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ADVERTORIAL: Adapting to the next normal in the food and drink industry



2020 has presented unprecedented challenges to the Scotland food and drink sector, though the agility, innovation and resilience demonstrated by many Scottish businesses has been one of a few positives.

The effects of the pandemic and national lockdown have impacted each business differently, with some being forced into a stand-still while others have experienced a surge in demand.  

One fundamental consequence of lockdown restrictions and health and safety concerns has been a change in consumer behaviour. Despite the best efforts of supermarkets to implement social distancing and with consumers spending more time at home, we have seen a sharp rise in delivery direct to the consumer.

This change in behaviour has presented multiple opportunities for Scottish food and drink businesses. At Anderson Anderson & Brown (AAB), we have seen first-hand when working with our clients – supporting with grant funding applications, fundraising or a review of the business model – how businesses are adapting and using technology to either open up new revenue streams or revolutionise their business model and operations.

We are finding that mid- and long-term growth strategies are being accelerated to take advantage of immediate opportunities and, in some cases, simply to survive. However, innovation and investment require significant thought and we would always suggest speaking with your advisor before taking action such as the following examples.

  • We have seen the successful implementation of direct sales across many food and drink sub-sectors such as agricultural businesses delivering meat and fresh produce to local households, bars and restaurants delivering takeaway food as well as retailers operating a delivery service while their doors remain physically closed.
  • A catering client successfully applied for the Bounce Back Loan Scheme (BBLS) to accelerate their growth plans and to invest in new technology which enabled them to sell their fresh produce products using contactless payment and to a wider client base.
  • A hospitality client has used the downtime to develop a large outdoor seating area, enabling them to re-open to the public at an earlier stage than before and increasing their capacity with and without social distancing.
  • We have seen alcohol retailers have become distributors for wine and spirit companies offering online tasting sessions via video call platforms.

Innovation, from the development of product ranges to modifying operational processes, has been essential for businesses responding to the challenges presented by the coronavirus. It goes without saying that in the current climate cashflow and working capital requirements have been under greater scrutiny. We encourage owners and management teams to be mindful of potential Research and Development (R&D) tax claims. Several of our clients have successfully applied for R&D claims in recent weeks which provided a welcomed boost to their working capital and cashflow during these unprecedented times.

Throughout the country businesses have been accessing Government backed support via the VAT deferral scheme, Job Retention Scheme, Coronavirus Business Interruption Loan Scheme (CIBLS) and others.

For businesses in the hospitality and tourism sectors, the temporary reduction in the VAT rate from 20 per cent to 5 per cent until 12 January, 2021 will hopefully provide a welcome stimulus. With the reduced rate applying to supplies of food and non-alcoholic beverages for consumption on-premises, hot takeaway food and beverages, hotel and holiday accommodation and entrance to certain attractions, many businesses in the hospitality and tourism sectors will hopefully see increased consumer demand for their services. Coupled with the 50 per cent “Eat out to help out” discount available from Monday to Wednesday throughout August, restaurant bills will be reduced to further encourage those looking forward to safely visiting their favourite venues.

These Government measures have certainly helped steady-the-ship over recent weeks and months but now businesses need to be more forward-looking. We have been working with our clients to modify projections and review internal processes to ensure the right information is being used to make the right decisions, and to formulate business plans for the short- and mid-term to ensure their businesses are scalable and commercially sustainable.

Technology has also benefitted clients’ internal processes. Businesses using cloud accounting for instance have seen the benefit of being able to monitor their financial position using real-time information, enabling them to have a stronger grasp of their cashflow and working capital.

Derek Mair is a partner and head of food & drink at Anderson Anderson & Brown



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