- The UK Food Sector: Current trends and future investment
The UK Food Sector: Current trends and future investment
The UK Food Sector: Current trends and future investment18th December 2020 - Published by Kuits corporate team
Back in December 2019, immediate reports suggested that the spread of the COVID-19 virus originated from a wet-market in China which sold predominately meat-based produce. This prompted commentators to note the consequences of improper food hygiene and shine a light on meat consumption.
It is worth noting that this is not a new trend. It is plain to see that the production of sustainable produce and plant based alternatives has gained significant consumer popularity in the last decade. For instance, a record 400,000 people signed up to the UK movement “Veganuary” this year, compared with 250,000 participants in 2019 and 170,000 in 2018. Add to this the Prime Minister’s comments in July this year, where he described the UK’s obesity crisis as “the single most important modifiable risk factor” in tackling COVID-19, and it shows that there is now, more than ever, an increased UK consumer focus on healthy eating.
Furthermore, natural disasters such as the forest fires in Australia, California and Brazil have provided tangible evidence of global warming in action, with deforestation used in large-scale farming being widely discussed as a contributing factor. Therefore, even before the outbreak of COVID-19, there was increasing pressure on businesses to promote and invest in sustainable alternatives to traditional methods.
In spring of this year, the sharp, sudden shock of national lockdown and the closure of domestic borders worldwide exposed weaknesses in both the national and global food system. Food manufacturing was halted and supply lines were cut off, leading to the onrush of anxious shoppers to our supermarkets, increasing reliance on online retail and likely causing permanent changes to consumer preferences and shopping habits. The immediate commercial impact was the dramatic fall in food sector deals and acquisitions.
However, as the food industry steers its way into clearer waters, investors are running with those trends outlined above and focusing their interests on the simultaneous goals of increasing food security and tackling climate change.
What have the changes been?
We are seeing that start-ups are encouraged to make key innovative contributions to more efficient, healthier and sustainable forms of food production and retail.
We are equally noticing that established companies are increasingly looking for minority or majority investments, joint venture opportunities, or acquisitions to broaden their product base, supply chain or logistical capabilities. This will allow existing key players to evolve alongside the ongoing trends of sustainability, wellness and healthy eating, while simultaneously strengthening their position in light of an array of challenges faced during the pandemic. This adaptability will in turn prepare them for the “post-COVID” world, allowing them to meet the requirements of new consumer behaviours and preferences which are predicted to become commonplace.
What does the future hold?
Businesses in the food sector undoubtedly have increased appetite to invest in innovative businesses which can also be advantageous to drive the profitability of the target business and to unlock more value for its owners. There are multiple reasons why a target might want to welcome such investment, often including increased market profile, synergistic benefits and leveraging on existing networks through being part of the investor’s group.
With food prices expected to rise as a result of a likely no-deal Brexit, and the UK subsequently opting out of the agricultural regulatory frameworks of the EU, it is suggested by commentators that the UK food industry is opting to follow those trends outlined above and will attempt to grow the market by hedging its bets on innovation.
It is therefore expected that agriculture and food manufacturing with a strong focus on technology and robotics, and following the above trends, will experience significant growth and investment in the coming years; the need for which becomes increasingly obvious as the population grows and society becomes more urbanised. It is hoped that the Agri-food sector could pave the way for increased employment opportunities as the UK heads into a jobs crisis following the pandemic.
Get in touch with a corporate solicitor in Manchester
We are experienced in advising food businesses at every stage of their journey; and as a full service law firm, we can help with all your legal needs. Our lawyers are experts in their fields, having advised numerous established food sector businesses and start-ups and are always on hand to provide clear and robust advice.
If you are looking for advice in relation to your Food sector company, please contact Helen Mather in the Corporate team on 0161 838 8183 or email firstname.lastname@example.org.