Spring 2024 – new beginnings and a time to look forward

Here in the South West, Spring is definitely in the air – which is great news for all of us given the wet, protracted winter we've had to endure. It's a time of renewal and growth and a time to look forward with optimism to what the year ahead holds. Along with our lead sponsors, Top 50 law firm Trowers & Hamlins and multi-award-winning accountants Bishop Fleming, we've been giving that a think.

Trowers and Bishop Fleming have been partners now for a year and it's great to have such experienced, respected organisations alongside Taste of the West, giving us and our members the benefit of their deep industry and economic knowledge. We like to think that between us we've got a good 360° overview of how the region's economy is holding up. We hear a lot about business confidence from sentiment amongst business owners and advisors and a strong, broader, national and international take on how our region's challenges and opportunities stack-up when compared to the UK, and our trading partners' broader economies.

A tale of Christmas past

Now we're firmly into 2024, we can safely look over our shoulder at how 2023 turned out. Particularly it's worth a review of the crucial Christmas quarter. Most producers reported being very busy in the run up to Christmas – but then they needed to be, having swallowed raw material price hikes for most of the previous 12 months. Sales were the order of the day to redress the balance. What was certain in the lead up to Christmas was that producers were experiencing severe downward price pressures from further up the supply chain and as a result, have been looking at ways to get to customers without sacrificing margin to the supply chain.

Meanwhile, the hospitality sector continued to suffer from ingredient and energy price hikes as well as a severe shortage of staff – with those that they can recruit being more expensive than they were before Covid hit. Overall, we'd give the trading period about a 7/10.

And so we moved into 2024 – a key year politically, with elections across Europe and the US, and economically as socio-economic factors, global inflation and shaky consumer confidence blight recovery efforts from the pandemic. In terms of sectors, the hospitality sector continues to slumber into 2024, but suppliers have had a busy start to the new year.

Given sclerotic appetite for spend among consumers, looking for new markets, particularly in the independent sector, is the order of the day right now. 10 years ago, we were advising suppliers who wanted to grow, to look at the opportunities in the multiple retail sector as well as the foodservice sector via distributors and wholesalers. Each of these sectors of course, require a margin from the supply chain and with downward price pressures continuing as both sectors grapple with the need to appeal to hard pressed consumers, it is suppliers at the bottom of the chain, as ever, feeling the tightest squeeze. Some things, as they say, roll downhill.

Post-budget & Pre-election

And so here we are – post the Spring Budget, and with a General Election looming somewhere on the horizon. The Budget was a mixed bag and berated by some for not delivering enough, given the tough market conditions out there. Personal Tax reductions were welcome, but we'll have to see if they were enough to reassure people into opening their purses and wallets. Behind all of this though, the UK's tax regime remains complex and burdensome – and the partial closure of HMRC helplines will be keenly felt by smaller businesses and individuals alike.

In light of the Budget, we've seen the Bank of England holding interest rates unchanged and UK inflation finally seems to be falling which is cheering. The potential election adds an element of mystery for businesses, with planning and investment decisions potentially on hold until there is a clearer indication of the macro-economic plans for both parties.

As part of our regular events for South West businesses, back in the Autumn, alongside Trowers and Bishop Fleming, we brought together over 70 owners and managers of leading food and drink production and distribution businesses from the South West, along with representatives from Government departments, such as DEFRA and the Department for Business and Trade. We wanted to get a sense of the mood of the room so polled those present about how things were going – interestingly 65% reported increased trade volumes in 2023, compared to the year before and 84% said that they expect the trading environment in 2024 to be the same or better.

In terms of investment planning, 31% were looking first at investment in facilities and operations, followed closely by focus on human resources and skills, with a quarter of respondents putting it at the top of their lists. Given what we've seen and heard about the impact of staff shortages this sounds like a savvy plan. Positive investment plans are a good bell-weather, indicating as they do a longer-term optimism for business success, which is never a bad thing.

Overall it seems a mixed-bag of positive signs and green shoots within a broader context of lagging consumer confidence and challenging market conditions.

Stuart Mathews, Partner, Trowers & Hamlins, believes that whilst things are getting better, it's a fragile situation that needs close attention, "We're hearing positive noises about the strength of the economy and some investment confidence, but it's guarded. No-one feels we're out of the woods yet by a long chalk, but there are signs of recovery and growth which is great. Crucially, both the Government and the Opposition need to be clear on their regulatory and economic priorities if we're to nurture those shoots of growth and give businesses the clarity and confidence they require to make key strong, longer term investment decisions," he said.

Fleur Lewis, Partner at Bishop Fleming, agrees:

"The 2024 Spring Budget contained some help for business owners, notably the rise in the VAT threshold and the cut in National Insurance, however we were disappointed that there wasn’t much to support and stimulate growth for those in Food & Drink and Hospitality.

Business owners continue to navigate a complex economic landscape marked by uncertainties and challenges and hence it is encouraging to see such resilience and agility in a difficult environment.

On a positive note, the economy is showing signs of recovery and hence those little green shoots will be a welcome end to a long winter".

A bright future for Taste of The West

Amongst all of this, Taste of the West is continuing to grow, and our partnerships are playing a central part in enabling our expansion and diversification. We were delighted to welcome another 25 new members in January and another 20 in February. Bringing in new organisations is a core part of our growth strategy for the coming 2 years as we further develop our regional voice as a cooperative, with the help of Trowers & Hamlins and Bishop Fleming.

We are getting stronger and louder, which is great for our members and the broader South West as a key UK economic region. The South West is increasingly recognised both as a great place to do business and as a target for inward investment. And it's not just domestic trade that's getting us noticed. Our international standing continues to grow and now more than 23,000 businesses across the region export internationally.

These are exciting times for the South West with opportunities around every corner. Our brilliant, 'can-do' attitude in the region stands us in great stead for an even brighter business future and we're excited to be on the journey there with you.