Growth drivers
From the Grant Thornton surveys and interviews, companies were prompted to identify key growth
drivers for UK food and soft drink manufacturing industry (FDM) with reference to the types of products that will help drive growth during the next 5-10 years.
Companies believe that value products are more likely to drive the growth of the
UK food and drink market than premium products, as the disposable income of UK
consumers is
increasingly squeezed and consequently consumers will continue to look for
better value products.
However, the segment that is expected to suffer the most is the mid-range
products category as consumers combine better value at lower prices with
innovative,
premium priced products.
In terms of brand vs. private label products, the views are split, with
corporates believing
that private label is more likely to drive growth, while SMEs expect branded
products to
drive growth. Desktop research (Mintel) indicates that during the recession,
branded food
products outperformed private label. Therefore, it is reasonable to suggest
that
this trend may
continue despite the increasingly trusted or premium image that private label
brands such
as Tesco Finest or Sainsbury's Taste the Difference may be enjoying with
consumers.
The ageing population (both in the UK and worldwide), as well as the health
agendas increasingly promoted in the Western world, are expected to impact the
demand for Health & Wellness (H&W) products and, therefore, be one of
the main
categories to drive the industry's growth.
Both in the UK and globally, the forecasted population growth will result in a
larger consumer
base, which should drive demand within the food and soft drinks market. The UK
is amongst
the European countries with the fastest population growth, forecast to reach
71.3 million in 2030
(15% growth from 62.3 million in 2010). France is forecast to grow at 11%
reaching 73.5 million
in 2030.
This contrasts with the 1% population decline in Germany and the stagnation in
Poland
(at 39.7 million people in 2030 vs. 39.5 million in 2010). However, in the UK,
the shape and pace
of economic recovery may impact consumer expenditure which in turn may affect
consumer
purchasing patterns and the degree of real growth of the food and drink
industry.
Therefore, the positive effect from the forecast population growth figures
showing a 2.5 million increase between 2010 and 2015 may be moderated due to
the
latest negative consumer and business confidence indicators as well as the Bank
of
England's 1% GDP growth forecast for 2012.
Case study: Growing business and local opportunities - Nestlé UK & Ireland
In November 2011, Nestlé UK & Ireland announced the investment of £110
million
in its Tutbury site in Derbyshire creating a world class coffee manufacturing
facility. The extension to the existing NESCAFÉ Dolce Gusto plant enables
Nestlé
to
treble its production capacity and create 300 new jobs.
This move follows an additional investment of over £100m in Tutbury over the
past five years,
which has strengthened its position as a leading NESCAFÉ production plant and
introduced the
NESCAFÉ Dolce Gusto brand. Tutbury is one of only two production centres for
NESCAFÉ Dolce
Gusto in the world and since its launch in 2006 demand for the 'coffee shop at
home system' has
been phenomenal with current growth of around 50%.
As demand for NESCAFÉ Dolce Gusto continues to grow Nestlé identified the need
to increase production to keep pace with demand.
Already a major employer in the local area, the workforce at the factory has
grown from 160 to
500 employees since 2006 and will expand to 800 people by 2013. Of the 300 new
employees some will become part of the first intake into the Nestlé Academy, a
new initiative under which Nestlé UK & Ireland has committed to double its
number
of graduates, apprentices and internships, supporting the economy through the
training of skilled workers.
Paul Grimwood, Chairman and CEO, Nestlé
UK & Ireland said:
“Over the past five years we have undertaken a multi-million pound investment
programme in the UK, establishing our next generation of world class
competitive
manufacturing facilities. This investment in Tutbury will extend our best in
class facility, trebling our production capacity for export to over 38
countries
across the globe. In order to grow we need to innovate and we are committed to
the
continued modernisation of our UK manufacturing capability.”
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More Information
A Grant Thornton report commissioned by Food and Drink Federation. Note that the
case studies in the executive summary were written by the Food and Drink
Federation.
Last reviewed: 07 Dec 2011