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FDF: New report shows innovation and investment key

06 July 2010

An ongoing demonstrable commitment to innovation and high-value production are key reasons why the UK food sector has emerged from recession in better shape than many other manufacturing sectors

This is according to a new report commissioned by the Food and Drink Federation from the Institute for Manufacturing at the University of Cambridge.

From May 2008 to May 2009, the production index for food and drink fell by only 1.9 compared to 13.1 for manufacturing overall – a clear indication of the industry’s resilience. The report was commissioned by the Food and Drink Federation.

Responding, Melanie Leech, FDF Director General, said: “As Government builds the strategy for economic recovery, this report provides a timely reminder of the important financial, strategic and social contribution of the UK’s biggest manufacturing sector. We have placed innovative research and development at the heart of our industry and continued to invest in our products, our factories and our people in a hugely challenging economic climate – and are now well-placed to capitalise on these strong foundations as the country emerges from recession. We are a high value added sector offering world-beating capabilities and a rich range of career choices. The Government can place us with confidence at the heart of its strategy for recovery.”

The UK food and drink industry invests more than £1.1bn a year on R&D - a comparable level with the automotive sector.

It has launched 1,500 new products each quarter since the beginning of 2008.

As well as NPD, industry has expended considerable resource in responding to consumer demands for products that are lower in salt, fat or energy.

UK food products are also in demand overseas – 2009 saw the 5th consecutive rise in food exports, growing in value by 4.4% to £9.65bn in 2009, significantly outperforming other manufacturing sectors, which experienced an 11.8% slump in overseas sales.

Factories: The food sector has been one of the most resilient manufacturing sectors in terms of output during the recession and FDF members are confident about increasing their investment in UK production facilities in the next three to five years. Indeed, business expenditure by the food and drink industry also supports their increased commitment to investment.

According to ONS time series figures, between Q1 2009 and Q1 2010, UK manufacturing business expenditure dropped by almost 25%. Within the same time frame, the food and drink industry increased their business investment by 7.2%, raising its percentage of total manufacturing business expenditure from 13% to 19%. The IfM report also shows that:

65% of UK food and drink manufacturers have more than 75% of their production in the UK
UK manufacturers also invest heavily in UK design and research work, with very similar percentages to UK production
Nearly 40% of UK food and drink manufacturers plan to increase investment in production and research and design over 3-5 years

94% of employees in the UK food and drink sector are full-time
UK food and drink employees are paid well above the national average
Average tenure within the food and drink industry is 9 years
20% of employees are graduates

Report author Finbarr Livesey, Director at the IfM, said: “The food and drink industry has weathered the recession best of all manufacturing sectors and appears to have continuing strength in R&D. The sector will be a bell weather for changes to come, as the industry addresses environmental and health issues, two areas intimately related to food production.”

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