A survey of UK food manufacturers by BDO LLP shows that 83% of companies experienced similar or worsening operating margins throughout 2013 in comparison to 2012. This continued strain on margins has been caused by pressures on pricing from customers and little or no relief from high raw material costs. The survey finds that 39% of respondents consider pricing pressure from customers as the key challenge for the year ahead and a quarter felt price volatility in raw materials as the most worrying concern. Despite these margin pressures, customers still expect to see quality and new product development, with 58% of those surveyed believing that new products present the best opportunity for growth this year. With such pressures existing in the domestic market, the question of export opportunity comes to the fore and a clear upward trend is identified in the survey. Currently, only a third of respondents export more than 20% of their total sales. However, the expectation is for a significant upward shift in this figure over the next 3 years with 61% of respondents forecasting they will export more than 20% of their total sales. This trend will be seen as encouragement to the Government which has a publicly stated ambition of raising UK exports to over £1 trillion. Manufacturing is at the hear to achieving this target with food and drink being the largest sub-sector within this, representing turnover of over £90BN and with more than 400,000 people employed. In September 2013, UK Trade and Investment published the UK Food and Drink International Action Plan, setting out the commitment and support the Government would offer the UK industry to help it become a powerful player.
