Food and Drink
After a difficult start to the year for hospitality/pub sector, mainly due to cost of living crisis coupled with poor weather, the succession of major sporting events (football, tennis, cricket) has seen an improvement in the 2nd quarter of the year. Hopefully, this will continue across the summer as we come into the busy holiday season. However, cost pressure remains a constant as do staffing issues. 62% of “cider” value is in the on trade (pubs etc) so this sector needs to remain strong. The average pub serves approximately 5000 pints of cider per annum and hence the pub market remains critical to the sector. After a steady decline in the overall cider market since 2010 the market is now seeing a small increase mainly due to growth from the “craft sector” and now represents approximately 5% of total alcohol sales (Beer 36%, wine 24%, Spirits 32%). Consumers are certainly looking for quality over quantity. There continues to be a movement towards lower product ABV% with producers looking to capitalise on the HMRC Duty benefits of lower strength products i.e. the lower the ABV% the lower the duty paid.”
A new term is being used in the press, ‘UPF’ (Ultra Processed Food) and their possible link to early-stage cancer and disorders in young people. UPF’s are manufactured from industrial substances and contain additives such as preservatives, sweeteners, manufactured colours, flavourings, and emulsifiers. UPFs vary but tend to have higher levels of added sugars, saturated fat, as well as less fibre, protein, and nutrients. These foods are widespread in our diets often because they are time saving and convenient.
Studies of food diaries of adolescents showed the consumption of UPFs was highest among those from deprived backgrounds, those of white ethnicity, and younger adolescents in families with food poverty. Adolescents eat or drink on average a diet containing 66% of UPFs.
Dr Yanaina Chavaz-Ugalde, from the Medical Research Council (MRC) Epidemiology Unit said “Adolescent’s food consumptions purchases, and practices are influenced by many factors, including their home environment, the marketing they are exposed to and the influence of their friends and peers. Adolescence is a crucial time in our lives where behaviours begin to become ingrained”. They hoped the findings could help towards contributing to more effective policies to combat the negative effects of UPF consumption among young people and the ripple effect this has on public health.
UPFs have been suggested as one of the key drivers in the global rise in diseases such as obesity, type 2 diabetes, allergies, and cancers (often related to digestion).
The ten worst ultra-processed foods:
Energy Drinks
These legal stimulants combine sugars in the form of glucose and sucrose with ingredients like caffeine to boost metabolism and increase alertness. Although said to sharpen our focus when consumed regularly they make the heart work
harder and faster and may have serious health implications especially when consumed by children and young people.
Mass Produced Bread
This is the type that covers most supermarket shelves and is classed as a UPF. As well as the staple bread ingredients (flour, yeast, salt, and water), it typically includes additives for the purpose of speeding up the manufacturing process and extending shelf life. Examples include emulsifiers, preservatives and sugars. Mass-produced bread is said to make up as much as 11 per cent of the calories we eat, so if this is relevant to you, buying the best you can afford, with minimal additives, may make a useful reduction to the amount of UPFs you consume.
Breakfast cereals
Many popular cereals are classed as UPFs because they contain highly processed grains as well as additives, such as invert sugar syrup, salt, preservatives, and colourings.
Hot dogs
Processed meat, like sausages, are thought to carry a greater risk, as they contain additional nitrates as well as high levels of saturated fat and salt. Long-term consumption of red meat, and particularly processed meat, is associated with an increased risk of all-cause mortality, heart disease and type 2 diabetes in both men and women.
Vegan ‘meat’
These highly engineered products are designed to mimic the texture, flavour, and appearance of conventional meat. For example, a clever use of the carbohydrates known as ‘reducing sugars’ (such as dextrose, xylose or arabinose) and colourants can create the effect of a colour change from ‘raw’ red-pink to brown during cooking.
Other additives, like methylcellulose, are used to create a meat-like bite, while carrageenan improves the slice-ability when served cold. Flavour enhancers like monosodium glutamate as well as emulsifiers, stabilisers and fillers are also used to adjust the taste and texture of the plant protein. As these chemicals have varied effects on the body, they shouldn’t be consumed regularly.
Chicken nuggets
Although we might assume they’re made from lean breast meat, chicken nuggets are likely to include other parts of the bird, including tendons, skin, bone, collagen and fat. Other ingredients include starch, salt, oil, egg powder, glucose syrup as well as stabilisers and colourings.
Reformulated potato snacks
Reformulated potato snacks, such as Pringles, are made from dehydrated processed potato, refined vegetable oils, rice and wheat flour, emulsifiers, salt, and colouring. Depending on their flavour, they may also include monosodium glutamate, hydrolysed protein powders and glucose syrup.
During manufacture the ‘dough’ is rolled, pressed, and cut into stackable shapes; these are then fried in hot oil and coated with flavourings. The high temperature potentially generates a substance called acrylamide, exposure to which may be carcinogenic.
Margarine
Often marketed as ‘heart healthy,’ these spreads are highly processed. They typically combine different vegetable oils that undergo a process called hydrogenation – this solidifies the oil, so it acts more like a solid fat. It’s this process that creates ‘trans-fats’ which are now known to be as harmful to the heart as some saturated fats. Margarines also contain emulsifiers to improve their spreadability and colourings and flavours to mimic the appearance and taste of butter.
Vegan ‘cheese’
Often made from a plant-sourced, saturated fat like coconut oil, these ‘cheese’ alternatives rely on the addition of starch, stabilisers, colourings, and flavourings to create a product that mimics real cheese. They usually contribute little (if any) protein, and no calcium. They are also typically high in fat, saturated fat, and salt. Unlike other plant-based alternatives, vegan ‘cheese’ is not typically fortified with vitamins and minerals, and as such has a poor nutritional profile.
Ready meals
Most of us are short on time, so it is tempting to fall back on shop-bought ready meals. But with convenience comes cost, and not just a financial one; these meals typically contain preservatives and other additives frequently used in UPFs to make them last longer and look and taste good. Research suggests supermarket ready meals fall short on nutritional contribution, with many being high in saturated fat and salt.
What does this mean for my health?
UPFs are typically designed to be easily eaten, with a high calorie density and additives that tend to confuse our “I am full” trigger. This gives them a moreish, addictive quality, meaning we are likely buy and eat more. Their main ingredients – oil, sugar, salt, flour, and starches – makes UPFs high in fat, sugar, and salt and low in vitamins and minerals, while also being devoid of the protective plant compounds found in many whole foods.
Education
This week, the new UK government has signalled its response to the current financial challenges facing the universities sector, with the OfS warning that up to half of all universities are likely to be declaring a deficit in their finances this year. The government has continued to echo its support for the current ‘graduate visa route’ which enables international students to study at UK universities. As ‘Student Clearing’ fast approaches, there remains a small but significant reduction in domestic applications to UK universities, which is similarly reflected across the West Midlands.
Closer to home, Worcester Business School is collaborating on a future possible partnership with NMITE to develop a Masters in Engineering and Project Management, bringing together different skillsets from both institutes into one new programme. The largely government-funded H&W Help to Grow programme is open for applications for its October intake, with more than half of the spaces already booked by SME leaders and managers. The Worcester Exec MBA for business leaders also returned for new registrations this September, with Skills Boost funding opportunities for bursaries of up to £1500 towards the first year’s course fees.
Sir Keir Starmer visited the University of Worcester’s nursing students as part of his pre-election campaign (see https://www.bbc.co.uk/news/articles/c2xxzekkldno) and it might be interesting to note that in 2013 he received an honorary degree from the University. Similarly, Baroness Jacqui Smith, Minister of State for Skills, Apprenticeships and Higher Education studied for her PGCE at the University of Worcester. Alongside current challenges facing universities, there is likely to be further investment in the development of apprenticeships with the Labour Party expressing a commitment to ‘High-quality apprenticeships and specialist technical colleges’ as part of its manifesto commitment to ‘Breaking down barriers to opportunity.’ The University of Worcester is currently working on future collaborations with Chamber Patron member TDM, to improve educator support for digital apprenticeships across the region.
The other labour-related education headline relates to removing tax emption from private school fees, predicted to raise more than £1bn of additional government income through taxation. Commentators are speculating this week that Labour’s plan to end tax breaks for private schools could begin as soon as next January, as the government looks to include the measure in their first autumn budget.
Generally in Higher Education – lots of discussion around ongoing funding and lots of concerns still. For example, tuition fees (frozen since 2016), although this has been offset by recruiting overseas students, however this is now challenged now with immigration rules around this. NMITE – still UK student based, recruiting 75 students for next academic year. Keen to see new Government future plans and policies.
Insurance
Insurance premiums in many areas of motor, property and liability continue to rise. Insurers declared 2023 the most difficult year for motor claims in over a decade. However, professional indemnity rates are showing signs of easing.
Martyn’s Law which was initiated during the last Government was resurrected in the king’s Speech and will require venues and locations that can hold 100 people or more to take steps to reduce terrorism risks.
The worldwide IT disruption in the middle of July was found to be related to a fault in a software update released by Crowd Strike, not a cyber-attack as initially feared. Many cyber insurance policies provide cover for this kind of business interruption and a large volume of claims is expected.
Retail
Over June and July retail has continued to be challenging. Despite a UK wide 2.9% rise in retail sales in May sales fell by 1.2% in June. This has been put down to the poor weather, which has certainly affected us and of course – the run up to the election. Despite the result being pretty much known from day one it still seems like there was uncertainty in people making big purchases.
This seems to have now gone and we’re seeing more stability, especially with currency (we got $1.30 to the £ last week). It’s also clear that in this Summer it’s been non-food sales that we’re hit the most – with a 2% fall. Again, we’ve seen similar during the summer months.
June, compared to May, was also slower when it comes to online sales although June this year compared to last year we still 2% up according to retail sales.
In terms of three big trends that we’re following and are definitely big UK wide:
Integrating AI and other technologies is prime for most retailers. In bricks and mortar people are loving NFC tags in products – small trackable stickers that be used for wireless payment or for ‘staff free’ stores – like Amazon Go. AI is now being used far beyond customer services and marketing but increasingly is creating more bespoke shopping experiences for people. Online we’re looking at how this means AI can show the right things at the time to the right people and also help and advice as needed making a shopping experience so much easier.
The Circular Economy is a growing trend. Collecting old items, repairing them and re-purposing where it’s not possible to repair is being adopted by a larger majority of retailers. Patagonia where a real trendsetter on this and we’ve been doing this a while alongside our Loan and Go scheme but it’s crossing into all retail.
And loyalty schemes, usually driven by ‘gamification’ (for example collection points through purchases) is becoming a must have. We’re looking into possibilities that work for everyone (for example – recommend a friend and we’ll give them 10% off their next order and you 20% or £20 – that kind of thing). Food retailers like McDonalds and Greggs are doing very well with these and it’s growing – but we can’t be quite as attractive as a free vegan sausage roll or birthday donut.
So – using Technology, the circular economy and loyalty schemes are all to watch.
Whilst people focus on ‘essential purchases’ this all helps. It helps to maintain competitive in a more difficult market .
Medical science
Access to finance still an issue with part of the sector who have assets to develop but do not have the funds to run projects.
Other sectors are focussing on late stage developments getting products to market so reducing the overall number of project being run currently.
The market continues to be depressed with fewer assets being developed at the early stages of regulatory projects.
Price competition is prevalent with discounting evident to win work.
Limited recruitment with no specific issues.
Defence
Labour won, the strategic review has been initiated, Starmer claims to be committed to 2.5% of GDP being allocated to Defence – but like all of Labour plans, the question remains ‘how are they going to pay for it’? Allegedly the plan is to be complete by mid-2025. The military will probably remain quite stable in terms of shape and size, but there is a drive to increase ‘lethality’ of our forces – what that means is yet to be articulated, but it will require new equipment based capabilities, and that generates opportunities for industry.
The political instability and upheaval caused by a general election has unfortunately extended the period of military procurement paralysis, and so most defence companies are increasingly reliant on exports – at some stage UK MOD will have to start buying stuff and I suspect most small UK defence companies are sat waiting for that day…
The Ukraine war continues, and the next major event will be the US elections – if Trump wins then he has said the funding stops – and logic would suggest that will force some form of negotiation to end the war – as currently it is arguably reliant on US dollars….. whilst that may end the formal conflict I would then expect many years of civil war and regional unrest.
Transport
Like most sectors, a challenging time as we enter into the holiday season, especially for organisations that have a high agency dependency.
The Road Haulage Association has launched a blueprint document to support ‘A partnership for growth between Government and the logistics industry’. Like most bodies, putting effort in to get closer to their new ministers.
Insolvencies continue, albeit at a slightly slower rate.
Direct Vision Standards for London has had a six-month enforcement extension until May 2025 to enable equipment to be sourced and fitted (cameras and sensors).
Fuel has stabilised with the national average the same as at the beginning of the year, 113p and peaked at 119p.
General market conditions are generally challenging with a glut of vehicles (despite a higher level of cancelled orders, for new vehicles, than would normally exist). Increased costs and customers under financial pressure.
Many fleets have shrunk so it will be interesting to see how the industry copes if we have a usual Christmas peak.
Accountancy
Previous issues with recruitment have been address by the set up new Apprenticeship training programme internally, which is now paying dividends. Completed year end, with high growth. Labour budget, predicting early Oct. Looking out for income tax rises, capital gain tax, inheritance tax, pensions – full detail will be presented at local budget briefing. VAT on private school fees rumoured to be bought forward to Sept 2025, taking to Academy schools to understand impact on sector – could have an impact on state schools. Pensions, equity – take advice and advantage of any benefits before any changes. Keep watching brief on the future changes.
IT
A continuation to the positive growth since the start of the year with a steady number of new clients taking Managed IT solutions as well as cyber security-based products. Also successfully added the largest new contract signed with national coverage providing a complete portfolio of products.
Engagement with a number of large national financial institutes and underwriters, to jointly present on Cyber Security and the inherent risk of not being protected, to their downstream clients. Month on month growth seen across the full portfolio of security.
Client decision making on deals has seen a more expeditious output over the last month for considered investment into new IT environments which may be a post-election bounce or renewed confidence but no obvious reasons. So, the sales cycle is definitely seeing a positive improvement. Efficiency gains and cost savings are the lead indicators.
Recruitment and staffing is being maintained at an optimum with choice now quite prevalent in the candidate market. Candidate contract demands have receded, and salaries are in line with market rates.
BT have recently announced that the exchange closure programme will be delayed by up to 2 years, thus allowing businesses more time to plan for replacement services for the 30+ products that will be switched off. Our advice is not to leave it to chance or the last minute as the intent remains the same, to close their networks and to do that quickly.
Continued strong demand for upgraded network solutions within offices (WiFi – Print – Switching – high speed Internet connections) which continues the trend for movement back to office-based working and new location expansion.
Cyber remains a key focus in the industry and with the recent Crowdstrike issue last week, although this was not Cyber related, it really demonstrates the impact when things go wrong and services are taken down through change events. The additional risk of cyber attacks whilst it was down also demonstrated that the threat actors take all opportunities to disrupt.
Recent survey suggested that 88% of companies will be investing in new technology this year, although 38% indicated that they were anxious of change and making the right decisions.
So, in summary, the sector remains strong with a lot of new enquiries being raised. Opportunities are on the increase and decision-making cycle in general has improved. All areas of our business have expanded to meet the demands.
Banking
More M&A work recently. Equity arm – first deal done to put equity into an SME. HP and leasing slow, suggesting investment down, because sales are down. Independent schools, extremely good in H&W – challenges and changes ahead but they will weather the storm. Branch closures continue.
Recruitment
The market continues to improve with Temp demand very much leading the curve and consistently increasing since March / April time. Perm demand had remained sluggish for the first 6 months of this year but July / August it is showing the first proper signs of following Temps lead. We anticipate this will continue now that the election is out of the way and we have some certainty in government…however, this in itself does bring about some potential issues for the recruitment sector and things that employers should consider moving forwards. The Labour Party’s “New Deal for Working People” covers a wide range of things including but not limited to – unfair dismissal rights from day one; enhanced redundancy rights; creating a single status of “worker”; repealing union laws; right to switch off; living wage aligned with cost of living.
Legal
Commercial property
A continuing lack of excitement in the high street to take on long leases of retail shops. However, there is some limited interest in local businesses venturing into this market to take on short terms leases for favourable rents and including tenant breaks.
A continued high demand for leases of small to medium light industrial units but with limited stock available with a more balanced approach to landlord and tenant obligations to those in the retail sector.
A more buoyant market in the letting of office suites but with tenants are still unwilling to take on longer leases without breaks.
Cash investor clients still wish to take the opportunity to invest further into light industrial units but continue to find it difficult to locate any such available property and struggle to find any local development land for such use to buy and develop. Investment in other types of freehold commercial property is not obvious from the type of work we are currently instructed to handle.
Employment
Uncertainty among employers over Labour’s new employment legislation
Day 1 right to unfair dismissal (but with a carve out for probation) – not sure exactly how this will work. Some employers looking at dismissing staff under 2 years’ service before the new laws come in where they are not 100% sure they are the right fit
Need for employers of all sizes to watch this space as we get the draft legislation and more details of how the changes will work in practice.
Private client
Slightly quieter; maybe to wait and see what changes may occur. Rumoured IHT increase but this only affects 4% of estates in any case.
Corporate
Busy in anticipation of possible CGT increase. Increasingly looking at alternative exit mechanisms such as employee ownership trusts etc to mitigate possible CHT issues and there are greater sources of financing available for these structures than a few years ago.
Education
Sector extremely busy, acquisitions of schools by PE/conglomerates picking up pace.
Residential property
Market is very tricky! Deals which are made by agents are fragile and messy. Mortgages subject to unusual conditions and I have seen a couple withdrawn where previously there would have been extensions or retentions.
General
There is still much consolidation in the legal industry with aggregators, such as Knights and Gateley, acquiring smaller firms – a recent acquisition for Knights being Thursfields in Worcester.
Client confidence is still being affected by economic pressures, which translates to a pressure to limit legal fees, although there are some benefits to regional firms, winning work from there more expensive competitors in Birmingham and London.
Whilst improved from the beginning of the year, activity in residential property is fairly level, as is commercial property although we are focusing on specialisms such as renewables projects (in particular battery storage and solar projects).
Corporate has been boosted by seller anxiety in relation to CGT rises and possible diminution of tax reliefs – this has led to an acceleration in sale transactions and sales to employee ownership trusts.
Cyber security threats continue to be at the forefront of our minds, and we are increasing training and security initiatives in that respect.
We are also looking at ways of differentiating ourselves from competitors by focusing in particular on improving the client experience; and following up enquiries and other opportunities more efficiently.
Construction/Manufacturing
Reports suggest that the construction sector decline has showed signs of gradually levelling out, with the underlying value of project starts in Q2 2024 demonstrating a -2% reduction vs Q1 2024. Despite this, the sector is still down significantly vs Q2 2023 (-19%). Data suggests that social housing performance propped up the residential sector with the number of starts up +12% vs Q2 2023. Private housing continues to struggle with starts down -5% vs Q1 24 and -27% behind 2023 levels. With regards to non-residential, reports suggest that retail is the only sector to experience growth vs Q1 24 and 2023. Hotel & leisure, education and office starts continued to struggle.
The Labour government outlined their ambition to build 1.5M new dwellings alongside accompanying infrastructure within the first five years of government. In order to achieve such growth levels, the growing skills gap within the sector will need to be addressed. According to CITB, some 251K additional workers will be required in the next 4-5 years. The sector awaits further details regarding the governments plans for the Future Homes Standard and what it means for sustainability targets going forwards within the built environment.
Sources:
CITB: https://www.citb.co.uk/about-citb/construction-industry-research-reports/construction-skills-network-csn/#uknations
GLENIGAN: https://www.glenigan.com/glenigan-index-of-construction-starts-to-end-of-june-2024/
Institution of Mechanical Engineers: https://www.imeche.org/news/news-article/labour-wants-to-build-1.5m-homes-this-tech-could-help-them-do-it