Food & drink

Recipe for success

Food and drink companies are the toast of the UK economy, bringing 16,000 new products to market each year. The industry spends £1 billion annually on R&D, helping it stay one step ahead of changing consumer demand.

No sector has been impervious to the recession, but UK food and drink manufacturing has held up well against the economic headwinds, with increased exports and new job creation. Figures show that the UK government helped 2,500 food and drink businesses sell their produce abroad in the 12 months to October 2014 – more than ever before – generating £300m for the UK economy.

Sector at a glance

  • 400,000 people are directly employed by the food and drink industry
  • 96% of businesses are micro- to medium-sized
  • 45% increase in value-added exports in five years


Scaling up the economy

Commentary by John Cridland CBE, Director General, Confederation of British Industry

We are fortunate in the UK to have thousands of innovative, disruptive companies that power our economy forwards alongside larger, household names.

These firms already contribute much to the business landscape and we should be proud that new business creation has risen over the last five years, with more than half a million new companies registering with Companies House every year.

But setting up is just the first stage – scaling up is the big challenge. Only 0.4% of companies based in the UK scale up to beyond 250 or more employees, compared with 0.7% in the US. Nurturing start-ups, accepting some will fail but supporting those that are ready to take risks, will help to overcome this challenge.

“We need to ensure that the finance is available to match companies’ growth ambitions”

By establishing high-quality business support programmes with strong brands that small businesses recognise and trust, cutting red tape and raising our performance on exports – only one in five small firms based in the UK export, versus one in four in the EU – we will give them the best chance of success.

Medium-sized firms in particular have a big impact. They make up less than 2% of all firms in the UK, but account for nearly a quarter of all sales and around 20% of all jobs. However, with the right support, they could be contributing even more, so government and the wider business community need to work together to raise ambitions for growth. 

First, firms need the right skills at the right time to scale up. Good external advice can be vital in making key decisions such as setting up a board, appointing an HR Director or launching into new international markets. Schemes like the Growth Accelerator and UKTI’s export support for medium-sized companies are starting to make an impact, and must be allowed to develop further.

  • 0.4% of UK-based companies scale up to beyond 250 employees

Second, we need to ensure that the finance is available to match companies’ growth ambitions. Banks will continue to be a major source of funds, but we must also look beyond them. This means upping the pace in establishing a private placement market capable of financing medium-sized firms, incentivising long-term equity investments through the tax system, and bringing new players into the follow-on venture capital market so it can rival Silicon Valley.

The future is bright for our small and medium-sized companies. By taking these steps to really tap into their potential, we could make it even brighter.

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