As one of the largest purchasing groups in the UK, we’ve been working with our suppliers and members to minimise the impact of Britain leaving the EU either with, or without a deal.
Challenge #1: Limited availability of migrant workers for fruit picking
One of the biggest challenges facing UK food producers - in particularly growers - is going to be around labour force come harvest time. This sector has a huge dependence on migrant workers with around 30,000 workers employed picking fruit and vegetables during the harvest season.
The potential impact on the availability of migrant workers is by far the most significant challenge facing our UK growers this year. Last year saw a decline of migrant workers travelling to the UK to pick fruit and vegetables, because of the uncertainty over Brexit, so we are expecting the numbers prepared to travel this summer will be even less. This is likely to leave a large gap in the labour required - and no real solution to fill it.
With only one percent of fruit pickers coming from the UK workforce, it’s going to take a seismic shift in labour force and attitudes to fruit picking to rectify the current imbalance. The bottom line is that a shortage in labour may well lead to crops not being picked in time and therefore wasted as well as a potential under-supply for the UK and export market.
Challenge #2: Increase in price of commodities, staffing costs and transportation (to name but a few)
Aside from Brexit, the UK’s food and drink industry is also facing challenges from issues such as the increase in price of commodities and the pressures around business, staffing and transportation costs, all of which have increased recently.
With the current tensions in the Middle East, the price of oil is set to continue to rise – which will inevitably have an impact on businesses. This coupled with an increase in minimum wage, business rates, pension contributions and the basic cost of products, is already having an impact, with many businesses looking to diversify.
The pressures on operating food and drink businesses at the moment are immense, the competition is strong and the margins are often tight, leaving little room for movement. The recent increase in minimum wage and higher pension contributions have made making a profit very difficult in already challenging conditions.
Some of those businesses hoping for a good December to bolster their profits, have been left bitterly disappointed and have had to close their doors. For others, December’s trading was positive and they move into the new year with a little more optimism.
Last year the UK saw the number of pubs and bars increase for the first time in more than a decade, which was very welcomed by the industry and customers alike. This growth is predominately because they have either diversified into or upgraded their food offering – thus impacting restaurants, who are suffering as a direct result.
CASE STUDY – THE LIBERATION GROUP
One of our long-standing customers who is continually developing its food offering is the Liberation Group, which has a wide-ranging portfolio of pubs, restaurant, hotels and inns and also owns Butcombe and its pub estate. Group Executive Chef, Alice Bowyer, working closely with Regency has enhanced the quality of food throughout the Liberation Group estate.
Alice explains: “We have been continuously improving our food offer over the last three years, evolving an eclectic managed pub estate, with major investment and rejuvenated food offers. Keeping to a clear company food brief based on provenance, quality, seasonality and sustainability and to exceed expectation. By working with Regency to identify key products, it gave us the platform and structure to launch and maintain a number of different unique menus; destination dining pubs, city centre pubs and outside food offers with street food, through to hotels and inns.
“We react and diversify our menus based on the locality of the business and what our local community are looking for. We try and deliver the pub classics as best as they can be, but we are not afraid to try new things and be bold, the pub industry is great at that. We have launched a few companywide initiatives such as our vegan 'Allotment' menu which focuses on home-grown vegetables, fruits and salads in season. As well as great customer feedback, we felt it gave some creativity to our chefs and gave me an opportunity to train our teams even further on our company brief.
“We have seen above industry food sales growth year on year as well as profit margins increase with better controls and we continue to seek ways to improve and please our customers through menu innovation."
Challenge #3: Significant shortfall in meat protein due to swine fever
With the dramatic spread of African swine fever across Asia, there’s a growing demand for proteins across the continent. More than half of China’s pig herd is expected to be wiped out as part of this latest epidemic, creating a significant shortfall in meat protein. In 2018 the Chinese government lifted its ban on British beef - one that had been in place for two decades, since the BSE outbreak in the 1990s - which is now beginning to open doors for British farmers.
China’s interest in importing British beef to help plug the shortfall of meat protein is good news for our farmers and producers as it will help to drive up the price. As the world’s second largest importer of beef, the Chinese deal for the British beef industry is expected to be worth around £250m during the first five years, once the terms are agreed.
While the value of meat exports is likely to provide a welcome relief for farmers and growers, this could, however, mean that purchasers of these products in the UK will have to pay more in the future.
Opportunity #1: Popularity of vegan-inspired lifestyle
Meanwhile, one of the key opportunities for food purchasers in 2020 will be the growing popularity of a vegan-inspired lifestyle.
Despite only two percent of us choosing to follow a vegan diet, almost a quarter of food products launched last year contained no meat or dairy products and this is a marked change for the British food industry. The growth in vegan products is a direct response to the number of people who are simply choosing to eat meat less frequently and are substituting with plant-based alternatives.
For pubs, restaurants and other food operators offering a vegan menu this means there is more margin to be achieved, as the protein element of any dish tends to offer the highest cost on the plate.
Our food service operators and restaurant customers are reporting overwhelmingly positive sales of vegan dishes, and the general trend is showing increased margins. Certainly a welcome boost for the sector.
CASE STUDY – THE OLD THATCHED COTTAGE
One restaurant benefitting from offering more vegan options this year is family-run restaurant in Weston Super Mare, The Old Thatched Cottage. General Manager, Julia Grobicka, comments: “We have seen a significant rise in demand for vegan menu items over the past 12 months, so opting to run a larger vegan menu for Veganuary was an easy decision.
“Whilst there are only a small number of true vegans in the area, we have seen regular customers who would often eat steak try some of the vegan items on the menu. We also find that vegans tend to be the influencers when groups decide where they are going to eat, so offering quality vegan meals has really paid off for us.”
Opportunity #2: Investment in technology
Regency itself has experienced overall business growth in 2019 of over 20%. One of the key drivers for its growth has been the need for our customers to save more money and understand the value of accessing more expertise into their business.
One of the biggest reasons for the growth is our investment in technology and in particular our purpose-built systems that support our client’s operational needs. An example of this is an automated invoice check, which means that customers no longer have to check their own invoices to ensure the pricing is correct, as the system will do this for them.
Established in 1988 and headquartered in Somerset, Regency Purchasing Group provides a comprehensive procurement solution for the leisure and hospitality industry. Regency offers increased buying power with low prices, quality produce and exceptional service, and has agreements with suppliers in all major sectors, including food, drinks, sundries, waste management and many more.