Value of Food and Drink Industry to UK: Executive Summary

This report provides a summary of the impact of food and drink manufacturers on the UK economy. The manufacturing element of the industry, linking the outputs of our farms to the retailers in the high street, is not well understood and so the Food and Drink Federation (FDF) commissioned a report from the Institute for Manufacturing (IfM) to clarify what the impacts of the industry were and to understand what could be done to improve the economic and social impacts of the industry.

Food and drink is a significant and resilient element of the manufacturing sector

The food and drink industry is a core element of the UK manufacturing economy, representing over 15% of manufacturing turnover and employment. Through the recent recession it was the sector that reduced its output the least and has returned to pre-recession output levels the fastest.

Innovation is a key focus for the food and drink industry

The food and drink sector accounts for over 4% of the total R&D spend reported in the annual R&D Scoreboard. Due to the highly competitive nature of the industry, there are over 1,500 new products introduced each quarter. This mix of product and process innovation is a core strength of the sector.

The sector provides above average pay and relatively long tenure in employment

The image of work in the food and drink industry is one of temporary and relatively low paid employment. Contrary to this common perception, the weekly earnings of employees in the food and drink industry are above those of the economy as a whole and job tenure appears to be over nine years on average for employees of food and drink manufacturers with only 6% temporary workers.

Strong and positive response to environmental and health concerns

Since 1990 food and drink manufacturing in the UK has reduced its CO2 emissions by at least 11%, showing a strong commitment to reducing the environmental impact of food production. At the same time, as there is a growing awareness of health issues related to diet and nutrition, the UK has become a leading source of new foods with health propositions. In 2007 36% of new health product launches in the European Union originated in the UK.

While exports have increased significantly, imports are rising faster

Over the past decade exports of both lightly and highly processed food products have risen by approximately 15%, showing a strong demand for UK products abroad. However, there is a growing trade deficit for food and drink in the UK, rising from £2.6 billion in 1995 to £9.9 billion in 2007. This impacts on the UK's ability to increase its food independence and is an ongoing concern in terms of the environmental impact of transporting food great distances.

The food and drink sector could contribute significantly to future sustainable growth

Due to its size, direct links to health outcomes and its impact on emissions from production and logistics, the food and drink sector should be a strategic focus of public and private action. Helping the sector to improve its trade balance, continue to invest in innovation and through supporting new low impact production technologies should be key public goals to retain a high value sector with significant social and environmental impacts.

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Last reviewed: 05 Jul 2010