The boom in the Scottish food and drink sector looks set to continue as the latest Bank of Scotland research reveals that the £12bn industry will be ramping up investment and creating jobs to target new export markets over the next five years.
The Bank of Scotland report, An Appetite for Growth: Ambition and Opportunity for Scotland’s food and drink industry, which launched this week, surveyed a broad cross section of over 100 Scottish food and drink businesses with an estimated aggregate turnover of £6 billion. The results help to cement the industry’s position as one of Scotland’s fastest-growing sectors.
A mean five-year growth expectation of 19% has been reported by respondents looking to expand.
Two-thirds of companies surveyed also expect to increase their workforce in the next five years as the sector continues to look to outpace the wider economy. Of the companies surveyed, respondents were confident of at least new 940 jobs between them over the next five years. If these findings were replicated across the wider food and drink production sector it could mean more than 5,600 additional jobs will be created.
The findings demonstrate that the industry is set to significantly exceed trade body Scotland Food & Drink’s current target of achieving £12.5bn turnover for the industry by 2017.
Other findings from the research included:
* Exporting and new product development are expected to be the key drivers for growth in the sector. Over 40% of firms are still planning on expanding their export activities.
* There has also been a significant shift in where Scottish food and drink companies are setting their international sights as they look for higher growth markets. Almost two-thirds of companies named the Far East/Asia as their key area of focus, replacing Western Europe at the top of the list of target markets. The rapid emergence of countries such as Brazil was also underlined with a 20% increase on last year’s report in the proportion of companies looking at South America.
* The biggest area of concern for the sector continues to be the cost and volatility of raw materials, cited by almost two thirds of respondents amid greater competition for resources and the threat of poor harvests caused by extreme weather.
Alasdair Gardner, Managing Director of Commercial Banking at Bank of Scotland said: “Scotland’s food and drink sector already makes a tremendous contribution to Scotland’s economy and these results show that will only increase over the coming of years. The creation of more than 5,600 jobs will be a very welcome boost to communities across Scotland as economic recovery continues.
“This is our second annual market survey on Scotland’s Food and Drink sector and following the opportunities we identified in last year’s survey, I’m delighted to see that overall confidence levels remain high and the sector is pushing ahead delivering record growth. The reality is that if this level of growth continues we will see levels of growth in the food and drink industry that could soon be alongside oil and gas on the export market.
“Scotland produces a fantastic array of food and drink products and this reputation for world class quality is enabling Scottish businesses to tap into the huge enthusiasm among global consumers for provenance. These are exciting times for the industry and Bank of Scotland stands ready to support companies with their growth plans whether those be here in Scotland or taking their products in to the US, China or South America.”
