Food and drink firms look outside EU for new customers

SCOTTISH food and drink firms are targeting new customers outside the European Union, a new report from Bank of Scotland has indicated.

The bank’s annual food and drink survey found six out of 10 companies in the sector were investing in or planning to secure new international customers in the next five years.

A fifth said they planned to export for the first time in the next five years, with the figure rising to almost a third among small and medium-sized businesses.

Western Europe remains a key market, with 61% of firms planning to target the region in 2017, up from 48% in 2016.

The survey of 100 companies found there has been an increase in interest in all areas, most notably South America, with 57% of firms targeting the region, up from 32%, followed by the Middle East up from 31% to 44%.

The results also indicate that Brexit is impacting on the food and drink industry.

Almost half of those questioned – 44% – cited rising labour costs as the biggest challenge to the industry over the next five years, ahead of concerns about leaving the EU, cited by 42% as the biggest worry.

However 67% said the UK’s planned exit from the EU had affected their recruitment plans.

Meanwhile, almost two thirds said the complexity of logistics and UK political uncertainty are the main challenges for firms looking to export.

Scottish Government figures published earlier this year showed food and drink exports from Scotland rose to a record £5.5 billion last year.

Growth in sales of seafood and whisky in particular helped increase exports by 8% in 2016.

Jane Clark-Hutchison, regional director of Bank of Scotland, said that despite challenges, the report showed the industry “remains robust in the face of economic and political uncertainty”.

“With a global reputation for quality, the sector enjoyed a record year for exports last year and, buoyed by the depressed pound, many are now planning to grow not just in Europe but across a number of overseas markets,” she said.

“Meanwhile, despite facing headwinds around the availability of skilled labour at home, the sector expects to create more than 18,000 new jobs over the next five years and is investing in the skills and development of existing staff to make their businesses more productive.”

James Withers, chief executive, Scotland Food and Drink, said: “It is great to see in this report that our Scottish food and drink businesses remain hugely ambitious, with 61% of businesses looking to develop in new markets.

“In order to do this, we must continue to invest in skills, our supply chains and embrace world-class innovation.”