Food and drink SMEs abandon automation plans to survive

Nearly two-thirds of SME food and drink businesses invested nothing in automation last year, hamstrung by the need to survive sector headwinds, a major industry survey has revealed.

The survey of more than 100 food businesses – two-thirds of which were based in Scotland and the rest across the UK –  found a “clear distinction in the ability to invest in growth-driving activities” such as automation between smaller and larger businesses.

Overall, across companies of all sizes surveyed, just over a third had made zero investment in automation through 2022, with 45% reporting they had invested “just a little”.

“It would appear that survival in the face of a barrage of headwinds, particularly in respect of supply chains, has been the priority for SMEs whilst larger businesses have been able to leverage their financial strength to consolidate and grow,” said Stewart Pennington, business advisory partner at accountancy firm Johnston Carmichael, which carried out the survey.

“Smaller entities in the food and drink sector appear to have been constrained by the economic conditions,” he added.

More than a third of all businesses questioned in the survey reported they were “significantly” constrained by a “lack of resource” to invest in automation or new product development, with some 40% saying they were somewhat constrained.

Smaller businesses also reported being less likely to have invested in new product development. Close to a third of SMEs had not invested anything in NPD last year, compared to the 16% who hadn’t across businesses of all sizes.