The food and drink industry is faced with many challenges that hinder companies from being able to scale up and prosper. Discover how Welsh businesses are being supported to take the next step in their development to overcome growth barriers.
Whether it is the complex landscape of regulatory standards in relation to health, safety and the environment, or logistics and distribution, through to financial challenges such as rising operational costs or access to capital, there are a number of barriers that hinder companies from being able to take the next steps to growth.
And this is even before tackling the complexities of the supply chain and how, in recent times, these have been increasingly exposed to global events. If there is one thing we’ve learned in recent years, it is that longer, more globalised supply chains are far more susceptible to disruption due to factors that are beyond our control, such as the war in Ukraine, with the resulting impacts of higher costs or scarcity of availability.
Support and scale-up
These are all factors that have been taken into consideration by Welsh Government, which has put a number of support packages in place to help remove some of the barriers to growth, and support companies to navigate these challenges successfully.
Its support helps identify areas where the industry is either underperforming or there’s scope to scale-up businesses to the next level, while stimulating growth in areas that will benefit everyone.
For instance, it can look to build the capacity of Wales-based aggregators and wholesalers. These can be focal points for producers, helping them to build local supply networks and then reach into a wider market. This, in turn, helps attract investment in building food-grade premises that capitalise on the latest low-carbon tech.
The robust support landscape encompasses various flagship schemes promoting access to finance, training, skills, food innovation and more. This includes the Food & Drink Wales Scale Up and Investor Ready programmes, which are dedicated to helping kick-start rapid growth among promising start-ups, or help more established businesses move to the next level. These have proven to be vital support mechanisms for the industry in recent years, as food and drink companies have navigated the myriad challenges to growth, ranging from the impact of Brexit to rising energy prices and supply chain disruptions.
The Scale Up programme takes a wider view, which looks beyond just issues to do with investment, and focuses on capacity, skills and competencies as an alternative vehicle for driving growth. By engaging with food and drink businesses and understanding their external and internal environment, including the risks they face, the programme aims to help manufacturers overcome challenges and support them on a path to sustainable success. This includes having a full understanding on economic, financial, climate, cyber and commercial risks. But, more importantly, it explores practical solutions that both small and large businesses can implement to help mitigate and manage down those risks.
Help for larger, or more established businesses looking for further growth can include high-level mentoring by industry leaders and professionals. This includes additional opportunities for behind the scenes reference visits to other companies that have successfully overcome some of the barriers to scaling up, and growing their businesses successfully.
The programme recently held a high-profile conference at the National Waterfront Museum in Swansea, which focused on resilience and risk, with speakers and panellists delving into operational, financial, commercial, and supply chain challenges.
As for the Investor Ready programme, this helps prepare businesses for investment as a means to grow their sales – whether that’s introducing them to fund providers, helping to write business plans, preparing financial forecasts and management accounts, recruiting an in-house accountant, or implementing new financial systems.
The delivery partners report that, since 2018, the programme has supported over 240 food and drink businesses, helping raise £22m+ in investment and safeguarding thousands of jobs. Furthermore, businesses that have engaged with the programme have an average survival rate of 97%, compared to 89% for the industry as a whole.
Investing and passing on knowledge
One business that has benefited from Welsh Government support is Pembrokeshire Creamery.
Situated in the heart of the Haverfordwest Food Park, its state-of-the-art dairy processing facility is the only BRC-accredited site for major-multiple retail liquid milk processing in Wales. The creamery is a partner company to Puffin Produce, a well-established name in Welsh food production.
The driving force behind Pembrokeshire Creamery was a clear market opportunity: the unmet demand for Welsh liquid milk to be processed and packaged within Wales. Before this venture, milk was transported to England for processing, before returning to Welsh shelves – a costly and environmentally inefficient process. Pembrokeshire Creamery was determined to meet this gap, providing a sustainable and cost-effective solution for Welsh dairy.
Government backing was pivotal in making Pembrokeshire Creamery a reality. Through support from Welsh Government grants, the project was able to overcome potential financial hurdles, making it a viable proposition that would deliver economic and social benefits to the region. The collaboration also opened doors for employing local talent and creating aspirational jobs for Welsh graduates.
Financing such an ambitious project requires multiple layers of funding. Pembrokeshire Creamery successfully navigated this challenge by combining asset finance, commercial mortgages, overdrafts and equity, alongside government grants, to close the funding gap and minimise risk. This robust financial structure laid the foundation for the creamery’s rapid progress and continued growth.
As part of the Food & Drink Wales Scale Up programme, the company was also keen to give back to the industry through hosting a fact-finding mission by other like-minded companies.
Huw Thomas, CEO of Puffin Produce, says: “The visit was an opportunity for other companies to get an exclusive behind-the-scenes look at the new site. We were able to share insights into how the meticulous planning, financing, and operational strategies have brought the creamery to life. This visit also provided valuable lessons for any food and drink manufacturer looking to scale and expand into new markets.
“We’re lucky in Wales to have such a comprehensive package of support available to overcome some of the challenges to business growth. While we had a clear vision and strategy for what we wanted to achieve, we’re also indebted to the support that we were able to draw upon from government to achieve these goals.
“The success of the venture has resulted in a second phase of development, which is already underway and ahead of schedule. The project’s focus on high standards of management and practice has helped secure key accreditations, reduce risk, and foster a culture of business confidence. The scale and intensity of the operation has also ensured that revenue generation keeps pace with the financial demands of such a large-scale project.”
Food and drink growth in Wales
When it comes to growth, the industry in Wales has an impressive recent track record, with figures showing that it had grown by 10% over the past year.
Huw Irranca-Davies MS, Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, says: “One of our policy objectives was to grow the value of the food foundation sector to at least £8.5bn by 2025. This includes businesses that produce, process, manufacture and wholesale food and drink goods.
“I was delighted to announce last year that we’d already exceeded this figure in 2023, with a value of £9.3bn, meaning we’d met our target two years early. This is an extraordinary achievement, and every food and drink business in Wales has played their part.
“Through our different support programmes, and helping companies attract investment, we want to continue to build on this success. This means targeting business expansion so more small businesses become medium-sized, and medium become large – with the power to project a positive image of the entire Welsh food and drink industry into the wider market.”
For more information on the support available, visit: gov.wales/foodanddrinkwales
