Food and drink firms optimistic but face recruitment difficulties

More than nine-in-ten food and drink companies are optimistic about their prospects, according to a new study from BDO. But recruitment challenges persist, and three-quarters of businesses in the sector believe they are struggling to fill skilled roles.

A host of factors – from climate change supply chain disruption, to rampant inflation causing consumer habits to rapidly shift – are impacting revenues in the food and drink sector. But after several difficult years, sentiment seems to be turning among operators in the space.

Food and Drink is the biggest manufacturing industry in the UK with a turnover of £148 billion, and exports worth £24 billion – employing 486,500 people in the UK. Audit and advisory firm BDO polled 100 food and drink manufacturers, and found that the majority of them expected to have turned a corner. 

In total, 95% of respondents said they has maintained or increased profitability. When asked how they felt about the future, the same percentage felt positive about the prospects for their business, up from 70% in 2023. Additionally, 62% had seen an increase in orders over the past 12 months, and 52% anticipate further growth over the next year. The optimism did not stop with their own outcomes, though. A 57% majority said they saw the food and drink sector’s future as a whole through “very positive” terms, while a further 36% chunk was “quite positive”.

The UK’s improving post-Brexit ties to the EU seem to be driving some of this sentiment. Around 34% expect to drive their growth through an expansion into new export markets within the EU – even more than the 31% who plan to expand into new markets in the UK. At the same time, 33% of businesses say new product development remains a key growth area.

Recruitment

However, the sector is not exempt from the current economic challenges. Faced with rising costs, 24% of food and drink businesses plan to increase borrowing or seek additional finance. At the same time, if they are to make the most of their expansion ambitions, firms will need to find new ways to access key talent.

BDO found that of the 100 firms it surveyed, 75% of respondents said they lacked skilled people in key roles – rising from 50% in 2023. This could hamper their ability to deliver their growth ambitions, with roles that manufacturers are most keen to fill including sales and marketing, production, and project management positions. Meanwhile, roles related to digital transformation are also in demand with 25% of businesses leaders seeing the need for more skilled workers in this area.

In spite of this, few firms seem to be prioritising a shift in their recruitment mechanisms. For example, while 15% said in the last survey that they were going to focus on digital transformation to boost recruitment, that fell to just 11% this time around.

Cindy Hrkalovic, head of food and drink at BDO said, “The sector will have been further buoyed by the recent trade deal announced with the EU which should remove barriers to trade for many food and drink exporters and offer new opportunities for growth. However, there is a pressing need for government to offer the food and drink sector targeted support with their recruitment and digital transformation needs in order to sustain growth and competitiveness in a rapidly evolving market.”