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Food manufacturer

Introduction

So you've decided you want to run a food manufacturing business. Maybe you want to turn an interest in food into a commercial venture, or perhaps you've been working in the industry for a while and feel the time is right to go it alone. Whatever the reason, this guide will take you through the issues you need to consider and give you practical pointers on getting started.

Sector trends

The last decade or so has seen significant changes in consumers' lifestyles and eating habits. There has been a strong trend towards convenience products that can be prepared with a minimum of time and effort. At the same time, consumers' tastes have become more sophisticated and adventurous. This has led to a huge increase in the range of ready-prepared meals and accompaniments available, whether frozen, dried, canned or chilled. In addition, lifestyle changes have meant that people are eating more snacks throughout the day, while travelling, at work, or during their leisure time.

Recent years have seen an increase in interest in regional and speciality foods and also in niche products such as low fat ranges, 'healthy living' products, ethnic foods, organic foods, vegetarian products and products catering for particular dietary requirements such as dairy or wheat free or low sodium. There has also been a move away from 'junk food' which is widely regarded as contributing to the so-called obesity epidemic in the UK and a ban on the use of television advertising of 'junk food' to children was implemented in 2007. Stricter rules over labelling and advertising food and drink with claims that they benefit health have also been implemented.

The mid 2000s saw the emergence of the 'ethical consumer'. Concerns about the origin of foods and impact of emissions caused by 'food miles' (the distance food travels when it is transported) led more and more consumers to consider how their food purchases affect the environment. This boosted demand for locally sourced and organic food products. Demand has also increased for Fairtrade products, which enable consumer to support producers and farmers in the developing world by ensuring they receive a fair deal for their produce.

All this has spelt good news for food manufacturers although it has also resulted in a very competitive market that is difficult for a small business to break into.

It is likely that your business will be joining the estimated 4,000 or so smaller food manufacturers which produce speciality food ranges. Typically these products are more expensive than mass produced ranges and use high quality local ingredients, perhaps also being made to a traditional local recipe and being branded as such.

Although demand appears to be strong for food manufacturers that successfully target their market, there are a number of things you may need to consider:

  • if your products target the luxury, or tourist sector of the market, will you be able to weather the current downturn in the economy?
  • is your product range broad enough to survive a change in consumers' eating habits? For example, the popularity of the Atkins diet in the 2000s briefly led to lower demand for carbohydrate-high products such as bread, pastry and pasta
  • will you be able to cope with price volatility in your ingredients? For example, the price of potatoes can vary a great deal from year-to-year
  • how will you keep customers loyal to your product ranges?
  • if you plan to supply local retailers, is there a possibility that the continuing expansion of the multiple supermarkets will force them to close, reducing your customer base
  • if you intend to produce organic ranges, will you have difficulty in obtaining a regular supply of organic ingredients?

1.1 Keep up to date with developments

Joining a trade association is an excellent way of keeping up to date with developments in your industry.

There are many different associations and organisations that represent the interests of the food manufacturing sector, including: