The Food & Drink Federation (FDF) is the representative voice of the companies and trade associations that make up the UK's largest manufacturing sector. Ian Wright joined the FDF in March 2015 and before that spent 14 years with Diageo, the world's largest drinks business. Ian was the executive committee member responsible for Diageo’s reputation as it became one of the world's most trusted and respected companies. Earlier in his career, Ian worked for Boots, Mars and Pillsbury, and had spells in consultancy and politics. He received a CBE for political and public service in August 2015.
Simon Walton, Head of the Consumer Leadership practice at Berwick Partners, speaks to Ian about his thoughts and opinions regarding both the positive opportunities and possible threats to boards in the current economic climate. Plus, of course, what impact Brexit could have on the UK Consumer Goods landscape and what actions boards could be taking…
What advice would you give right now to the UK food & drink sector, and also to consumer goods organisations?
I would advise organisations to do a thorough risk analysis, making sure to mitigate against reputational and brand damage, poor customer service and strained retailer and customer relations. A good example would be the CO2 shortage that took the market by surprise in the summer last year. Food & drink-grade CO2, used in the production of a wide variety of products, was in short supply leading to shortages and subsequent issues with the production and packaging of products such as beer, soft drinks and meat.
A more recent example would be the talent and skill shortages with the wider UK market. Here, organisations should consider how they attract, retain and access quality skilled labour, particularly against a backdrop of Brexit and subsequent trade negotiations.
In the current climate and market, what do you see as the potential opportunities?
There is a real and genuine appetite, and therefore opportunity, for new product development and significant innovation of products, particularly products that have an affinity to lifestyle and health, or conversely indulgence and luxury.
Linked to this, products and companies with a sincere environmental conscience also have a huge window of opportunity. The move towards being more environmentally-conscious looks like it is here to stay – it isn’t just a trend or short-term fad. A good example here is the significant rise in ‘free-from’, ‘meat-free’ and ‘meat substitute’ products, as well as vegetarian and vegan products across all categories and sectors.
Further opportunities lie ahead for more environmentally sustainable products and organisations, especially those that can illustrate real provenance to retailers and customers alike and demonstrate a desire to reduce unnecessary packaging and increase the potential to recycle.
In summary, I see huge opportunities within the market for those who are prepared to think a bit differently.
How do you believe the UK food & drink and consumer goods industry is viewed by domestic and overseas investors?
Despite the continued debate around Brexit and some of the recent political uncertainty, the UK, as a whole, and particularly the food & drink and consumer goods sector is still viewed as a very attractive investment. This view includes both domestic and overseas investors who have continued to invest in the UK for many, many years. For instance, some obvious examples over the years would be Roundtree’s acquisition by Nestlé, Cadbury’s acquisition by Mondelēz, KP Snacks’ acquisition by Intersnack or United Biscuits’ acquisition by Yildiz/Pladis, to name just a small few, all of which are large scale international investments and acquisitions.
More recently, we have seen a rise in UK domestic management buyouts, often backed by private equity, particularly within the SME arena. This includes a number of rising and fast-growing SMEs and start-ups being acquired by larger corporate organisations. Good examples here are the likes of Graze’s acquisition by Unilever, and Sharp’s Brewery and their heritage-driven Cornish ale Doom Bar being acquired by Molson Coors. These are all examples of big consumer, FMCG heavyweights taking on smaller challenger brands to drive expansion, harness innovation and diversify into 'fashionable' markets and consumer trends.
What do you see as the future for the UK food & drink and consumer goods industry?
Further consolidation amongst the larger organisations and further domestic and overseas investment, as well as more staff ownership and an increase in start-ups coming to market. There are around 8,000 food & drink organisations within the UK, and less than 10% of these organisations have a turnover of in excess of £20-30m. This is a trend we expect to continue, especially as consumers seek out smaller artisan manufacturers and providers.
On a separate point considering grocery retail (often the biggest channel and largest customer base for UK food & drink and consumer goods organisations), the questions here are whether we will still have the current status quo in the coming years, and what the grocery retail channel will look like in 3-5 years’ time.
During your career to date, what have been the biggest learnings?
The biggest learning, both personally and professionally, has been the importance of good training, development and structured learning, making people consciously competent and giving them a foundation upon which to build a successful career. However, this doesn’t mean baffling bureaucratic training schemes or over-thinking and constantly indulging in theoretical hyperbole. On the contrary, it means keep things simple and easy to follow and consume.