A COMPELLING CASE FOR TRANSFORMATION From great to groundbreaking
No country provides a perfect benchmark, with differences in consumer preferences, size of economies and the scale of imports and exports. However, they do provide an indication of the value that can be generated by more productive food and drink manufacturing sectors. Looking at macroeconomic differences, the Netherlands is the most productive, but highest salaries are in Switzerland. The US is the largest food importer and exporter by value. However, both the Netherlands and Belgium also have significant export levels relative to their economic size, which can be attributed to their strategic location, efficient logistics networks, and specialisation in the manufacturing of particular products. Consumer behaviour also differs significantly. North American households appear to be more price sensitive, while the Swiss and the Dutch have a strong preference for own-label products. If the UK was to move to achieve the average North America productivity, that would represent a 22% improvement or a 2% annual improvement above inflation over 10 years, generating a further £7 billion of value for the economy.
While if it was to reach the average productivity of the world leading Dutch and Belgian food and drink manufacturing sectors, that would bring a 44% improvement or 4% annual improvement above inflation over 10 years, representing £14 billion of extra value for the economy. Such growth would strengthen the UK as a world leader in food and drink manufacturing, enhance food security, provide the potential to increase exports and support the UK economy. 2. Comparison with other advanced manufacturing in the UK In interviews with manufacturers, innovation hubs and academics, transport and engineering manufacturing was often brought up as a key comparator. Transport and engineering is a wide category, consisting of multiple manufacturing sectors from automotive, other transport, computer, machinery and electrical equipment. Although not exactly like-for-like, there are similarities in workforce demands, supply chain dependencies, regulatory pressures and technological advancement.
By going from great to groundbreaking, the food and drink manufacturing sector has the potential to unlock £7-14bn 1 of extra value for the UK economy Based on an extensive literature review and study of economic and industrial indicators, the research programme set out to quantify the potential of the UK’s food and drink manufacturing industry by comparing its performance internationally and domestically with other advanced manufacturing sectors. These are the findings. 1. International comparisons: G7 economies and beyond It’s noteworthy that the UK is more productive than its G7 European counterparts while having fewer employees.
Our research found that the UK’s food and drink manufacturing industry performs relatively well amongst its G7 peers. Only North America and Italy have a more productive industry, while France and Germany have lower GVA per employee (Chart: Labour productivity in the food and drink manufacturing in the G7 economies). Our labour productivity measure is gross value added (GVA) per employee 2 , adjusting GVA figures to remove consumer goods price level differences between countries. Labour productivity in the food and drink manufacturing in the G7 economies, 2022 3
Expanding the same view to other European countries, the food and drink sectors in the Netherlands, Belgium and Norway are performing better than the UK. The UK sits above both Spain and Poland which have similarly sized workforces, but a smaller output per employee (Chart: Labour productivity in the food and drink manufacturing in European economies).
Labour productivity in the food and drink manufacturing in European economies, 2022 4
Comparison of food and drink manufacturing industry characteristics across different nations 5
UK relative to G7 countries
£120,000 UK relative to European economies
£120,000
2.5m
0.6m
% of consumers who would switch to less expensive foods to save money
Private label value share in consumer goods (%)
Adjusted GVA per employee
Average annual salary per employee
Value of food imports (m)
Value of food exports (m)
Country
£100,000
£100,000
0.5m
2.0m
£80,000
£80,000
0.4m
1.5m
£102,720 £91,630 £89,201 £75,248 £69,731 £68,815 £67,308 £66,674 £62,704 £62,117 £58,096 £57,389 £53,376
£39,914 £35,916 £40,430 £50,057 £43,679 £22,261 £31,486 £51,004 £44,678 £28,490 £21,742 £12,376 £26,614
£80,943 £42,601 £81,558 £39,817 £8,334 £50,471 £60,578 £12,189 £13,699 £60,276 £43,915 £27,392 £94,842
£106,795 £47,487 £172,147 £60,541 £12,297 £51,933 £27,468 £8,447 £17,993 £69,256 £53,944 £41,392 £77,208
45.2% 39.8% 18.9% 18.5% 23.0% 30.2% 44.0% 52.3% 34.0% 34.4% 45.6% 27.2% 41.4%
43% 39% 66% 66% 27% 43% 34% 37% 37% 36% 38% 46%
Netherlands
£60,000
£60,000
0.3m
Belgium
1.0m
£40,000
£40,000
0.2m
US
0.5m
Canada Norway
£20,000
£20,000
0.1m
£0
£0
0.0m
0.0m
Italy
UK
Switzerland
Denmark
Adjusted GVA per employee Number of employees
Adjusted GVA per employee Number of employees
France
Spain
1. Opportunity calculated by multiplying the number of UK employees in the food and drink manufacturing industry by the median GVA per employee of Northern American countries (US and Canada), and the median GVA per employee of smaller, more successful European economies (Netherlands, Belgium, Norway). 2. Gross Value Added (GVA) measures the value generated in the production of goods and services. It is one measure of overall economic performance. GVA is displayed per employee for comparison across countries. 3. Data sourced from: UK GDP (low-level aggregates), Office for National Statistics (2024), JOBS03: Employee jobs by industry, Office for National Statistics (2024), JOBS04: Self-employment jobs by industry, Office for National Statistics (2024), Enterprises by detailed NACE Rev.2 activity and special aggregates, Eurostat (2022), Value Added by Industry, U.S. Bureau of Economic Analysis (2024) Labour Force Statistics from the Current Population Survey, U.S. Bureau of Labour Statistics (2024), Labour productivity and related measures by business sector industry and by non- commercial activity consistent with the industry accounts, Statistics Canada (2023), Canada GDP deflator, Trading Economics (2022), Price Level Indices, OECD (2022) 4. Data sourced from: UK GDP (low-level aggregates), Office for National Statistics (2024), JOBS03: Employee jobs by industry, Office for National Statistics (2024), JOBS04: Self-employment jobs by industry, Office for National Statistics (2024), Enterprises by detailed NACE Rev.2 activity and special aggregates, Eurostat (2022), Price Level Indices, OECD (2022)
Poland
Germany
5. Data sourced from: UK GDP (low-level aggregates), Office for National Statistics (2024), JOBS03: Employee jobs by industry, Office for National Statistics (2024), JOBS04: Self-employment jobs by industry, Office for National Statistics (2024), Enterprises by detailed NACE Rev.2 activity and special aggregates, Eurostat (2022), Value Added by Industry, U.S. Bureau of Economic Analysis (2024), Labour Force Statistics from the Current Population Survey, U.S. Bureau of Labour Statistics (2024), Labour productivity and related measures by business sector industry and by non- commercial activity consistent with the industry accounts, Statistics Canada (2023), Canada GDP deflator, Trading Economics (2022), Price Level Indices, OECD (2022), Annual Survey of Hours and Earnings, ONS (2022), Occupational Employment and Wage Statistics, Bureau of Labour Statistics (2022), World Development Indicators, World Bank (2022), Private Label Value Share of FMCG in Europe, Statista (2024), Private Label Share of Consumer Goods in the US, Statista (2024), Private Label Market in Canada, Statista (2022), The State of Grocery Retail, Europe, McKinsey and Company (2023), The State of Grocery Retail, North America, McKinsey and Company (2023)
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