In this article we aim to present a quick and easy to digest run-down of the main trends and developments in a highlighted sector of the process manufacturing industries in one of our covered regions. For more information on the areas we cover, click here.
In our previous industry update we reported a decline in the number of new build, larger scale investment projects. However, looking to the end of the year and beyond to 2016 it appears confidence in the food and drink markets of the UK is returning.
Feedback from various players in the industry coupled with statistics from our project database indicates that project investment levels are growing overall with a greater proportion of planned project schemes coming to fruition. In our last update, we estimated only around 25% of planned project activity was implemented. This rate is now increasing to around 33%.
On average, project investment values are on the up; with a greater spend on capital equipment and services. Furthermore, fewer projects are being placed on hold. Tendering levels are very high, with many of the major engineering houses & consultants starting to turn work away.
We are seeing a greater number of longer, more complex and multi-site schemes being planned, resulting in many Protel project bulletins being issued very early in the project lifecycle. This positivity seems to be echoed across other industrial areas as a whole, which are seeing a 3-5% growth in investment over the next year.
The landscape for engineering houses in the food and drink industry has become even more competitive. Organisations that are benefiting from the general buoyancy of the industry mostly include small to medium size engineering houses.
We are seeing a trend toward greater sensitivity surrounding projects, as commercial considerations and strict confidentiality agreements are widespread. These factors, coupled with no-names policies at many sites means making contact is increasingly difficult for new suppliers to achieve face-to-face meetings (find out how we can help with this here).
A current issue facing the industry stems from uncertainty among the ‘Big 4’ supermarket giants. With discounters from mainland Europe such as Aldi and Lidl securing ever greater market share, downward price pressure on the larger supermarket stalwarts is being passed onto manufacturers.
The ‘Asian Slowdown’ is also affecting exports in the industry with knock-on effects on meat processing, dairy and whiskey (Diageo are currently slowing down capex investment). Further, many manufacturers are concerned over the impact of the ‘living wage’, which is increasing and planned to peak in 2020, where increased costs in the supply chain may be passed on to the manufacturers themselves.
Craft alcohol production is booming, with an increasingly large number of small distilleries and microbreweries planned. Mineral water production is another strong area. The bakery sector, ready meals, food-to-go and the ‘free-from’ movement are also growth areas.
Some of the larger food and drink capex projects currently being tracked by Protel (data taken from our MyProtel project search engine):
• 2 Sisters Food Group – £60m
• CSM Bakeries UK – £40m
• Arla Foods – £50m
• Cargills – £100m
• Mondelez International – £90m
• Associated British Foods – £50m
• William Grant & Sons Distillers – £50m
To gain information on specific projects, including all the contact details you need to start your sales process at the right time, get in touch.