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allegraTop food executives are more optimistic over the economic health of the UK food and beverage sector than they were 12 months ago. The majority of food businesses experienced like-for-like sales growth in the 3 months to December 2009.

Senior decision makers remain cautious about prospects for 2010, with recovery across the wider economy expected to take 12-18 months.

Building customer loyalty and innovation are critical for future corporate success within the food and beverage sector as competition intensifies. ‘Anti-brands’ and artisanal concepts are rapidly growing in popularity.

Key findings

Improving trading environment but cautious times ahead

• The current trading environment has improved significantly in the last 12 months. Double the number of top executives in 2009 report the climate is positive compared with 2008 However, trading in January 2010 has been difficult due to severe UK weather conditions

• Business leaders will remain cautious during 2010. 86% of industry leaders predict full economic recovery will take longer than 12 months

Competition within the marketplace intensifies

• The depreciating pound is a major concern for businesses and has resulted in increased input costs for many food and beverage operators

• As financial institutions impose stricter lending criteria, access to capital is one of the key challenges currently facing businesses within the food sector

Consumer value consciousness will last beyond the recession

• UK consumers have benefitted from increased discounting and promotions in the marketplace during the recession. Consumer scrutiny of the trade-off between price and quality will be an enduring legacy of the recession

Ethical issues take a back seat in the recession

• Increased consumer demand for value during the recent economic downturn has resulted in weakened appetite for more expensive ethically sourced products

Pret A Manger is voted most admired brand

• Pret A Manger is currently the most admired food sector brand, revered for its product quality, consistency, forward thinking and superior execution

• Waitrose is the most admired UK supermarket brand

Building customer loyalty is paramount for future success

• Investment in staff and training will increase over the next 5 years as building customer loyalty becomes a critical corporate competency. Three quarters of businesses are planning to increase investment in staff training in the next 3 to 5 years

• Utilising social networking media will be of paramount importance for businesses here forward to promote, engage and interact with customers

• Brand identity is growing in importance. Strong brands will also have to develop a ‘local feel’ to appeal to consumers’ changing tastes

• ‘Anti-brands’ and artisanal concepts are a niche but fast growing trend

• The capacity to innovate will be a crucial business success factor as competition intensifies in this marketplace

Editor’s Notes
Allegra Strategies is a London-based management consultancy and has accurately predicted trends in the UK foodservice market since 1999. Allegra is recognised as one of the global leaders in coffee sector and foodservice research.

Sources
• 311 in-depth interviews with senior executives across food retail, foodservice and hospitality and food and beverage suppliers
• Typically CEOs, Managing Directors, Country and Regional Managers, Marketing and Brand Directors and Senior Operational Managers

Further information: www.allegra.co.uk

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