True, food prices are rising, some by double-digits, and British manufacturing output suffered its sixth-consecutive monthly contraction in August, its worst run since 1980. The response of many food producers and brand owners will be to cut overheads by moving more production overseas. They will argue this is the only way they can stay in business and while some accountants may agree, I for one don’t.
Being a British-based producer, as Tangerine Confectionery is, has distinct advantages that will become more and more valuable if the decline in UK-based manufacturing continues. The first and most obvious advantage is the rising cost of importing products to the UK. While it may be cheaper to manufacture overseas, rising fuel prices make it increasingly expensive to move products long distances. True, oil prices have fallen back, but the long-term trend is up and up. Combine this with the weakness of the pound, especially against the euro, and a considerable percentage (if not all) of the ‘savings’ from overseas production are lost.
Secondly, being UK-based gives you much more control over production processes and traceability. The UK does have a well-established and proven regulatory system that consumers can have confidence in. This is not always the case overseas.
However rigorous the systems in place, local practices, customs or regulation mean it can be very challenging to enforce overseas the food production and traceability standards expected by UK consumers. This can and has resulted in expensive and damaging product recalls.
Both of these factors are reason enough to maintain UK production, but there is a third factor that clinches it for me and that’s the environment. Much of the food previously produced in the UK is now imported by road, resulting in millions of additional vehicle miles. Consumers accept that climate change is a real issue. In response they are changing their behaviour, millions more people are now recycling and the UK has one of the fastest-growing recycling rates in Europe.
This growing concern for the environmental impact of food production is set to have a major impact on businesses that have relocated production facilities overseas. Consumers want to do more to reduce the impact of climate change, but realise individual action is limited. They are looking to brand owners and retailers to provide products that are less damaging to the environment such as vehicles with lower emissions, packaging that can be recycled and food that’s not driven halfway across Europe.
Food brands have to respond as both retailers and consumers start choosing low-carbon products. A sensible response is a return to production plants predominantly serving ‘local’ or national markets. This will not only be beneficial in terms of carbon emissions but may also help reduce the incidence of cross-border food safety issues. At Tangerine Confectionery we are trying to ensure we minimise our carbon footprint. We are maintaining production in the UK and sourcing most ingredients locally.
Chris Marshall is MD of Tangerine Confectionery.