Food and drink firms are planning to slash costs and target overseas customers amid fears over soaring wage bills and Brexit implications, a new report indicates.
More than half of firms in the sector - 53% - plan to cut costs through “efficiencies” to fund growth, the survey by Lloyds Bank Commercial Banking found.
It showed that 48% believe that rising labour costs are the industry’s biggest challenge over the next five years, up from 25% last year.
Despite this, 44% of all companies polled still plan to create jobs over the next five years as they remain ambitious on growth plans.
The report found more than a quarter (28%) of food and drink firms are also planning to export for the first time in the next five years as the weak pound makes British goods more attractive to overseas buyers.
It showed that 69% plan to invest to secure new overseas customers, up from 55% in 2016.
But there are concerns among more than half, or 54%, of firms in the industry over regulatory issues and barriers to exporting .
Leaving the European Union is also seen as the biggest threat to supply security in the next five years, according to 41% of respondents.
Concerns about ingredient security have also increased with 36% saying it is one of the biggest challenges for the industry, up from 26% last year.
However, 78% of firms surveyed said they would be prepared to pay a higher price for British producers to guarantee supply and maintain provenance.
Ian Wright, the director general of the Food and Drink Federation, said the report “underlines both the importance of the UK food and drink manufacturing industry and the challenges it faces as the ever-increasing uncertainty of Brexit looms”.
He added: “This research adds to the growing formal evidence that demonstrates that we must extract assurances from the Government about the key aspects of workforce, supply chain, and regulation for our industry to be able to plan with confidence for the future.”