16 th July 2014 UK food & drink manufacturing What is keeping - - PowerPoint PPT Presentation

Food and Drink Federation Professional Affiliate Seminar

16th July 2014

UK food & drink manufacturing

What is keeping the industry awake at night? Steve Barnes - Commercial Director

Agenda

• The things keeping the industry awake at night:

 Volumes  The rise of the discounter  Disruptive new players and new models  Structural challenges for large customers  Promotional junkies?

Where has the volume gone?

• The UK has a growing population
• And we are used to volumes always rising…..
• But change is afoot and hitting supermarket sales

Trending in: Trending out: Shopping lists Impulse buying Buying what we will eat Buying what we might eat No food waste Throwing food away Lower calorific intakes Eating what we want Deflation Inflation Eating out Eating in

The rise of the discounter

• On current trends:

 Aldi will be the UK’s fifth largest food retailer by 2015  Aldi and Lidl combined will be as big as Morrisons  The Big Four under relentless pressure  Aldi growth = combined online growth of Tesco, JS, Asda, Morrisons, Waitrose & Ocado  1992 the previous discounter peak – “we have been here before”  We can glance one of two ways……

Disruptive new players

With the threat of more to come……

&

Structural challenges for large customers

Changing channel mix

• Online and technological change
• Convenience
• The rise of premium
• Some suppliers going it alone…..

Promotional junkies?

• 34% of all FMCG products sold on promotion
• 48% of all branded FMCG products sold on promotion
• The “biggest concern” in trading relationships
• The retailer with the highest % promotional sales is…….
• Promotional innovation will be important

To conclude

• Unprecedented times for the industry
• Pressure comes in many different forms
• Identifying the end game
• Innovating
• Returning to growth

Taking the political temperature

Terry Jones Director of Communications

Countdown to the General Election

294 days to the election

Reshuffle!

Reshuffle!

Reshuffle!

Its getting hot on health

• Warming up
• 2011 PHRD
• 2012 AoMRC
• 2013 PHE
• 2014 AoS
• What’s next?

Its getting hot on health

To what extent would you agree or disagree about each of the following statements about the food and drink industry?

26% 31% 21% 9% Stricter regulation of manufacturers is essential to reducing

• besity

Agree strongly Agree a little Disagree a little Disagree strongly

Ingredients for Success

• Introduction
• Why food and drink

manufacturing matters

• What food and drink

manufacturing delivers

• Our Agenda – key asks for the

next Government

Our Agenda 2015-2020

• An industrial partnership

between industry and Government

• Support frameworks for

voluntary action by industry

• Building resilient supply

chains for safe, affordable and nutritious food

Europe

• European elections
• EP powers post Lisbon
• New Commission in

November

• Juncker wants a fair

answer to the British question

• Watch outs – influence,

sustainability

FDF’s Four Pillars

Health and Wellbeing Overview

Industry initiatives to help consumers follow a healthy and balanced diet

Barbara Gallani Director - Regulatory, Science and Health Food and Drink Federation

Largest UK Manufacturing sector 400,000+ Employees £12bn – 77% to Europe

Food & Drink

Annual £1bn R&D spend 8,500 New Products 2/3rds UK Farm Production 6,000+ Businesses £76.2 bn Turnover

The UK food and drink industry

Public Health Responsibility Deal

• Better diets, increased physical

activity and healthier lifestyles;

• Encourage people to drink sensibly

and responsibly;

• Maintaining a healthier lifestyle in

the workforce.

Calorie reduction pledge

“We will support and enable our customers to eat and drink fewer calories through actions such as product/ menu reformulation, reviewing portion sizes, education and information, and actions to shift the marketing mix towards lower calorie options. We will monitor and report on our actions on an annual basis."

The reformulation challenge

Industry considerations when reformulating:

• What do our customers want?
• What’s the public health context:
• What is government policy (UK/EU/Global)?
• What’s the scientific evidence?
• How does that fit with my portfolio of products?
• What are the practical and technical considerations?

Calorie reduction pledge

Calorie reduction pledge

• FDF members

commit to a 250kcal cap on individually wrapped, single-serve confectionery item.

• Average calorie

reduction 10-15%

Some final thoughts

• The UK food and drink manufacturing sector has shown

real leadership in reformulation, innovation and labelling

• Voluntary initiatives have been proven to work
• Our members will continue to work with others to make it

easier for people to move towards recommended diet and physical activity levels

• Our members see reformulation as part of the solution

but it will not solve obesity on its own

• Reformulation to lower sugars forms part of this work,

where it also leads to a reduction in calories

• It is important the consumer is provided with clear and

consistent messages

Barbara Gallani

Director – Regulatory, Science and Health barbara.gallani@fdf.org.uk www.fdf.org.uk

Sustainability Overview

Peter Andrews Sustainability Executive

Sustainability overview

• Sustainability is fundamental to the food industry
• Our members face a multitude of complex sustainability challenges,

regulations, and campaigns

• FDF has delivered significant progress in reducing environmental

impacts

• But there are challenges ahead where collaboration is needed

Sustainability is fundamental to the food industry

Key Business Challenges:

• Dwindling raw materials and rising

raw material costs

• Environmental and geo-political

disruptions to supply chains

• Changing legislation and regulatory

regimes in response Key Business Opportunities:

• Secure supply
• Competitive advantage
• Improve trust around products/brands

Global Risk 1 Fiscal crises in key economies 2 Structurally high unemployment/underemployment 3 Water crises 4 Severe income disparity 5 Failure of climate change mitigation and adaptation 6 Greater incidence of extreme weather events (e.g. floods, storms, fires) 7 Global governance failure 8 Food crises 9 Failure of a major financial mechanism/institution 10 Profound political and social instability

World Economic Forum: Global Risks 2014 Ten Global Risks of Highest Concern

Multitude of complex sustainability challenges, regulations and campaigns

FDF’s Sustainability Work CLIMATE CHANGE & ENERGY ENV REGULATION SUSTAINABLE SOURCING WATER & NATURAL CAPITAL PACKAGING & WASTE CONSUMER COMMS Climate Change Agreements Energy costs & security Mandatory energy audits FDM BREF review Medium Combustion Plant Dir. Env Permitting Regulations Supplier specifications ISO 14001 review Commodity tool Water market reform Water abstraction reform Natural capital awareness Recycling & recovery targets Deposits & PRN system Surplus food redistribution Fresher for Longer campaign EU PEF & OEF methodology Product Sustainability Forum Low carbon roadmap Climate change adaptation

Renewable Heat Incentive Green Deal SMEs GHG Corporate Reporting Green Investment Bank Energy Efficiency Strategy DECC/BIS 2050 Roadmap UK Food and Drink Manufacturer European Union 20% emission by 2020 20% Renewables 20% Energy Efficiency 2030 Framework 2050 Roadmap Climate Change Act 2008: Carbon Budgets

34% 2018 -2022 4th Budget 50% 2025 80% 2050

F Gas Regs Ozone Regs Discussion ‘Energy Tax Directive’ EU Emissions Trading Scheme

Phase 3 2013 - 2020

Energy Efficiency Directive Sustainable Consumption Production IED - Energy Efficiency Climate Change Agreements

2013 -2023

Climate Change Levy CRC

Phase 2 2014 – 2019 Environmental Permitting Regulation Energy Efficiency

Energy Saving Opportunity Scheme Carbon Price Support

Start April 2013

ROCs FiT CfD Feed in Tariffs EMR Energy Bill EII Support Electricity Demand Reduction

How do we help members with Sustainability

Targets:

• Cut CO2 emissions
• Reduce waste
• Optimise packaging
• Cut water use
• Reduce transport impact

Guidance:

• Carbon Management
• Sustainable Sourcing
• Water Management

Policy & Legislation Advocacy

Challenges ahead

• Showcasing the industry’s good practice
• Raising awareness of key issues, particularly amongst SMEs
• e.g. Natural Capital
• Accessing funding/support/research to help businesses implement

innovative technologies and processes to reduce environmental impacts

• Moving to a more sustainable food system

Peter Andrews, Sustainability Executive, peter.andrews@fdf.org.uk

Food Safety and Science Overview

Kerina Cheesman Food Safety and Groups Manager

FDF’s Food Safety and Science Objectives

• For the food and drink manufacturing industry to be able to operate

in a legislative and policy framework which is proportionate and evidence-based

• For stakeholders, including government and consumers, to trust the

UK food and drink industry and have confidence in the safety and authenticity of its products

Representing, promoting and safeguarding members’ interests

• Constructively influencing the regulatory and policy environment to

ensure:

• proportionate and evidence-based legislation and voluntary initiatives
• coupled with effective and pragmatic enforcement
• Working in partnership with Government to improve confidence in the

safety and authenticity of food

• Supporting an independent FSA and the proper resourcing of its work on

food safety and the enforcement of food law

• Networking with stakeholders, including FoodDrinkEurope
• Monitoring and evaluating scientific and regulatory developments and

keeping members updated

Incident Prevention and Management

Aims:

• Assist members and regulators in the prevention of incidents, including

horizon scanning for emerging issues

• Promote the proportionate handling of food safety and food authenticity

incidents

• Coordinate an effective industry response to any incidents

How?

• Working with members
• Liaising with other stakeholders
• Engaging with FSA and Defra on emerging issues and food authenticity

Government Review of the Integrity and Assurance of Food Supply Networks

A wide-ranging independent review commissioned by Government FDF has responded by:

• Providing evidence and input to the Review
• Publishing our Food Authenticity Guide
• Engaging with FSA, Defra and stakeholders to build on existing

intelligence sharing activity to help to prevent future incidents

Food Information to Consumers

EU legislation governing the labelling of products and the provision of information to consumers has recently been overhauled FDF has been active in seeking:

• Proportionality and clarity in the legislation
• Clear guidance on points of interpretation
• Pragmatic enforcement, including transitional arrangements
• Consistency across Europe

Breadth of FDF Food Safety and Science Activity

• Allergens: Consumer communication
• Animal Feed: FDF ‘Food to Feed’ guidance
• Food Contact Materials: Best practice guidance
• Food Hygiene: Working to minimise public health incidents
• Food Ingredients: Input to EU additives assessments
• Residues and Contaminants: Mitigation tools
• New Technologies: Genetic Modification, Novel Foods, Nanotechnology

FDF’s Food Safety and Science: Summary

Consistent theme of our activity is to facilitate and foster:

• A proportionate and evidence-based legislative and policy framework
• Trust in the UK food and drink industry and confidence in the safety and

authenticity of its products

Competitiveness Overview

Caroline Keohane Competitiveness Policy Manager

Vision: Industry to grow by 20% by 2020

Exports and Trade

• Grow food and drink

exports year-on-year

• Increase the number of

companies exporting for the first time

• Access to raw materials at

competitive prices

Skills and Employment

• Industry can attract and

develop talent

• Continue to promote our

industry as career of first choice

• A flexible and safe workforce

R&D and Innovation

• The UK is seen as an

attractive place for food & drink companies to invest in innovation

• Public R&D funding reflects

the needs of food & drink manufacturing

Supply Chain

• A fair and balanced food

supply chain particularly for SMEs who have less bargaining power.

Competitiveness Steering Group

Role: Oversees policy areas and actions directly linked to FDF's vision for 20% sustainable growth by 2020 Chair: Fiona Kendrick (Chief Executive – Nestlé UK) Members: Apetito Ltd Mondelēz International Cargill plc Nestle UK Ltd Devro Scotland Ltd PepsiCo UK & Ireland General Mills UK Ltd Premier Foods Plc KP Snacks Tate & Lyle Sugars Mars Chocolate UK Thorntons Plc

Exports and Trade

• Challenges
• Only 1 in 10 agri-food companies exporting
• Difficulty in identifying opportunities abroad
• Perception of complexity involved in exporting
• Access to sufficient supply of ingredients at competitive prices
• Solutions
• Joint gov / industry UK Food and Drink International Action Plan
• Open to Export
• UKTI / FDF networking events
• Research to benchmark UK export support versus competitors
• EU Free Trade Agreements

Skills and Employment

• Challenges
• Ageing workforce
• Higher level, technical skills gaps
• Perception of careers in our industry
• Solutions
• Graduate Excellence: MEng Food Engineering degree
• Apprenticeship Trailblazers
• Women In STEM Pledge
• See Inside Manufacturing
• Taste Success: A Future in Food careers campaign
• Flexible working regulations - zero hour contracts; shared parental leave
• Occupational health & safety pledge

Research, Development & Innovation

• Challenges
• Tackling environmental and health challenges using innovation
• Bridging the gap between basic and applied research
• Complex regulatory and funding landscape
• Solutions
• Top 10 pre-competitive (collaborative) research priorities – product &

process innovation

• Centre of Excellence for Food Engineering

Supply Chain

• Challenges
• Transfer of excessive risk and unexpected costs by grocery retailers to

suppliers

• Unfair supply chain practices
• Solutions
• UK Groceries Code Adjudicator and Groceries Supply Code of Practice
• EU (voluntary) Supply Chain initiative

Introducing FDF Commercial Services

Nicki Hunt

Marketing & Commercial Services Manager

NEW ACTIVITIES FOR FDF COMMERCIAL

• Building contacts
• Brand visibility
• Suite of commercial activity

MARKETING REACH Now extends to:

• Database of 11,000 quality contacts
• High and increasing brand recognition
• Trusted brand

WHAT OUR MEMBERS SAY

“I receive hundreds of marketing emails each

• week. I delete almost of all them but when I see

something from FDF, I’m very likely to open it as it’s usually of interest.”

FDF HEADLINE EVENTS

• 2014 FDF AWARDS
• Evening dinner and awards ceremony
• Targeting 450 guests
• 8 main sponsors
• Reception sponsorship still available

FDF HEADLINE EVENTS

• FDF PRESIDENT’S DINNER
• Largest event in 2014 at The Dorchester
• Targeting 500 for 30 April 2015,

Marriott Grosvenor Square

• Invitees including all Excom members

and industry stakeholders

FORTHCOMING EVENTS

• Food & Drink Federation Awards – 18 September 2014, The Brewery
• Sustainability convention – 21 October 2014, British Museum
• Crisis Management – November 2014
• President’s Dinner 30 April 2015, Grosvenor Square Marriott
• Start up food and drink event – early 2015

AND

• Introductory Training Courses – October 2014 and dates throughout

2015

COMMERCIAL OFFERS

• Speaker slots
• Exhibitor space
• Breakfast briefings
• Literature in delegate packs
• Marketing material

WHY FDF EVENTS?

• Ability to reach top FDM member companies at the

event and through marketing

• Plus growing start-ups
• Align your brand with high quality events delivering

industry expertise

• Excellent opportunities to network and showcase your

brand

WHAT OUR DELEGATES SAY

• ‘Brilliant and inspiring day with expert talks. Well done.’

Understanding the Food Information Regulation, Sept 2013

• ‘Really good event which showcased the good practices very well’

FDF Awards, November 2013

• ‘Well organised, very good panel, very practical’

Crisis Management event, March 2014

• ‘A great night and I would not hesitate supporting any future FDF

events’ FDF President’s Dinner , April 2014

Food and Drink Federation Professional Affiliate Seminar

16th July 2014