Adapting to Change: Opportunities for UK food producers in 2021
At FEG we work with many UK food producers that are looking to adapt their operation. Whether it’s expanding to meet customer demand through new production lines, streamlining processes to increase efficiencies within their operation, or creating more comfortable working environments for their employees through odour control and ventilation, we’re truly in the business of change.
And with the year we’ve had, the ability to adapt has never been more important for UK food producers. One of our customers that has truly embraced this is Scottish producer PK Foods Glasgow Ltd.
We spoke to PK director Jason Stevenson to get his take on the challenges and opportunities facing the industry in the wake of the pandemic and Brexit.
About PK Foods
Rutherglen-based food manufacturer PK Foods Glasgow Ltd has produced Indian starters and snacks for retail and wholesale markets across the UK for more than 20 years.
Employing 27 staff, including manufacturing, admin and driving teams, the family business prides itself on keeping its entire operation in-house – from recipe development and cooking the product from scratch, right through to packing and delivery.
PK supplies more than 90% of Scotland’s wholesale sector, including Dunns Food & Drink, Cambells Prime Meat and JB Foods, and counts the likes of Costco, Morrisons, Co-op Food, Scotmid, Spar and Nisa among its retail customers.
Director Jason Stevenson joined business partner David Mirani nine years ago – and he’s certainly no stranger to change. Hailing from the East End of Glasgow, Jason’s career has included roles as a civil servant working in the Central Office of Information, producing Weekend magazines for News International, and working with Glasgow Taxis.
Jason was introduced to PK through his accountant, and despite having no prior food experience has helped the company grow fivefold during his tenure – a 50% increase in turnover year-on-year.
The impact of the pandemic
When the pandemic hit the UK in March 2020, Jason’s first thought was how to look after his team.
“At the start, people were really frightened,” Jason says. “We have an incredibly ethnically diverse staff, including people who have come from countries that have had pandemics and not coped and they were understandably scared.
“We were happy to offer furlough and support if they chose not to come in because for us it was about protecting their wellbeing – but after taking some time to think most of them did choose to come to work.
“Like all food businesses, we felt completely in the dark in those early days. There was just no basis for comparison – the whole industry was scrambling about in the dark!”
With the UK in lockdown and restaurants closed, PK’s wholesale business collapsed overnight, while supermarket demand exploded.
“We were fortunate in that we didn’t supply just one side of the market,” explains Jason. “Our customer base is wide ranging and we weren’t reliant on a single sector.
“Supermarkets began placing huge orders to keep up with customer demand.
“Their concern was keeping their shelves filled. It was labour intensive and we had to take on extra staff to cope.”
Keeping up with demand
Timing was on PK’s side. FEG had just completed a project for the business that saw it able to cope with the increase in orders.
“We’d invested a lot of money in the front end of our process to drive volume through but that had created backlogs and bottlenecks at the other end,” explains Jason. “We were inefficient when it came to the cooling, packing and storage of products.
“Customer demand was increasing; time was reducing, and we had to act.”
The first phase of a five-point plan to transform the business, the work allowed PK to keep up with the increase in supermarket orders.
“The work meant we were ready when the large volumes came in from retailers and we were in a position to act,” Jason continues. “This is capacity we thought we’d need in five to ten years, not immediately!
“There’s no question that we would have lost money if we hadn’t completed this work. We would have either fallen over or had to cancel orders. The timing was incredibly fortuitous.”
Learn more about the first phase of work we completed with PK, solving major space constraints and achieiving a 20% increase in output.
What does Brexit mean for UK food producers?
The food sector has been a source of major concern for the UK post-Brexit and UK food producers have expressed concerns. For Jason, the majority of the issues came in the run-up as the supply chain began forward buying, creating difficulties for PK.
“We’re an SME,” explains Jason. “We don’t have the resources to bulk buy ingredients and throw excess capital at the supply chain, and even if we did, we don’t have the capacity to store huge amounts of fresh stock.
“It was a stressful time. Supermarkets were constantly asking questions and wanting to know our stock holdings and systems in place. Again, as a smaller producer these things are difficult to formulate and evaluate.”
The business was forced to make ingredient changes to some of its lines and saw a short-term loss in profits while supply issues were resolved but operations are now seeing a return to normality.
Long-term implications
Jason doesn’t believe Brexit will affect PK Foods in a significant way long-term as it is not an exporter to the EU, but he has concerns about the wider industry.
“We’re seeing Scotland’s shellfish industry suffering in a big way at the moment and it’s in the hands of the government to promote UK products abroad and showcase what we do best,” he says.
One area where he does have apprehensions is staffing.
“A number of workers come to the UK with EU passports but they’re not necessarily from an EU country,” Jason explains. “We have staff from different countries that are here on EU passports. Things are okay at the moment, but I think staff replenishment will be an issue long-term.
“The solution will be upskilling UK workers and changing the attitudes of people who look upon the low skilled sector as not an attractive prospect – but this will all depend on government planning and how they perceive future opportunities.”
Jason doesn’t believe there will be a change to the existing relationships UK companies have with those in the EU.
“It’s not beneficial to either country to end a relationship. We’re not going to stop buying Spanish onions, due to the supplier being inside the EU, for example.
“With the pandemic the focus has been off business but I’m hopeful that the UK will start looking at different markets and opportunities abroad.”
Future growth
With phases two and five of PK’s work with FEG underway, the business is firmly looking to the future.
Phase two sees an expansion of the freezer area, which will allow PK to reduce the number of deliveries it receives each week, while phase five is the creation of a food production area which will allow the business to expand its product offering.
“We re-evaluated our business entirely during the pandemic,” explains Jason. “During lockdown we were reviewing processes, streamlining the business and looking at new sectors.
“We used to have the public come to our premises to collect orders and fans of our products coming home to Scotland and ordering a year’s supply of products to take back with them. None of that has been possible this year and customers have been asking us to send them products instead.
“We’ve identified an opportunity and we want to offer new lines of ready meals with an ecommerce system to go alongside it.”
We want to be brave – it’s easy to hide away when uncertainty hits but you have to be brave, consider market trends, streamline and evolve as the market evolves. You can’t stand still. There are always opportunities out there.
Working with FEG
Jason explains PK Foods chose to work with FEG due to our flexible approach. We developed a five-phase plan which allowed PK to pick and choose the areas it wanted to focus on, with flexibility to change things later.
“We liked that FEG were prepared to listen, understand our requirements and come up with solutions, before we even talked about costs and plans,” says Jason.
“As an SME it’s about what capital we can raise against the health of the business. By breaking it up into bitesize pieces we could chip away at it and we weren’t put off by the overall cost.
“By completing phases two and five now, we’ll be able to get the return on our investment that will make phases three and four possible.”
Our years of experience has led to our status as a proven and trusted consultant for the food processing industry. To find out how we can help UK food producers considering adapting their manufacturing facility to the changing landscape, get in touch with our expert team.