Andrew Walker

In April, the First Minister was encouraged to take “urgent action” by Food & Drink Federation (FDF) Scotland as figures showed that food inflation had increased to 19.2 %, the highest recorded rate for more than 45 years. To steady the sector, the First Minister announced his 10-year stability plan, which aims to provide the food and drink sector with a 25% increase in turnover by 2028.

This stability plan signified to leaders involved in the sector that a focus on safeguarding through due diligence and preparation is vital. Industry leaders must take action to ensure their business is well-equipped for scenarios such as inflation and staff retention.

To prepare, there are three key factors business leaders must be mindful of: establishing concrete contracts, food and drink supply chains as well as price fluctuations.

Ensuring staffing contracts benefit both staff and the overall business will stand businesses in good stead against any unforeseen changes within the food and drink sector. It is important to understand the different types of hospitality contracts out there and pin down which type will be most favourable to a workforce.

For example, a zero-hour contract may be beneficial to an employer as they allow for a flexible pool of staff to call upon if work becomes available, but without any commitment to offer work.

However, these contracts are becoming fraught with criticism due to their unreliable nature and lack of security for workers.

Providing employees with contracts that state clear and considered obligations and rights is an efficient way to retain staff and avoid high turnover, which in turn could potentially result in a solid workforce through uncertain times.

After the Covid-19 pandemic, a large volume of food and drink supply chains shut down, resulting in many contracts not being honoured. With the remaining supply chains now under immense strain, it is essential for Scottish food and drink sector leaders to review supply chain contracts and make sure they are the correct choice for their business’s operations.

Reviewing a business’s mode of operations and understanding the pace of supply and demand will help to inform decisions around supply chain contracts and keep things on track. The three main types of supply chain contracts are: continuous, fast and flexible. Each contract offers a variety of benefits depending on a business’s process of operation. For example, flexible contracts suit the needs of more seasonal businesses while a fast contract works best for businesses that need to meet high demand quickly.

As for price fluctuation, it is best practice to shield a business from the inevitable ups and downs of the economy by futureproofing pricing policies. Having transparent pricing policies that reflect the ever-changing economy is the best approach in safeguarding a business from potential backlash over pricing changes.

Given food inflation doesn’t seem to be slowing down, it will be vital for stakeholders in the Scottish food and drink industry to prepare for any scenario. By prioritising due diligence and considering the various valuable legal and commercial steps outlined above, the vision of achieving a 25% increase in turnover by 2028 becomes more attainable.

Andrew Walker is partner and head of corporate growth at Morton Fraser. This article first appeared in The Herald.