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NPD Will Be Major Source Of Growth For Confident Food Industry
Strong business confidence, product innovation and export potential means food and drink manufacturers are expecting revenue growth, despite a year of substantial change and uncertainty, according to a new report published by accountancy and business advisory firm BDO LLP.
BDO’s Food and Drink Report 2017 found that 73% of manufacturers surveyed are positive about the future of the industry, with 81% of firms expecting revenue growth of up to 20% in the next year.
However, challenges still remain as operating margins continue to be squeezed. Almost a third of firms (28%) have reported a decrease in operating margins this year, with raw materials price inflation having an impact on the bottom line.
For the second year in a row, the BDO survey finds the volatility of raw material prices is the key challenge for food and drink manufacturers – exasperated further by Brexit. This is followed by foreign exchange rates, which was not a major concern for manufacturers questioned last year and seen as a direct result of Brexit uncertainty.
Despite the challenges, firms are proving resilient in their growth ambitions. Just over half of those surveyed said that new product development and investment in production/capex would be a major source of growth, with 49% and 46% saying access to new UK markets and export markets respectively will be an increasingly important part of their growth strategies.
M&A appetite is also on the up with 27% of firms (up from 15% last year) expecting growth to come from transactional activity.
Through product innovation and increasing investment in automation, the industry continues to become increasingly efficient and smart in dealing with market pressures. Two thirds of food and drink firms say they are increasing investment in this area, 15% higher than 2016.
According to the report, the food and drink industry is a prime candidate for greater process automation due to the benefits it brings through increased production output and flexibility, improvements in product quality and reduction in waste.
Interestingly, attracting and retaining skilled labour was named the eighth biggest challenge – falling from second place in 2016. However, over half (57%) of those surveyed did say they were experiencing difficulties in recruiting the skilled people they require.
Worryingly, 31% of manufacturers are not confident that a favourable post-Brexit environment will be negotiated for the food and drink industry, with 40% saying it was too soon to judge what impact Brexit will have on their business in the medium to long term. 32% said Brexit would have no impact on the industry and 14% each were positive and negative.
Export opportunities were identified by 31% as the key positive impact of Brexit and access to labour and skills as the key negative impact by 57% of respondents. When questioned on what would help the food and drink industry grow in the current uncertain landscape, the two most important factors for food and drink manufacturers were improved support for exporting and delivering the future employees/skills for the industry.
Paul Davies, Head of Food and Drink at BDO LLP said:
“The industry continues to be faced by challenges predominantly related to price and margins, and Brexit brings with it new challenges. But it is promising to see high levels of positivity in the industry, with firms pushing forward and adjusting their business plans to make the most of the opportunities available.
“Food and drink businesses are a driving force of growth, contributing jobs and revenue to the UK economy. Yet they are at risk of being overlooked as the UK prepares to leave the European Union. The Government needs to draw on the natural energy, ambition and entrepreneurial-spirit of food and drink businesses and help them succeed post-Brexit.
“We believe the Government can do more to support the industry by ensuring they have open and simple access to world markets to successfully continue trading and deliver growth through new export opportunities. With a workforce where about one in four employees are non-UK EU nationals, the Government needs to deliver simple access to global talent to help secure the industry’s future.”
Global Organic Baby Food Market to Reach $11,592 Million, Globally, by 2023
According to a new report published by Allied Market Research, titled, Organic Baby Food Market by Product and Mode of sale: Global Opportunity Analysis and Industry Forecast, 2017-2023, the organic baby food market was valued at $5,834 million in 2016, and is projected to reach at $11,592 million by 2023, growing at a CAGR of 10.15% from 2017 to 2023. Europe is expected to be the leading contributor to the global organic baby food market, followed by Asia-Pacific and North America.
Rise in parental concerns with respect to babys health and nutrition, increase in awareness about benefits of organic products, eco-friendly farming techniques, rise in disposable income of consumers, growth in standard of living encourages the adoption of organic baby food products, and improved distribution channels in the industry drive the organic baby food market growth. However, premium price and certain government regulations for the approval of organic food & beverage hamper the organic baby food market growth. Various government initiatives and investment of government and private investors in the organic baby food industry are expected to provide numerous growth opportunities for the global organic baby food market. Moreover, increase in working women and growth of nuclear families have led to the adoption of organic baby food products.
In 2016, the prepared organic baby food segment accounted for the maximum revenue share in the overall organic baby food industry due to the convenience in usage and time saving factor for preparation of the food product. Moreover, prepared baby food products, such as purees and vegetable & fruit blends, are available in variety of flavors, such as mango, banana, peach, and others thereby providing taste and nutrition. Moreover, the other organic baby foods, such as puffs, rusks, and biscuits are expected to grow at a CAGR of 9.93% during the forecast period. The prepared organic baby food market is expected to grow, owing to the benefits of these food products in terms of nutritional value.
The offline segment accounted for the maximum share in the global organic baby food market with around 81.55% in 2016. Offline stores, such as supermarkets and hypermarkets, are mostly preferred by the costumers to purchase organic food products. However, the trend is shifting toward purchasing products online due to ease and convenience provided by these online portals. The online mode of sale is expected to grow at a CAGR OF 12.94% during the forecast period.
Europe accounted for the major share of the global organic baby food market in 2016, and is expected to maintain its dominance during the forecast period, owing to health-conscious costumers and demand for chemical-free baby food products. Asia-Pacific is estimated to grow at the highest rate due to rise in birth rates and growth in awareness related to beneficial effects of these food products.
Key Findings of the Organic Baby Food Market:
In 2016, the offline mode of sale segment accounted for the maximum revenue, and is projected to grow at a notable CAGR of 9.4% during the forecast period. The organic infant milk formula market accounted for 12.2% share in the global organic baby food market. China is the major shareholder in the Asia-Pacific organic baby food market, accounting for more than 28% share in 2016. The key players profiled in the organic baby food market include Abbott laboratories, Nestl S. A, Hero Group, Amara Organics, Danone, Plum organics, The Hein celestial group, North Castle Partners, LLC. HiPP GmbH & Co. Vertrieb KG, and Baby Gourmet Foods Inc. Market players have adopted various strategies, such as product launch, collaboration & partnership and acquisition, to expand their foothold in the market.
Brits might be famed for their love of roast beef and bacon sarnies but a new study has revealed growing numbers are now turning their backs on meat.
Just over a quarter of people – the equivalent of 16 million of the UK population – have started to cut down on the amount they eat, according to customer segmentation specialist Clusters, which carries out research into shopper attitudes and behaviour.
Of those reducing their meat intake, first to be sliced from dinner tables was beef (56%), followed by bacon (47%) and then pork (46%) and lamb (45%). In contrast, just 11% said they were avoiding chicken, which is thought to be healthier.
Using segmentation to uncover the differing motivations behind this move, Clusters found that one group in particular is steering clear of red meat due to health concerns. People in this segment tend to be aged 45-54, shop at Tesco, and usually buy standard product ranges (rather than value or premium). From this group, 69% noted health concerns to be a main motivator in their decision to cut back on meat and a further 37% said they are worried that eating too much red meat will lead to diseases such as colon cancer.
While health seems to be the primary motivation to reduce meat consumption, it was also found to be the main barrier. Interestingly, an equal number of people claim the reason they are not reducing their meat consumption is because they believe it’s good for their health.
These findings follow a number of high profile reports on the link between cancer and high meat consumption. At the end of 2015, the World Health Organization warned that there was ‘convincing evidence’ that processed meat such as sausages and ham caused colorectal cancer.
Managing director of Clusters Chris Cowan, who led the research, said: “Just as we have seen with smoking, raising public awareness is an extremely effective way of encouraging people to make changes to their lifestyles.
“Bowel cancer tends to affect older people, so it is interesting to note that this group is more likely to cut their meat consumption because it indicates that the health advice is working.
“Some supermarkets, like Sainsbury’s, are already trialing innovative schemes in store and online that encourage shoppers to switch their meat-based dishes for healthier, vegetable alternatives. Our research discovered that over a quarter of people would be ‘very likely’ to take part in a rewards programme like this which incentivised shoppers to make the swap. This trend is only likely to grow, so there are real gains to be made for the progressive retailers who stay ahead of the curve.
“This study also highlights the importance of segmentation in determining which groups should be targeted when it comes to health campaigns. The motivations and barriers behind people’s reasons for reducing meat intake should form a large part of any campaign, instead of taking a narrow view and focusing on demographics.”