Food and drink

Sustainability and smart packaging

There is an increased demand for sustainable, environmentally friendly packaging in the industry and funding is available in the UK for the development of these products. A 2019 YouGov report found that 82% of consumers are actively trying to reduce their plastic waste, and nearly half of consumers would be willing to pay extra for more sustainable packaging.

The £20 million Made Smarter Innovation programme supports innovations that improve sustainability in manufacturing by reducing material waste or energy consumption.

Functional food

There has been a steady increase in the demand for functional foods (modified foods that claim to improve health). Consumers are becoming more focussed on preventative healthcare and the potential for functional foods to prevent nutrition-related diseases and improve both physical health and brain function.

The global market for functional foods has been valued at £209.6 billion in 2021, with a projected compound annual growth rate of 9.5% from 2021-2028. The UK is at the forefront of the development of these foods.

Plant-based and alternative protein sources

Vegetarian and vegan diets are growing in popularity. This presents a very exciting development for the food industry, as manufacturers are creating plant-based and alternative sources of protein, with Frost and Sullivan reporting in 2021 that the market revenue for plant protein ingredients is projected to reach £16.8 billion by 2026.

A key opportunity in the market for alternative protein is the development of lab-grown meat. A 2018 Adam Smith Institute report predicts the emergence of this as a new multi-billion-dollar industry, with the UK potentially at its forefront.

The UK has established itself at the forefront of innovation, with high quality produce and technological advances combined to cater to the demands of the consumers. More importance is being placed on sustainability in production, lessening of environmental impact and provision of healthier food options.

The industry has an excellent ethical and international reputation, providing enormous scope for expansion both within the UK and around the world. This includes developing markets, where premium products are increasing in popularity.

Food and drink production is carried out across all regions of the UK, with a well-developed export capability, resulting in exports exceeding £23 billion in 2019.

Scotland

Scotland’s rich natural larder combined with its world-leading technology results in an industry constantly pushing the boundaries of innovation, with a long history of expertise in distilling, engineering, science and research.

Scientists at the universities of Glasgow and Strathclyde have developed an artificial tongue that can taste subtle differences between whiskies. This will be used to tackle the counterfeit alcohol trade.

Northern Ireland

Nothern Ireland has a progressive industry based on family farms and fishing businesses, and award-winning enterprising food and drink producers focused on original products. It has the high-quality raw ingredients, state-of-the-art processing facilities and world-class food security record which major retailers demand. It’s also the location of numerous research centres, including Queen’s University Belfast’s Institute for Global Food Security and Ulster University’s Nutrition Innovation Centre for Food and Health.

Lincolnshire

There is a growing demand for robotics to aid in the automation of food manufacturing, and Lincolnshire has a great research and development capability for this. The Lincoln Institute for Agri-food Technology (LIAT) is a pioneer, with the world’s first Centre of Excellence in Agricultural Robotics.

North East of England

The North East of England is home to the UK’s only 100% dedicated plant-based manufacturing facility in County Durham. Companies such as Quorn Foods have established operations in this region, with low costs in terms of industrial space and plenty of research capability to allow for further innovations.

The UK provides an exceptionally strong base in the field of research and development in food and drink. It has a wide range of research universities and the Food and Drink Federation estimate we will see a potential £55.8 billion value added to the industry through implementation of existing digital technology over the next decade. In 2021, the UK government outlined its Research and Development Roadmap, with aims to increase public investment in research and development to £22 billion per year by 2024-25. The UK’s top 15 food manufacturers spend £900 million annually on research and development.

The UK is renowned as a lead innovator in the food and drink sector, particularly in high-tech packaging, health foods and convenient food options. In their 2021 Food and Drink Report, BDO reported that 77% of food and drink manufacturers stated that they are increasing their focus on new product development and innovation, showing an industry-wide commitment to fulfilling the changing demands of the public.

The Knowledge Transfer Network (KTN) offers support to businesses by providing them with expertise and financing through their connections with businesses, university funds and investors.

Incentives are offered to companies to encourage further research and development. The UK government allocates funds to UK Research and Innovation (UKRI), and through Innovate UK, there are many funding opportunities available to support highly innovative SMEs and large businesses. These funds can range from £25,000 to £10 million depending on the scale of the project. Companies can also take advantage of HMRC R&D tax credits and R&D expenditure credits.

Expand your business in the UK

Get practical guidance and insights to help you successfully set up in the UK.