Great Britain’s top food and soft drink manufacturers saw revenue fall last year for the first time in 15 years. The 150 companies experienced the loss due to deflation and investor uncertainty, according to an OC&C Strategy Consultants’ report.
The report revealed that revenue growth of the UK’s top 150 food and drink producers declined by 0.1% in 2015. It also revealed a drop in profit margins for the top 150, including Associated British Foods, Coca-Cola Enterprises and Unilever UK. Profit margins totalled at 5.3%, 1.1% below the 20 year average.
The result of the research is thought to be due to deflation and a decrease in investor confidence in the run up to the EU referendum in June this year.
Will Hayllar, author of the report and partner at OC&C Strategy Consultants said: “For years, the top 150 food and grocery companies in the UK have enjoyed revenue growth that has far outpaced overall grocery spending, driven by merger and acquisition activity and a focus on leading brands.
“That has now been turned on its head, and we’re facing the dawn of a new era for the industry. Small branded businesses are coming to the fore, boosted by the appetite for niche food and drink brands in the UK and are presenting the biggest source of revenue growth for the sector.”
Interestingly, small branded businesses posted a continued revenue growth of 1.2% in 2015 according to the report. It is thought that the growth could be due to the UK public’s excitement for new and innovative brands. The report suggested that smaller brands may become more attractive to investors as the sterling weakens in the wake of the Brexit vote.
According to Hayllar: “Brexit uncertainty can be turned into opportunity, but producers must be proactive if they are to do this. With sterling at historic lows, there’s no longer such a price premium for buying British and this opens up a market that has previously been facing stiff competition from cheaper overseas suppliers.”
