Optimism high among South West business leaders
Since I wrote last month it's been all 'Thunderbirds Are Go' here at the Trowers Exeter office and it looks like it'll be a busy final quarter of 2023. You'll appreciate that I am quite chuffed about this!
October has seen a continued up-tick in activity, with our lawyers busy working with clients across all business sectors, helping them with planning and bringing to life the next steps for their organisations. And it was against this backdrop that I presented at a brilliant seminar a few weeks ago that Trowers co-hosted with accountants, Bishop Fleming, and local food champions Taste of the West. We brought together over 70 owners and managers of leading food and drink production and distribution businesses from the South West, along with representatives from Government departments, such as DEFRA and the Department for Business and Trade. It was part of a partnership that we, Bishop Fleming and Taste of the West, have undertaken for the next 18 months to deliver a series of seminar events, aimed at boosting support for the food and drink industry in the South West.
Nosey as I am, I was particularly curious to hear what the guest speakers and attendees would have to say given the difficult year experienced by many in the food and drink industry. Earlier in the year FT reported a surge in insolvencies in the sector, with inflation and business costs hitting hard. Alongside this, labour shortages continue to dog the industry, with many in the restaurant business in particular struggling to find enough cover for shifts and being forced to close some lunchtimes and evenings due to a lack of staff. The recent Food and Drink Federation’s (FDF) State of Industry report found that in the in the last quarter of the year running July 2022 to 2023, the cost of staff shortages has been a staggering £192 million.
This isn't to be taken lightly, given that food and drink exports were worth £25bn in 2022, according to the Institute of Export & International Trade. A booming industry riding high on a massively popular 'British' brand zeitgeist, is apparently being hamstrung because of problems with a basic production issue. Not great.
That said, it's not all gloom and doom. The total UK food and drink market, combining both eating in and eating out, is predicted to be worth £315.2bn by 2028, experiencing a growth of 19% from 2023 (£265bn), according to the Industry of Grocery Distribution. There are definite challenges but, with innovation spending on the rise, the industry seems imaginative and robust enough to weather them.
With these stats in mind and never ones to miss a trick, during our event, and whilst we our such erstwhile guests in our midst, we took the opportunity to quiz them on their sentiment about their plans and the outlook for the food and drink industry. I'm pleased to report that the results made for cheerful reading!
In terms of how our guests saw their trade volumes in 2023 versus 2022, 25% said it was the same, but 63% said it had improved. 84% said that they expect the trading environment in 2024 to be the same or better. Not quite the apocalyptic vision we could have expected to see.
When it came to plans on prioritising for the year ahead, 31% are looking first at investment in facilities and operations. Closely behind that, the second biggest investment focus is human resources and skills, with a quarter of respondents putting it at the top of their lists. Given what we've seen and heard about the impact of staff shortages this sounds like a savvy plan. Positive investment plans are a good bell-weather. They indicate longer term optimism for business success, which is never a bad thing.
It was good not to see too many Cassandras in the room. As I've said before, we're an optimistic bunch in the South West, and it was great to see that flair and positivism that has come to characterise our brilliant business community. Indeed, one of our guest speakers, Chris Milton, Former Sales Director for Thatchers Cider, was the antithesis of a Cassandra (brush up your classics if you don't know what I'm talking about) and he spoke with gusto about the South West as a food producing region – particularly about how we often act as an incubator for small and medium sized businesses. He also made a particular point in his speech about the buying habits of millennials and Gen-Zs. These groups have growing buying power and look for high quality, high welfare, organic and sustainable produce. They're savvy and discerning -and epitomise what so many of our regional food and drink producers and retailers stand for. In a nutshell he outlined a massive opportunity for our colleagues across the industry on which to capitalise. Ignore them at your peril!
Chris shared the podium with Karl Tucker, non-exec Chair of Yeo Valley Farms Ltd (and also the Chair of Heart Of The South West LEP, South Bristol Youth, not to mention Great South West PRP – he's a busy man) who laid out the economic scene for the South West as he sees it – it was inspiring and confident in its vision, albeit conscious of the challenges we face. As I mentioned in my last article there is a definite 'can-do' attitude in our region and it was great to hear the views of someone with so much hands-on industry experience (Yeo Valley has grown to be the UK’s largest organic food brands and one of the largest, independent, family-owned dairy businesses in the UK).
All of our speakers were brilliant and enthralling, but a point raised by Chris Ormrod, CEO of Cakesmiths, an artisan cake bakery based in Bristol, really made my ears prick up. Until recently he chaired The Somerset Larder Co. and until earlier this year was chair of the Richard Huish Educational Trust in Taunton. His opinion is that the time is now perfect for independent food businesses to flourish.
It would be remiss of me not to give a shout out to our brilliant hosts, Food Works SW, who looked after us at their premises in the new Food Enterprise Zone near Weston-Super-Mare. It was an apt venue given Food Works' great support for our local businesses. They're a centre of excellence for food and drink producers across the region and if you've not come across them look them up.
Next up in my diary – The Taste Of The West 2023 Awards, being held at Sandy Park on the 6th November. It looks set to be an exciting night and I'm really looking forward to meeting more of our amazing food and leisure industry heroes and seeing them get some limelight and well-deserved recognition! Hopefully I'll see you there! If you can't make it but would like to get in touch, feel free to drop me a note on firstname.lastname@example.org.