The latest Food and Drink Federation (FDF) Business Confidence survey shows that net business confidence rose in Q1 2021, reaching 14 percent due to the UK government’s vaccine rollout easing of lockdown restrictions. 

Businesses continued to experience decreased domestic sales in Q1, driven by low domestic hospitality and foodservice sales levels. 

Over a third of respondents saw output, productivity and domestic retail sales increase in Q4 2020.

“After a turbulent year, food and drink manufacturers are beginning to see the light at the end of the tunnel. The successful rollout of the UK’s vaccine program and the lifting of lockdown restrictions has meant that businesses are more confident than they were at the end of 2020,” says Mark Harrison, economic research and employment policy manager at the FDF. 

“Increased business costs and issues with customs are still causing concern for our sector. However, the future outlook is positive, with two-thirds of members expecting business conditions to improve as we head into the summer.”

Confidence rises
Businesses are relatively optimistic about UK economic conditions in 2021, with three quarters expecting business output to increase and two-thirds expecting business confidence to increase. 

Nonetheless, businesses have highlighted concerns regarding the unemployment rate and consumer price inflation, with more than half expecting them to rise in the upcoming months, says the FDF. 

In the federation’s Q1 2021 Business Confidence report, which summarizes member sentiment, the latest official industry figures, and key opportunities and challenges for the sector, planned investment in new product launches and international trade opportunities are on the horizon. 

Key barriers in 2021 include border and customs issues, cost of ingredients and cash flow issues.

“A disappointing year”
Last month, an FDF report revealed that UK F&B exports to the EU were down more than a fifth in February, linked to a fall in sales of 40.9 percent compared to the same period of the previous year.

In the same month, export volumes of the UK’s top-tier food and drink exports – whiskey, chocolate and cheese – saw a decline amid the COVID-19 pandemic. However, industry watchers reported buoyancy for pork and breakfast cereal sales during the first year of the global crisis.

As a result, FDF and Santander UK called for greater long-term support for exporters amid a “disappointing year.”