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5600 New Scottish Food & Drink jobs on menu

Around 5,600 jobs could be created in the food and drink industry over the next five years, according to a report which concluded that it is one of Scotland's strongest performing sectors of the economy.

Two-thirds of firms in the sector predict they will increase their workforce by 2018 and more than 40% of companies plan to expand their export activities, researchers found.

It is also set to "significantly exceed" its target of achieving £12.5 billion turnover by 2017.

But the cost and volatility of raw materials, amid greater competition for resources and the threat of poor harvests caused by bad weather, is a key concern for those in the sector, the report found.

The findings were contained in a Bank of Scotland report entitled An Appetite For Growth, its second annual market survey on Scotland's food and drink sector.

The 100 or so companies surveyed for the report told researchers that they are confident of up to 1,000 jobs being created between them over the next five years.

Looking to the next five years, the report said: "If these findings were replicated across the wider food and drink production sector, it could mean more than 5,600 additional jobs will be created."

It also noted: "Scotland's food and drink has been one of the nation's strongest performing sectors in recent years and our findings highlight its importance to the future of the economy.

"Two-thirds of companies expect to increase their workforce in the next five years as the sector continues to look to outpace the wider economy."

A mean five-year growth expectation of 19% was reported by those business looking to expand, the report found.

Exports and the development of new products are expected to be the "key drivers" of growth over the coming years, the report found. It noted that more than two-fifths of firms are planning to expand the exports side of their business.

"There has also been a significant shift in where Scottish food and drink companies are setting their international sights as they look for higher growth markets," the report said.

"Almost two-thirds of companies named the Far East/Asia as their key area of focus, replacing Western Europe at the top of the list of target markets. The rapid emergence of countries such as Brazil was also underlined with a 20% increase in the proportion of companies looking at South America."

The "biggest area for concern" is the cost and volatility of raw materials, the report found.

With a rising incidence of poor harvests globally and increasing competition for commodities, a third of businesses in the survey said security of ingredients supply is their biggest challenge.

The main threat to ingredients security in particular is seen as the rising cost of raw materials, followed by energy costs.

The specific impact of the weather, climate change and the risk of disease affecting key crops is also highlighted by some of those surveyed.

The health of the global economy remains a key issue, although concerns appear to have eased compared with last year, the report also found.

Writing in the report, Alasdair Gardner, managing director of commercial banking at Bank of Scotland, said: "Despite the challenges there appears to be an upbeat mood in the sector, with most firms planning ahead for growth and job creation and almost half looking to break into new export markets.

"It is pleasing to see that fewer firms would consider moving production overseas and also encouraging that more could quickly ramp up production if opportunities arose.

"The publication of this year's report is timely as preparations build ahead of a momentous year for Scotland. The Glasgow 2014 Commonwealth Games, the year-long Homecoming celebrations and the Ryder Cup at Gleneagles are together expected to attract visitors and participants from more than 70 countries.

"The opportunities to promote Scotland as a producer of high-quality food and drink to a global audience come as firms increasingly look further afield to sell their products."

James Withers, chief executive of Scotland Food and Drink, said in the report: "Ambitious sales and export targets are in place for 2017 and achieving those will not only represent success for the industry but also for Scotland with the potential to create thousands of new jobs.

"In many respects we are at a game-changing moment for Scottish food and drink. Signs that confidence is starting to return to the domestic economy are encouraging but it is the potential for the industry to build on progress to date in overseas markets that holds the most potential."

Source: - 5 September 2013