Food and drink business confidence falls as supply issues remain

The Food & Drink Federation (FDF) revealed the situation in its Q3 2021 Business Confidence Report​, which has just been published summarising the views of its members and industry figures.

It found that net business confidence fell by 55% in the third quarter of 2021, dropping to -51%. This was the lowest net confidence rate measured by the report since the height of the pandemic in the second quarter of 2020 (-65.2%) and the biggest drop in confidence since the FDF began reporting it in 2018.

It revealed that severe supply chain disruption was the biggest cause for concern, particularly the transportation of goods with 93% experiencing delayed or missed outbound deliveries and 75% reporting delayed or missed inbound deliveries.

Most common labour shortages

Labour shortages also remained across a range of roles in the food supply chain. The most common shortages were HGV drivers, temporary agency workers and process, plant and machine operatives. Half of respondents said they expected the permanent supply of labour to decrease and 54% expected the temporary supply to decrease in the fourth quarter of 2021.

As product margins were squeezed, driven by wide-ranging supply chain disruption and rising production costs an overwhelming majority of businesses anticipated continued price rises. The majority (97%) of respondents expected consumer price inflation to increase in the fourth quarter of 2021.

The results showed a lack of confidence for the future as businesses were full of pessimism with a further decline in business confidence anticipated. Half of respondents expected a further decrease in business confidence in the final quarter of 2021.