Brexit is likely – to a lesser or greater extent depending on the deal we get – to impact on the competitiveness of our exports, so the domestic customer has never been more important.
It is said “every crisis presents opportunities” and this will be true for Scottish farmers and growers as the UK economy adjusts to the twin disruptive events of Covid-19 and Brexit. Understanding what is happening in the marketplace is going to be key to future business survival, so here are some of the domestic consumer trends to be aware of.
Price will remain the biggest concern for most UK shoppers. With increased unemployment and household budgets squeezed for the next few years, food prices will be a major factor as consumers adjust to the economic consequences of Brexit and the pandemic.
The whole supply chain will be affected by this and will need to become more efficient by reducing costs, increasing productivity, ensuring that they produce what the market demands and keeping a strong focus on the cost of production.
There has been a steady increase in consumer interest in the source or origin of their food over the last number of years: where it comes from; how it is produced; whether it is what it claims to be (think horsemeat scandal). Retailers and manufacturers are asking their supply chains to provide evidence of provenance all the way back to the farm where possible. Being able to provide this will give businesses a point of difference and competitive edge in the marketplace.
Another trend that has accelerated during the pandemic has been the sale of local products. This was partly driven by the rapid response by farm shops and local retailers and producers during the first lockdown. Smaller, flexible businesses have been able to change their offering within a matter of days, working with local suppliers to provide click and collect and delivery services in response to the Covid restrictions. Several farmers also established direct sales to consumers. Scotland Food and Drink have recently published a Brexit/Covid Recovery Plan with 50 different actions to support Scottish products, and the Scottish Government has just announced initial funding of £5m to encourage the sale of more local food in retailers post Brexit and pandemic. This will provide opportunities for more farmers to provide local produce to retailers in their area.
With the Scottish Government promoting Scotland as the Land of Food and Drink the Scottish Brand is an important factor in both local and some export markets. Practicing and demonstrating high production, environmental and husbandry standards is a means of differentiating Scottish produce from the competition and important in growing export markets over the coming years, both at home and abroad.
Health & Nutrition
Many consumers are increasingly looking to retailers and manufacturers to provide products that provide the necessary nutrients and keep them healthy. The ‘Health’ category has increased significantly during the pandemic and this trend will continue presenting opportunities for Scottish farmers to produce specialist crops or animals for specific healthy products and niche markets.
Convenience is not just about ready meals, it also applies to the way people purchase their food and drink. Online sales and home deliveries have soared during the pandemic to the extent where some retailers are having to restrict the number of new customers as their depots are working at capacity.
Reports are that some retailers will be accelerating plans to decentralise their online facilities by establishing micro fulfilment units alongside existing local stores in order to speed up and expand online deliveries. This may present opportunities for some farmers food businesses to deliver products directly to their local fulfilment centre.
Supply chain disruption
Because of changing consumer behaviour, it is widely predicted that retailers and manufacturers will seek to shorten their supply chains to help reduce costs. And increase efficiency over the next few years. They are likely to look for greater engagement from the whole supply chain and there will be opportunities for farmers to have a greater influence and provide greater value to supply chains.
The carbon footprint and environmental sustainability of food products is an increasingly significant factor in consumers’ buying decisions. This is a whole chain issue and so may provide farmers with opportunities to provide carbon offsetting for other businesses within the supply chain that do not have these assets, creating a new added value opportunity for farmers.
Lastly, following some empty shelves at the beginning of the pandemic and the potential for imported food to be more expensive post Brexit, food security has become more important to retailers and manufacturers. This provides the prospect of increasing domestic sales of certain existing farm outputs but also the potential to look at new crops and production methods to help replace imported products.
These are just some of the trends that will influence the Scottish food and drink market post Brexit and Covid-19, how does this line up with what you currently produce, and how you produce it?
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