COVID recovery, labour shortages & supply chain issues: the resilience of Scotland’s food & drink sector

In the last two years we have seen some of the most challenging times in business. In particular, the Scottish food and drink industry has been hit hard by varying restrictions imposed across the country. Despite these challenges, the industry worth £14 billion each year to Scotland’s economy has demonstrated great resilience developing products and connecting with customers in new ways at a time when traditional means were no longer the most effective. 

Combined with changing habits we have also seen an evolution in consumer tastes in this time, something which has undoubtedly had a positive impact on both the domestic and international markets where demand has increased for innovative and sustainable products from Scotland.  

As the country also continues on the path to the net zero targets set for 2045, businesses in the sector have demonstrated their own commitment to this in revising production to low-carbon alternatives through advanced manufacturing and resource efficiency.  

So why is the food, drink & hospitality sector still enduring such a challenging time in securing staff for vital roles? In the last quarter unemployment in Scotland dropped to a record low of just 3.2% in the latest figures released by the Office for National Statistics.

Inflation at 9% has undoubtedly been felt across UK households in the rising cost of living we are faced with today, particularly when you consider that pay rose by only 5.6% in March 2022.  

This rising cost of living may well be felt at home but on the contrary, hoteliers are struggling to meet demand for products and services as the country bounces back from years of yo-yoing travel and eating out restrictions. The impact of the pandemic was clear in restaurants closing, some permanently, but across the UK people are once again seeking out the enjoyment that comes from a meal prepared by skilled chefs delivered to your table by charismatic front of house staff.  

In January 2020 the UK withdrew from the EU, closely followed by restrictions imposed in March 2020 in response to the pandemic, a perfect storm for the labour market. It also makes it almost impossible to separate the effects of both on the sector. 

Suppliers are also feeling this strain on their resources. A Scottish-based food processor who exports across the UK and EU has seen a sharp rise in demand for their products and is in what should be a fantastic position having both the funds and planning permission to expand their production facility, however the ability to staff vital production roles is causing unnecessary delay to the development of their business.  

With the labour shortages not showing any signs of slowing and in some cases having an impact on business growth, now might be the time for businesses in the Scottish food and drink industry to begin to think more creatively about their employee benefits. The resilience businesses have shown in developing products and connecting with customers should be seen as a transferable skill used now to attract and retain talented people who share their passion for the Scottish food and drink industry.

If you would like any further information on the food and drink industry in Scotland, or have any questions at all, please don’t hesitate to contact Derek Mair, Head of Food, Drink & Hospitality, or any of our dedicated Food & Drink team.