Member Article

Food and drink firms "brace themselves" for Christmas

Businesses in the food and drinks industry are preparing themselves for what is expected to be the toughest Christmas yet, despite a strong third quarter for the sector.

A survey carried out by the Food and Drink Federation (FDF) found that trading in the 2012 Christmas period is major cause for concern amongst firms, in stark contrast to the previous two quarters, which were particularly strong.

Over half of responding firms said sales were up in the last quarter, with many suggesting this was a result of good weather and the Olympic and Paralympic Games.

However, confidence has fallen considerably for the remaining few months of 2012, with a 3% fall in optimism.Ingredient price rises are expected to continue over the festive season, while poor harvests have considerably pushed up the cost of wheat.

Steve Barnes, FDF’s Economic and Commercial Services Director, commented: “The results of our latest survey show that food and drink business leaders are bracing themselves for what could potentially be one of the toughest Christmas trading periods in recent years.”

A slowdown in overseas exports over the last quarter is expected to continue into quarter three, after a significant drop in European demand.Investment in research and development is expected to improve into quarter four, while a third of food and drink businesses plan to launch new product lines before Christmas.

Over a third of firms also said they hoped to increase investment in staff training over the last three months of the year, however capital expenditure fell by 7% as a result of restricted lending to businesses.

Mr Barnes continued: “Christmas is traditionally our busiest production period and when we would expect to see higher levels of demand in both our domestic and overseas markets.

“However, continued rises in ingredient prices and an uncertain economic outlook are impacting confidence and this volatility is making it harder for businesses to plan ahead.

“However our sector has always proved resilient and we are confident that it will continue to be so and make a significant contribution to the UK’s economic recovery.”

This was posted in Bdaily's Members' News section by Miranda Dobson .