Covid-19Food and DrinkNews

FEA Members Feel Confident Yet Cautious Over Recovery, but Supply Chains Still a Worry

Members of the Foodservice Equipment Association (FEA) have contributed to two recent surveys that provide an overview of the post-covid recovery as well as spotlighting the concerns caused by ongoing supply chain issues.

The first is the FEA’s business barometer survey for the 4th quarter of 2021. It shows an industry that is mostly confident about the future, but with serious underlying concerns about how the issues facing the wider economy could affect it.

“After an unprecedented couple of years, the survey shows that the foodservice equipment industry is in a great position to bounce back,” says Stephen Hobbs, chair of FEA. “However, the continued issues with supply chains, rising costs and overall economic instability remain big problems for many.”

The survey indicates that the post-Covid recovery has been strong, with nearly half of the companies reporting that sales have returned to pre-pandemic levels. Further growth is anticipated over the next eighteen months, with 90% of companies predicting sales will have fully recovered to 2019 levels by then.

The major areas of concern for 2022 were overwhelmingly price increases and inflation, the cost of raw materials and the supply chain. Over 90% of those surveyed are worried about these issues. In other areas the picture is more mixed. While the majority of businesses aren’t worried about a lack of economic growth, reduced customer demand or being able to find appropriately trained staff, a significant percentage are.

Of least concern is the availability of credit, the uncertainty over the UK’s role in Europe and regulatory pressures.

Over 80% of companies say that selling products to new and existing customers will be the most significant drivers of growth, with 62% looking to expand into new customer bases. Just 22% plan on launching new products to target competitors and 28% are looking to expand into new geographical regions. This could indicate that 2022 will be a period of retrenchment, focussing on strengthening existing markets rather than potentially risky new ventures.

The greatest threats to growth are seen as the inability to control cost increases, and the overall weakening economic environment. “The rising price of raw materials is a very serious concern to FEA members,” says Stephen. “The continuing supply chain problems are having huge effects on the world’s economy, and it is very likely that this trend will have serious implications for the foodservice equipment industry throughout 2022 and beyond.”

The supply chain issues were further examined by the survey carried out by Euris. Euris represents the industrial product sector to identify the potential impact of the changing relationship between the UK and the EU. The FEA is one of twelve professional associations that make up Euris’ membership, covering industries that represent over 25% of the UK’s total goods both import and export.

The results of the survey show that 50% of companies say that they are having the same supply chain issues as three months ago, while 31% say the problems are getting worse. Only 9% see things getting better in that timescale.

The biggest challenges are availability and cost of materials, with 91% identifying these as the most serious issues, but logistics and demand are also very significant to 83% and 74% respectively.

92% of businesses expect the supply chain crisis to continue for more than six months, with 40% suggesting it will last for longer than a year. While costs are seen as the most pressing challenge, delays and extended lead times for components are causing huge problems too.

“The worldwide shortage of silicon chips continues to affect a range of businesses,” says Stephen Hobbs, chair of FEA. “Suppliers are often prioritising larger customers, which can mean that our members keep getting forced to the back of the queue. We’re hoping solutions can be found – whether it’s combining the purchasing power of companies in the short term, as well as increasing silicon manufacturing capacity in the UK or EU in the long term.”

Despite these problems, the strong recovery and the high levels of confidence shown by companies in their ability to continue and sustain growth indicate that the foodservice equipment sector is in a good position to maintain its position in the economy. “The last few years haven’t been easy, and it doesn’t look like the fundamental issues the industry is facing will be going away any time soon,” says Stephen. “However, there are definitely hopeful signs, and the confidence many FEA members are demonstrating in their future potential is a big one.”