Hope yet for small food and drink firms in volatile markets
As a firm, we'd like to see ministers supporting the industry with sensible taxation, increased grant funding and greater trust in business owners, but we're also clear that operators must play their part with effective planning and forecasting, and a keen focus on cash flow.
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According to our research, labour (53%), raw materials (20%) and energy (12%) account for the industry's greatest costs.
Upcoming increases to the national minimum wage and higher national insurance contributions (NICs) are having a disproportionate impact on food and drink SMEs, where labour-intensive processes remain the norm.
The volatile energy market isn't helping. Rising and unpredictable energy costs are an ongoing concern, with more than one in 10 of our respondents citing energy as their biggest cost increase.
Meanwhile, raw ingredient supply chains remain turbulent. A mix of Brexit-related import challenges, global commodity fluctuations, and climate change-related crop issues are creating ongoing uncertainty for producers.
After cocoa prices surged to their highest level in 50 years, driven by crop diseases and adverse weather, many chocolate producers are now more familiar with the weather forecast in West Africa than where they are going on their next family holiday.
Despite the pressures, there are clear routes forward for SMEs willing to take a proactive, strategic approach.
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While more than half of our respondents have not to date pursued automation, it is becoming an increasingly important – and affordable – tool as technology progresses. By investing in automated production, packaging, and quality control systems, SMEs can reduce their reliance on manual labour and ensure their people are carrying out meaningful, high value work.
In a crowded marketplace, a strong brand can help SMEs shift from price-takers to value-setters. Businesses that articulate their value through branding, storytelling, and digital marketing are better equipped to demand a premium price and encourage customer loyalty.
A tight labour market has evolved post-Covid and it's essential that SMEs get the best from their people amid a high-cost environment. Encouraging a positive workplace culture and implementing strong performance management frameworks — including clear goals, recognition, and development opportunities — will help to boost morale and productivity.
For some businesses, scale could be the solution. Larger operations benefit from bulk buying and broader distribution, and are better-positioned to survive shocks in the supply chain.
Organic growth options include expanding product lines and entering new markets, with export ranking as the primary driver of growth in our survey, but mergers or acquisitions can also drive new capabilities and customers. This year has already seen consolidation in the marketplace, including Dean's of Huntly's acquisition of Duncan's of Deeside Limited, bringing together two respected shortbread brands to pursue fresh growth.
The outlook is undoubtedly tough, but UK food and drink SMEs still have a sustainable future. Through investment in automation, brand development, culture and scale, they can transform vulnerability into opportunity.
Graham Marjoribanks is a partner and head of audit at Johnston Carmichael.
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Wales Online
6 hours ago
- Wales Online
Owner of top Welsh restaurant forced to close down speaks out
Owner of top Welsh restaurant forced to close down speaks out Michelle Evans, who runs Paternoster Farm, and her family have been fighting for answers from the council Founder of Paternoster Farm Michelle Evans and her family are looking for answers after they were told they would have to move elsewhere as their tenancy at the farm had not been renewed (Image: Paternoster Farm ) The founder of an award-winning restaurant in Pembrokeshire has said she is "mentally exhausted" after she received news that it would have to close later this year. Paternoster Farm in the village of Hundleton, Pembrokeshire has been hailed as serving some of the very best food in Wales and has received rave reviews by the likes of The Good Food Guide, The Times, and Hugh Fearnley-Whittingstall. It employs around 12 members of staff and sources tens of thousands of pounds worth of produce from local suppliers. For the latest restaurant news and reviews, sign up to our food and drink newsletter here. But last month its founder Michelle Evans confirmed the restaurant would have to close as their lease on the farm had not been renewed by its landlord Pembrokeshire County Council. Since receiving the news Michelle and her family have been fighting for answers from the local authority. The mother-of-two has expressed frustration at the council's handling of the situation, claiming they haven't provided her answers on why the business' future was abruptly cut short and offered to another party without consultation. "It's been mentally exhausting," Michelle said. "When I already had a full life anyway – the farm work, the restaurant, admin, and kids – this happens. Article continues below "I've got two kids who maybe we're not doing as much with them as we would normally try and fit in because I'm working on this. "I'm constantly writing something. I'm doing FOI (freedom of information request), then another FOI, and then another FOI. "It takes a lot out of you. I'm just exhausted by it all." The family have been at Paternoster Farm since 2016 after Michelle and her husband Leum decided to take over the small holding's tenancy for 10 years. Michelle started out with a beach hut, which focused on street food before deciding to start a business in the farm's former milking parlour. During the Covid-19 lockdowns Michelle initially opened a farm shop selling home-reared meat and pastries which then evolved into a restaurant. For the latest restaurant news and reviews, sign up to our food and drink newsletter here . Over time the business transformed a small farmstead into a hospitality destination which was featured in The Good Food Guide for three consecutive years and profiled in The Times, which described it as a "rural gem reinventing Welsh dining". During the Covid-19 lockdowns Michelle initially opened a farm shop selling home-reared meat and pastries which then evolved into a restaurant (Image: Paternoster Farm ) According to Michelle the family had "no doubt" the tenancy would be for a decade but when they asked Pembrokeshire County Council about the likelihood of renewing their tenancy after the first 10 years the council hoped there would be no issue. In an email exchange between Michelle and an asset manager for the council in April of last year, seen by WalesOnline, Michelle was told that there was a "lot of support" within the authority for the county farms and that they hoped that "any decision on a renewal would be favourable". In response to WalesOnline's query to this exchange a Pembrokeshire County Council spokesman said they had "hoped to be able to offer and provide a tenancy in one of [their] larger farms",but confirmed the "language used in correspondence with [their] tenant did not make that clear" and "may have given the impression that a renewal of the current tenancy at Paternoster would be possible". The restaurant has received rave reviews from The Times and The Good Food Guide (Image: Paternoster Farm ) Michelle explained that in November of last year representatives of the council came to inspect the farm and conduct a survey. She said: "They came out, they spent about two hours here – we walked the land, they looked at the livestock. "They were really happy with how the animals looked, happy how the land was. It was looking really good for that time of year." The conclusion of their visit did not come until four months later. "We heard nothing then until a letter arrived in February," Michelle said. "It was just this one paragraph saying: 'We're not renewing your tenancy. We're offering you a larger farm in Solva. Here's a map. Yours faithfully…'. That was literally it – one paragraph." Hundleton is around an hour's drive from Solva in Pembrokeshire. According to Michelle such a move would disrupt their business, livelihoods, and their children's education. Michelle said she has tried to get an answer on the council's decision not to renew their lease at Paternoster Farm. Michelle has sent a request asking for records including emails, reports, minutes, and transcripts of all meetings in regards to the decision not to renew the lease. But in response the local authority said they had searched their records and the information requested was not held by them. While Michelle feels frustrated by the council's response she also feels uncertain about the future. "It's the uncertainty of not knowing," she said. Michelle has said she feels 'mentally exhausted' and uncertain about the future following the news (Image: Paternoster Farm ) "We're obviously looking at alternative sites for restaurants and cafes because we'd be daft to just tread along fighting this but not have a Plan B. "I'm worried about money. The cost of having to move is going to be enormous. "It's a terrible time for restaurants as it is but the cost of moving a restaurant and establishing somewhere else, as well as the cost of being closed for that time, will be huge." But the recent news has also had an impact on Michelle's children and especially her 14-year-old daughter who has a passion for farming. "When she first found out she took it upon herself to write a letter to the farm's manager," Michelle said. "We didn't know – I didn't know about it until afterwards. "She hopped off the school bus in the village, got some stamps, and posted the letter. They didn't reply to her. "And then she was frustrated so she emailed and asked for a reply and that prompted the farm manager then to email me and say she'd written a letter and that they weren't going to reply because she was a child. I was furious." Michelle added: "She's really into farming. She works in the restaurant and she works every weekend with me. "And she really thought that, with the renewal, the next 10 years would be the start of her adult life here. "She thought she'd be farming with us. She's got her own sheep, she's got her own ducks, she sells her eggs and helps out with the lambing. "She's also only a few years away from GCSEs, which is another thing, because when the tenancy runs out she's only 12 months away from sitting her exams. As any parent would know that's not the time to be moving a teenager." Michelle and her husband Leum have launched a petition calling for a full and thorough review of a policy (Image: Paternoster Farm ) Following the news that their lease renewal was denied Michelle and her husband Leum have launched an online petition calling on Pembrokeshire County Council to conduct a full and thorough review of its County Farm Policy. Previously the county council said their proposals at Paternoster Farm were in line with the policy offering the tenancy to new tenants and providing "those who wish to farm a way of entering into the industry". But the petition argues that the policy is "not fit for purpose" as it does not support "farm diversification nor integration into the community". It continues: "If County Farm Policy does not support and encourage our type of farming enterprise, one which farms the holding to its fullest whilst caring for the land, farms regeneratively, provides employment, fosters community links, supports a wealth of local businesses, supports local schools, feeds farm produce to the community every single week of the year, then it cannot possibly be said to be fit for purpose." It later adds: "County Farm Policy lists its objective as facilitating entry into farming, and moving tenants up to larger farms, but to what end? "Has the authority actually considered who it aims to benefit, and why do they not seek to measure the success, or otherwise, of the policy? "It is all very well to seek to help new entrants into farming, but what are the authority really trying to achieve? Farming for farming's sake is not enough. The authority has to ask, who will benefit, and to what extent?" So far the petition has received more than 500 signatures. In response the county council has said the petition will be "fully considered" with the policy said to be due for a renewal next year. "The amount of support we've received is unbelievable," Michelle said. "I didn't expect it. I thought some people would be angry but everyone was really supportive." She added: "And that support continues with people signing the petition. Within less than two hours we got the 500 signatures that we needed to enable it to be heard by the full council. "I think the restaurant has eclipsed the farm and that's why there's been a bit of a pushback from people." Although no official closing date has been set Paternoster Farm is expected to remain open into the autumn with bookings made available through the restaurant's Instagram page and via For now Michelle and her family remain hopeful that they will get answers. "We've been here nine years," she said. "It's our home, it's our children's home. This place means a lot to us because we've made a huge success at the restaurant. "But at the same time had we known in advance that we'd need to move we'd have made quite different business decisions. "I'm not an unreasonable person. We could have made plans to move and I think, although it would have been difficult, we would have been okay with that as we would've kept other options open. "My issue is the way they've treated us – that's what it comes down to. "The fact that in November, when we spoke about renewal, they went away to do their report and made the decision and then came back in February and only had until March to give us notice if they were going to renew or not. "So it was right down to the last minute. And the way that letter was so unceremonious with one paragraph and no explanation." In response a Pembrokeshire County Council spokesman said: "Renewing the lease on a long-term basis would be contrary to the existing County Farm Policy which is designed to provide opportunity and movement up through the different-sized tenanted farms. Hundreds of people have signed the petition (Image: Paternoster Farm ) "In April last year we hoped to be able to offer and provide a tenancy in one of our larger farms in accordance with our policy; unfortunately, the language used in correspondence with our tenant did not make that clear and may have given the impression that a renewal of the current tenancy at Paternoster would be possible. "As part of our approach the E-petition will be fully considered in accordance with our petitions policy. "That will include a debate at council should there be sufficient valid signatures on the petition. The County Farm Policy is due for renewal next year and will therefore be reviewed in the near future; the petition contents will also be considered as part of this review. "The council supports and commends the contribution and success of the Paternoster Farm restaurant. "However extending the tenancy to facilitate the restaurant on a long-term basis would contravene the existing County Farm Policy; this aspect will be further reviewed along with the policy. "Any relevant information will be released to our tenant in accordance with our data control policies, freedom of information requests, and subject access requests as appropriate." Article continues below
Telegraph
a day ago
- Telegraph
British holidaymakers to miss out on compensation after EU rule change
Britons will miss out on compensation for delayed flights after Brussels adopted a rule change following complaints from airlines. Payouts that were previously triggered by delays exceeding three hours will now only be made after four hours of holdups, European transport ministers agreed. The new regulation, hammered out following a decade of discussions and bargaining over passenger compensation, will apply to all services from EU countries to the UK. For the time being, travellers headed from Britain to the Continent will still qualify for a refund when flight delays hit the three-hour mark, unless they are flying with an EU-registered airline. While raising the compensation threshold, ministers also agreed to increase the minimum level of payment from €250 (£210) to €300 for shorter journeys and to €500 for those above 3,500km (2,175 miles). The original regulation, known as EU261, was passed in 2004 with the aim of ensuring that passengers received money and assistance in the event of flights being cancelled at short notice. Following Brexit, the UK adopted it into law so that the rights of travellers remained unchanged. However, the Government will now have to decide whether to adopt the amendments for outbound flights or stick with the original version. Taking no action might be welcomed by consumer groups but would have consequences for UK airlines, which would be at a disadvantage to their European rivals. It could also affect fares, with Ryanair having claimed that EU261 costs passengers £7 per ticket. Airlines for Europe, an industry group, had pressed for a higher compensation threshold, arguing that extending it to five hours – as originally proposed by the European Commission – would allow 70pc of flights that are cancelled to be rescued. It argued said that airlines inevitably scrapped flights once compensation was triggered, especially since the payouts involved were often higher than the ticket prices charged. It said a five-hour threshold would have made it more practical for carriers to fly in replacement aircraft so that more flights would get away, potentially benefiting 10m passengers a year. A spokesman said: 'Getting to their destination is the primary concern of passengers, even if it means getting to bed or arriving at their holiday resort late. But with a low cancellation threshold it makes more sense to call off the flight and take that hit.' Airlines have also railed against the fact that the compensation applies whether delays are caused by a crew shortage or technical issue that might be laid at their door, or by severe weather or air traffic control issues beyond their control. A number of extraordinary circumstances are expected to be added as part of revisions to 31 different air passenger rights. The revisions must still clear the European Parliament but are expected to become law in the bloc by the end of the year. The Department for Transport said the UK did not have to amend its legislation in line with any changes from the EU, and that any potential future reforms would require careful consideration on their merits, and be subject to public consultation.
South Wales Guardian
a day ago
- South Wales Guardian
Sweet Williams in Pontardawe wins gift shop of the year
Mrs Emma Doyle runs Sweet Williams on 6-8 Herbert Street in Pontardawe. The shop has 96 reviews on Facebook and a recommendation ratio of 96%, specializing in beautiful handmade gifts. Sweet Williams is located on 6-8 Herbert Street. (Image: Emma Doyle) Mrs Doyle said: 'I am very much proud of our achievement. We have worked so hard. You only need to look at Trustpilot to see how many positive reviews we have. Now, to have recognition for that is fantastic. 'It's quite a big award. It started out as a hobby. We started in 2011 at home and then we got our first shop in 2016. So, we have had a presence on the high street for a number of years. We first had a studio and then we eventually got a shop. Mrs Doyle started her business in 2011. (Image: Emma Doyle) 'The shop became available at the start of COVID, and we have been here ever since. My background before I started this business was in law. I started the business while I was on maternity leave. 'I'm always trying to put Pontardawe on the map. We are a huge champion of shopping local and independent and feel privileged to have a space to do this in Pontardawe. 'This is important because in the last couple of years it's been tough for businesses on the high street. So, to have support from the local community is fantastic.' The store specialises in handmade gifts. (Image: Emma Doyle) Mrs Doyle was informed via email that she was nominated for the award, before a panel of judges looked at her business, including her reviews. She will attend Ashton Gate Football Stadium in Bristol next month to attend an award ceremony and receive the accolade in person. Mrs Doyle continued: 'We have supplied products for the Royal Family and received an award from Theo Paphitis from Dragons Den. But this award has been the icing on the cake. 'We just want to keep building our customer base. We still have so many people coming in who didn't realise we were here. 'We are a family business. My husband chips in, as do my children. My mum and dad also get involved. We even offer sowing workshops." The business creates its own brand of textile products. (Image: Emma Doyle) Sweet Williams is a gift shop consisting of several retail spaces set over 4 floors. The business has recently reopened its basement following a yearlong renovation project, which is now home to Welsh/locally sourced foodie treats and a pre-loved bookshop. On the fourth floor, Sweet Williams creates its own brand of textile products, which are then supplied to over 200 stockists, helping other independent retailers to grow their presence on the local high street.
