The bank’s PMI was at 53.5 in August, which surpassed the all-manufacturing reading of 49.6.

RBS has said that Scotland exports more beverages than the rest of the UK combined – with sales of Scotch Whisky reaching almost £5 billion in 2018.

The bank has also said that orders have improved once more so far in 2019 despite global economic headwinds.

It stated that food and drink accounts for nearly one-in-four manufacturing jobs in Scotland, with the largest concentration in Moray, home to the Malt Whisky Trail.

The bank has also revealed that the food and drink sector also accounts for nearly one-in-four manufacturing jobs and underpins Scotland’s position as the dominant force behind UK international trade in agrifood products.

It is against this backdrop, that RBS has compiled its new Purchasing Managers’ Index data to examine the production trends, export sales and business expectations signalled by Food & Drink manufacturers in Scotland.

The headline seasonally adjusted Scotland Food & Drink PMI - a single-figure measure of developments in manufacturing conditions - registered 53.5 in August, down from 53.9 in July. However, the index has remained above the 50.0 ‘no-change’ value that separates growth from contraction in each month since June 2013.

A sustained improvement in food and drink business conditions for over six years stands in contrast to the trends seen across the Scotland manufacturing sector as a whole. The equivalent Royal Bank of Scotland Manufacturing PMI reading was 49.6 during August. In fact, on RBS’s measure of business performance, the Food & Drink category has consistently outperformed the rest of the manufacturing sector since late-2014.

The deep tentacles of Brexit uncertainty and an intensification of global trade tensions have taken their toll on business optimism across the Food & Drink sector. While still expecting growth in the coming 12 months, the latest survey data reveals that business confidence among food and drink producers is the lowest since this index began in 2012.

While near-term expectations have become less upbeat, RBS has found that new export sales across the Food & Drink sector continued to pick up in the three months to August.

Resilient export sales have been achieved against a less favourable global economic backdrop. Our Food & Drink Export Climate Index for Scotland signals the slowest pace of economic growth in overseas markets since May 2013.

RBS has said that a key reason to be optimistic that Scotland’s food and drink producers can decouple from the recent global economic slowdown is the sector’s exceptional record for gaining a foothold in new overseas markets, especially the opportunities provided by fast-growing consumer demand in emerging markets.

The export success of the whisky, bakeries and aquaculture industries means that Scotland accounts for 29% of all UK Food & Drink sales to overseas markets. In fact, Scotland exports more beverages by value than the rest of the UK combined.

RBS also found that the value of whisky exports to India and Japan has doubled since 2013, while sales to China and the United Arab Emirates have risen by around 50% over the same period.

The contribution of Scottish food and drink exports to rural economies is impossible to underestimate. Of particular note, Food & Drink is responsible for 41% of manufacturing jobs in the Highlands and Islands and this figure reaches over half of all manufacturing jobs along the Speyside Malt Whisky Trail.

Malcolm Buchanan, chair, Scotland Board, Royal Bank of Scotland, said: “Scotland’s food and drink sector has been a huge success story over the last 20 years and its contribution to the Scottish and UK economies is very significant. It is, in fact, Scotland’s largest sector. Whilst Scotch Whisky is a major component of the industry it is a sector that offers a rich diversity of world-class products firmly rooted in great quality and provenance of home grown raw materials.

“As we look into the immediate uncertainties that we face as a consequence of Brexit, the Royal Bank of Scotland remains committed to supporting our customers through whatever changes and adjustments need to be made over the longer term. We have been working with the food and drink industry almost since the Bank was established in 1727 and we will support the sector’s growth long into the future.

He added: “Uncertainty is not only about challenges. There will likely be great opportunities ahead too. Food and Drink Scotland has a vision to double the contribution of the sector by 2030 and that should be within our grasp given the quality of what Scotland has to offer is excellent. The heritage of many of our great food and drink brands, the new brands being built, the quality of our products and the skill of our world-leading farmers, fishermen and manufacturers means that Scotland’s food and drink will be attractive in many new markets.

“Royal Bank of Scotland wants to collaborate with food and drink producers, farmers and fishermen to help take advantage of these opportunities and deliver a thriving sector for many years to come. Continuing the traditions of our almost 300-year relationship with the sector to unlock the potential of the future.”

Sebastian Burnside, Royal Bank of Scotland chief economist, said: “In a world where growth has become harder to find the Food & Drink sector makes a refreshing change and stands out as Scotland’s strongest. The outperformance of the Scotland Food & Drink PMI for the last four years is striking. Its durability through the varying economic and political backdrop is tremendously valuable.

“Focusing on the last 12 months, the Food & Drink industry has grown by 6.7%, five times faster than the 1.3% managed by the broader Scottish economy. This is no flash in the pan. The value of output today is a third higher than it was a decade ago, compared to a 10% expansion of Scottish GDP. As such, Food & Drink manufacturing is making an increasing contribution to Scotland’s prosperity, reversing the trend seen across many other parts of manufacturing.”

He added: “There are many drivers of the sector’s high performance, from inspiring individual stories of success to market-wide trends that play to Scotland’s strengths. Particularly notable amongst these is the power of selling products with a strong sense of place. As consumers pay more attention to the provenance of what they buy, particularly towards the luxury end of the market, the connection with where the product has come from needs to keep up. Scotland’s brand, at home and abroad, is a vital asset and the food & drink sector has both harnessed and helped build its value.

“These are great foundations for further growth as we look to the future. With climate change becoming an issue increasingly at the forefront of consumers’ minds there is the opportunity to drive home the difference. Scotland’s natural assets open up possibilities for sustainable production that producers in other parts of the world lack. And whilst reducing the carbon intensity of production is a massive challenge for all firms, Scotland’s food & drink producers are well placed to lead the way.”

James Withers, chief executive, Scotland Food & Drink, said: “Just over a decade ago, Scotland’s decision-makers were debating whether food and drink should be a priority sector in the nation’s economic strategy. That is a reminder of how far Scotland’s food and drink industry has come; from economic after-thought, to star player. Now driving Scotland’s export performance – indeed seen as a model to follow by the rest of the UK – there is much for our farming, fishing, food and drink industry to be optimistic about. This report confirms again that the food and drink manufacturing sector is outperforming other industries. We also know that in the past 10 years, the rate of food manufacturing growth in Scotland has been double that of the sector in England.”

He added: “However, the current outlook is something of a paradox. For sure, the long-term vision for our sector to 2030 is marked by opportunity. In a world where provenance matters, where increasing wealth has consumers on a search for premium products and where a climate emergency is turning attention to sustainable forms of food production, there can be few countries now better positioned to take advantage than Scotland. Yet, this long-term reason to be cheerful is contrasted by enormous short-term uncertainty.

“The political circus that is Brexit has huge implications for our sector. Our industry is resilient and talented enough to navigate any Brexit deal. But the prospect of No Deal hangs over us, with the potential for it to set our export progress back years. With £2 billion of annual food and drink trade with our EU partners, alongside a 40,000 strong workforce of talented non-UK, EU nationals, the stakes are high.”

Mr Withers also said: “The stark reality is that despite all the work of the last three years to prepare for a possible No Deal, the end outcome is out with our control. So, across the Scotland Food & Drink Partnership, our focus is on the factors we can control. We can control how we develop Scotland’s brand overseas – perhaps our most important asset. And, alongside exploiting untapped opportunities in the home market, we can control how we develop many of our most promising export markets.

“This report is right to highlight collaboration as being a key feature of our industry’s success. In fact, it has been transformational. Scottish Government and its agencies have stood squarely alongside the industry to drive growth. That means we can now point to a global team of trade specialists in 15 cities around the world, driving new opportunities for food and drink producers.

“That kind of resource, twinned with innovations in technology such as the development of a national e-commerce platform for our products, meaning further growth is well within our sights. I can’t predict the short-term future for our sector, but we should be as confident in the long-term as we have ever been.”