UK confectionery businesses continue to face major tests amid economic uncertainty

We’re only a couple of weeks into January 2024, and it seems that both global and domestic events here in the UK have been particularly newsworthy across many spheres of industry, and the confectionery sector is in no small way exempt from that.

As anyone who has read our news coverage online or in our magazines will have seen in recent months, it has become increasingly clear the level of strain that many small and medium-sized businesses have come under here in Britain amid a turbulent economy and cost of living crisis that has led to a concerning impact on our sector.

Notably, as many industry observers have observed, there has been a scarce level of available financial support for SME businesses across the UK to mitigate the tests of attempting to stay afloat amid straightened economic conditions that have seen several Covid-19 hit years compounded by major inflation hitting 40-year highs that has threatened the viability of many enterprises.

This is especially true within the hospitality sector in the UK, as national media have reported this week – thousands of pubs and restaurants are closing across the UK – falling 3.6% to a level of 99,600, which is reportedly the first time it has fallen below 100,000, according to figures from Nielsen research. High energy costs, cancelled bookings and other increases in operating costs have all taken their toll.

Just this past week, as far as confectionery businesses are concerned, York Cocoa House has found itself in administration, faced with crippling rises in business rates, ingredients prices, and the ongoing fallout from Brexit pressures that have made importing and exporting ingredients (and any other produce), far more expensive than it ever was before our exit from Europe, that have placed the business under severe pressure. They’re far from alone – as Confectionery Production has reported.

One of the UK’s most renowned chocolatiers, Paul A Young, shut up shop a few months ago in London, closing his city stores amid the heightened cost of rents, major rises in energy costs, and economic uncertainties that have severely tested consumers’ spending power. The retail landscape in the UK has been struggling for some years, but there seems little if any respite to this position at present, amid spiralling rental fees and trading overheads that have created almost a ‘perfect storm’ of operating challenges.

Another notable case is that of Britain’s Hotel Chocolat, which had put forward ambitious expansion plans in the US and Japan in recent years, but the inability to finance its continued expansion led to the business being bought by Mars, which has pledged to maintain its sustainably-founded principles. These are just several notable cases in recent years that underline the major tests that SME’s are facing.

While there have been some welcome developments in the past few months in terms of capital investment relief being introduced that will allow companies tax relief on investing in new plant machinery in the UK over the next few years. This is a positive piece of policy, yet weighed against major increases in trading that many have endured, most smaller enterprises are largely, if not entirely lacking the ability to make such investments in the present economic climate that is characterised by uncertainty.

This has been underlined by recent Food and Drink Federation figures have shown this past month, there has been a significant slowdown in exports from the UK, including confectionery, with manufacturers finding the complexities and expense of trying to send quantities of products to continental Europe disproportionately expensive to do, thereby shrinking their potential market outlets. All in all, British businesses have made their position clear in many instances – greater financial support and not platitudes are needed urgently.

Neill Barston, editor, Confectionery Production magazine


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