Food and drink
Combining high-quality produce with cutting-edge technology, the UK is at the forefront of innovation in the food and drink industry.
The UK’s food and drink industry is the country’s biggest manufacturing sector by turnover, valued at £104.4 billion. It is larger than the automotive and aerospace industries combined.
The UK presents many opportunities for exporters, investors, and international buyers, with key capabilities across the food and drink supply chain and all stages of product development. It provides a strong base for research and development with clear and defined routes to market, making it well-placed to meet the demands of consumers.
Thames Freeport is Britain’s trading future. With 1,700 acres of development land across three zones along the Thames River, it is at the centre of Europe’s biggest consumer market.
East Midlands Freeport
The East Midlands Freeport is the UK’s only inland Freeport, with unparalleled connectivity across the country, to international cities, and home to a wide range of innovative sectors.
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.
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.
Key UK assets
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’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.
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.
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.
Business and government support
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.
International food group Princes Ltd, a wholly owned subsidiary of Mitsubishi Corporation headquartered in Liverpool, has its largest UK production site at Long Sutton in Lincolnshire. It is one of the largest employers in the area, supporting hundreds of jobs. The company has invested £80 million into the site, with upgrades including a new warehouse for raw materials, ingredient processing kitchen and a high-speed automated canning line.
Heineken N.V., a Dutch company with global headquarters in Amsterdam, has invested £200 million across its 150 pubs in the UK. In its search for growth opportunities in a mature market, it invested £50 million in 2019, representing the brewer’s biggest spend on its UK bars in a single year.
Cadbury is a subsidiary of American multinational Mondelez International, with its headquarters located in Uxbridge, UK. In 2021, Mondelez announced plans for a £15 million investment in Cadbury’s historic Bournville site, which will be used for the creation of a new production line and to oversee an increase in chocolate-making capacity.