Food and drink driving green economic recovery | ONE

“The challenge was the total unknown of Covid and lockdown and the loss of hospitality and foodservice sales," said Jane Mackie of Rora Dairy.

The business makes live yoghurt using milk produced on the Middleton of Rora Farm near Peterhead with quality, locally-grown ingredients and minimal processing.

“There was a pause of breath, but then orders kept coming in. The local and broader Scottish retail markets were very supportive. We’d recently secured a listing with Sainsbury, which we were very blessed to have. Staff in the business were great, and we’ve pretty much been all go throughout,” said Jane.

Jane has participated in Opportunity North East business growth, meet-the-buyer, and mentoring programmes, and a ONE Enterprise Fund loan enabled investment in new equipment to streamline production and increase volumes.

“We did pause investment plans last year but then pressed ahead later in 2020 to increase production capacity. We also continued with new product development and recently launched our fresh fudge yoghurt with more lines to follow this year. Our Greek yoghurt has been on trend for cooking at home.”

Established firms have had to be equally nimble. A household brand across the UK and now approaching its fifth decade, family-run Dean’s produces premium quality Scottish shortbread from its base in Huntly. The business exports to around 30 countries, including China, the USA, Australia and many parts of Europe.

Managing director Bill Dean sees fallout from the pandemic continuing to disrupt many aspects of the industry for some time, but has seen the practical benefit of investment in e-commerce, automation and new product development.

“UK and international logistics are still hugely disrupted with little guarantee on delivery timescales along with four-times higher shipping costs. We see cost inflation in all areas, including ingredients and packaging. Labour and skills shortages are a persistent issue, especially seasonal staff. There are many challenges on our plate and will be for some time to come as these issues work through," said Bill.

When the pandemic initially hit, Dean’s export, foodservice, and tourism-related sales dropped, and even its core retail sales stopped when only essential goods were moving.

“Fortunately, we had already invested a bit in our online sales channel and fulfilment centre in Huntly and had jointly resourced a digital marketing post via a Knowledge Transfer Partnership. This side grew strongly and by the final quarter of 2020 was doing very well. It also gave us the flexibility to repurpose product destined for other sectors that were closed. Consumer spending patterns have changed considerably in the past year, and our investment in this sector of our business continues,” said Bill.

Dean's focus on automation enabled it to flex production in busier periods, and new investment is coming online.

“We’ve converted a warehouse to a new production unit. There have been delays and extended lead times for new plant and machinery. It should have been operational last year, but we'll now have the new facility ready to use in August. Automation is critical for efficiency, productivity and sustainability nowadays,” said Mr Dean.

"There are good opportunities ahead for the sector. We need to do everything we can to ensure businesses can make the most of them."

Food and drink is the UK's largest manufacturing sector. In north east Scotland it provides over 22,000 direct jobs and more than 20% of Scotland’s total output. The area leads in sectors including seafood processing, where it produces a fifth of UK output.

Over the past five years, Opportunity North East has created and delivered business growth, market development, export, technology, mentoring and leadership development programmes to give businesses the insights, tools and connections to grow. It works with more than 150 food and drink businesses in the region, has supported more than 50 new starts and has over 20 senior industry leaders mentoring high-growth firms.

"This is a world-class industry with a vital part to play in our future economy," says Stanley Morrice. He chairs Opportunity North East's food, drink and agriculture board alongside his executive and board leadership roles with Garrets International, Strachans and Van Hulle.

“The north east punches above its weight, and we have some real success stories. Companies including Mackie's of Scotland, Farmlay, Mackintosh of Glendaveny, International Fish Canners, and Thistle Seafoods have grown retail sales and market share, invested and created new jobs through the pandemic. And at the other end of the scale we are continuing to see a large number of exciting start-ups.

"Opportunity North East sits at the heart of a cluster of well connected businesses with able and ambitious leaders within a sector which is a priority for the future economic growth of NE Scotland. ONE has built strong relationships with companies and industry partners, drawing on the expertise of its team, providing a crucial trusted adviser and partnership role, and the programmes businesses need to achieve growth,” said Mr Morrice.

Opportunity North East is also developing transformational projects to shift the economic potential of the sector.

“The Seafood Transformation Project aims to grow our largest sector, SeedPod will provide facilities and support to deliver industry’s growth ambition, and an open doors festival will put the region’s food and drink on the national visitor map. Our membership of the Scotland Food & Drink Partnership and Export Partnerships allows us to draw on and influence national support. All of this gives businesses the skills, confidence and opportunities to grow, even in difficult times,” said Peter Cook, director of food, drink and agriculture at Opportunity North East.

Peterhead-based Brew Toon makes characterful small-batch craft beers. Established in 2017 it is typical of the ambitious younger businesses working with Opportunity North East and benefitting from business growth, market development, export and mentoring support and participation in regional and national meet the buyer programmes.

Operations director Cameron Bowden said: “Covid dealt a big blow to brewing. Around 80% of our sales were on-trade, and that stopped overnight. So we had to put a lot of thought into what we would do and then adapt quickly.

“Fortunately, we already had an excellent website that could support an e-commerce channel. We’d have struggled without that. The local market has also been incredibly supportive. I think people are more interested in where their food and drink comes from and choose to support businesses in their communities.

“We are pretty encouraged with pubs and bars re-opening and beer gardens coming into their own. We are selling beer across the UK. Taking part in ONE’s business growth programme before the pandemic gave us many new connections and sound advice from industry experts, and the North East Scotland Food & Drink Awards raised the brand profile with buyers.

“We continue to develop our beers and offer to meet customer needs. We’ll be introducing a new canning line soon because consumers want 440ml cans. That’s a combination of larger servings and lighter, recyclable packaging, which focuses on sustainability. Our on-site bar is gone to accommodate increased production, but we are opening a bottle shop and tasting room around the corner from the brewery next month.

“It’s been a challenging time, but we’ve adapted and grown the business, and we are building good momentum for the year ahead.”

That sense of optimism reflects the exciting future ahead for the industry in the region. Jane Mackie and Stanley Morrice agree.

"I think the outlook is good. We have a balance of retail listings, and foodservice and hospitality are coming back strongly, driven by people staying in the UK for holidays. We’ve also recently achieved organic status certification for our dairy business, which I think is important. Consumers and buyers are increasingly pressing producers on provenance and sustainability, and it's hugely important to be as good as we can be,” said Jane.

Stanley concluded: “There's new-found flexibility and a confidence in our ability to change at pace. This is a desirable sector to be in – we all eat and the market is incredibly diverse. There are many opportunities to do things differently in response to changing consumer behaviour, growing health and wellbeing trends, low-carbon and sustainable production demands, and new trading arrangements. All of these mean new openings for businesses and people in the region and put us right at the heart of the green economic recovery.”