The biggest bite in UK manufacturing

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Today continues our series of blogs on individual sectors in manufacturing. This time it's the food and drink sector, the largest in UK manufacturing by standard industry classification codes (codes 10 and 11 if you're wondering). More than 17% of manufacturing output in 2012 came from the food and drink sector.

Food and drink covers a broad swathe of items we all consume every day from meat, processed fruit and vegetables, and baked goods to soft drinks and alcoholic beverages. Many UK food and drink products on our supermarket shelves make a virtue of being made close to home so look at for the 'made in GB' label.

The sector emerged in the modern sense in the 18th and 19th centuries as the population moved more and more towards the cities and subsistence small scale farming and distribution needed to be scaled up into mass production. Some of the biggest names in the sector today date from this period particularly in brewing, baking goods, and ingredients.

Though food and drink companies are found throughout the UK, areas of concentration include Yorkshire, the East Midlands, and the East of England in food manufacture, the South West for dairy products, alcoholic beverages and the processing of fish and shellfish in Scotland, and of course the 'food square mile' in north west London.

Food and drink manufacturing is not as export or R&D intensive as other manufacturing sectors in the UK. Nevertheless, the UK exported nearly £18 billion in food and drink products in 2012, primarily (61%) to the EU. In 2011 food and drink manufacturing companies invested £350 million in R&D - 14.8% up on 2010, the biggest increase in ten years.

There is increasing consumer awareness and interest in the provenance of the goods they are consuming. Consumer interest in goods with lower sugar, fat, and salt content is prompting interest from policymakers and voluntary actions from industry. Genetic engineering too has an important consumer angle with the increased production possibilities on the one hand tempered by consumer demands for GE free products on the other.

The industry is also challenged by the impact of climate change. Most food and drink key commodities are vulnerable to weather and growing conditions and prices are often determined internationally. So poor growing seasons in Russia, storms depleting fish stocks in Chile, or a drought reducing dairy output in New Zealand can all impact the UK sector.

The food and drink sector has come through the recession period relatively well and although 2012 was a tough year the medium term outlook for the sector is relatively positive with growth returning in 2014 before strengthening in 2015.

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