Business with more bite

The food and drink sector remains key to the continued growth of businesses in the Midlands and has faced several significant challenges in the past year.

The sector has undergone the pressures of the exacting standards not only of the Food Standards Agency (FSA), but also wider challenges from Ofcom, the supermarkets (for example, the ongoing issues between Guideline Daily Amounts and Nutritional Profile Modelling, which itself is subject to further review by the FSA), the Advertising Standards Authority (ASA) and other pressure groups, for example, environmental and fairly traded matters.

Primary producers in this sector have been adapting to the challenges introduced by the creation of the Gangmasters Licensing Authority last year, as well as new requirements for sourcing temporary or seasonal labour. In addition, pubs and restaurants in the region have also been settling down following the introduction of the smoking ban in public places in the summer.

Consumer attitudes and trends are driving an emphasis on new product development and this has been recognised by large manufacturers that have for some time grasped the potential growth their business can experience by the use of engineering support. Manufacturers such as Coca-Cola and Weetabix introduced apprenticeship schemes for electrical and mechanical engineers some time ago. In contrast, smaller companies have struggled to find the engineering support or lack the initiative and resources to consider such possibilities.

Although new product development is a key new trend, this too has become the subject of increasing regulation with the emphasis on environmentally friendly packaging, Minimum Packaging Regulations and so on. In particular, the cost of redeveloping packaging on a continued basis is a real and significant cost to businesses in the sector. Recent requirements have involved complying with guidelines relating to the traffic light system and gross daily allowances, together with further guidelines issued by the FSA.

The food and drink sector faces ongoing competition in today’s global market but in the Midlands there is a positive mood that remains key to the continued growth of businesses in the region.

This regional interest largely stems from the fact that investment in this area offers stable returns supported by a strong asset base. Also, large organisations have been disposing of parts of their businesses, providing opportunities for others to acquire. This trend has continued over the summer and is reflected in a number of initiatives in the Midlands that have been designed to increase innovation in the sector and support businesses taking a more competitive edge.

The East Midlands New Technology Initiative (EMNTI) has been a leader in encouraging this approach. Among other services it offers a specific food and drink network providing support to smaller businesses in this sector.

It also offers support to East Midlands businesses in the food and drink sector of up to a maximum of £10,000 for capital fund equipment purchases that advance the use of technology within the workplace. Examples might be the development of technical and engineering base skills in process and packaging automation, for example, systems of control, check weighing and metal detection.

More recently, collaboration between the Food and Drink Forum, Food Processing Faraday and engineering consultants Optimat has resulted in a scheme being set up with the aim of putting the East Midlands at the forefront of food technology. Championing Innovation between the Engineering and Food Sectors is a three-year initiative funded by the East Midlands Development Agency (EMDA) that proposes to tackle and overcome challenges in the food sector using the skills of the region’s engineers.

Currently before Parliament is the Regulatory and Enforcement and Sanctions Bill, which it is intended will establish the Local Better Regulation Office (LBRO) as a statutory corporation. The overall object of statutory status will be to secure more effective and less burdensome approaches to the way regulations are enforced by local authorities. The Bill follows ongoing reviews about the way regulators manage reflecting reports such as the recent McCrory Report, which espouses a ‘risk management’ approach, where inspection is focused on the potential for serious compliance failure rather than repeatedly focusing on relatively minor issues. It is hoped that this will result in a lighter enforcement touch, which may enable smaller businesses to relax some of the regulatory burden.

Fiona Carter is a partner at Browne Jacobson