UK drinks SMEs outperform other sectors
Small and medium-sized UK beverage manufacturers are performing favourably when compared to other sectors, a new report has found.
The Manufacturers’ Health Index, which is compiled quarterly by inventory software brand Unleashed, assesses industry fitness on a scale of 0-100 for UK-based SME manufacturers.
With a score of 70 out of 100, UK SME beverage manufacturers are performing well above the industry average (50/100), ahead of medical, automotive and electrical supplies.
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The index is calculated from several key performance metrics including sales, purchasing and internal efficiencies that impact stocking levels and lead times across 16 manufacturing categories.
Beverages delivered an impressive improvement in lead times down to 14 days in Q3, the lowest of any UK industry and more than a full working week faster than the UK all-industry average of 20 days.
But while the homegrown drinks industry, which includes both alcoholic and non-alcoholic manufacturers, is in good health, the index shows that food producers are lagging with a score of just 30 – the second lowest in the rankings.
Jarrod Adam, head of Product at Unleashed, said: “Manufacturers in every industry category were hit by challenges from all directions in 2023 – including high inflation and rising borrowing costs.
“The UK is home to a wide variety of artisanal beer, wine, spirits and coffee producers, as well as suppliers to big-name brands.
“No doubt the cost of living crisis has made some people think twice about going to a pub or coffee shop but many drinks manufacturers could make up the shortfall through retail and direct-to-consumer sales. Moreover, unlike food producers, beverage manufacturers haven’t been under the same pressure to keep prices down to support struggling households. The low index score for food is a sign that independent food manufacturers have seen their profitability dented because of this pressure.”
Top of the table were cosmetics and personal care, and industrial machinery, raw material and equipment, which both achieved a near-perfect score of 98. Office equipment and supplies were bottom of the table at just 18 points, followed by food at 30 and electronics and communication at 38.
Looking ahead to the coming year, Adam said: “Whether beverage manufacturers trade under their own name, or are a supplier to a household name, our analysis suggests that they are in a strong position to meet this demand because they have finely tuned their inventory management processes. Of course, any improvements they make would put them on an even stronger footing in this highly competitive and fast-moving sector.”
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