Executive Interview: David Thomson, FDF Scotland
As part of Carlyle’s series of Executive Interviews and Industry Spotlights, Jamie Brown (Associate for Food, Drink and Manufacturing, Carlyle) caught up with David Thomson (CEO, Food and Drink Federation Scotland) to discuss the opportunities and challenges facing the Food & Drink sector in 2018, the importance of collaboration in promoting innovation, and the impact of the changing role of both the consumer and the regulator on the industry.
For those less familiar with FDF, could you describe the organisation’s role within the Food & Drink industry.
“As part of the wider FDF in the UK, we act as the independent voice for organisations with a food manufacturing presence in Scotland. Our main responsibilities include: supporting our members to respond to political, socio-economic and regulatory change; working with local Government to shape policy and ensure that the interests and concerns of our members are heard; and acting as the voice of the industry within the media.”
You have just completed your second full year in post; how would you reflect on that time and what progress would you highlight?
“When I joined at the end of 2015, we set out to achieve three things. Firstly, we aimed to raise the profile of FDF across the sector [which is measured through engagement levels and enquiries] and have increased this significantly. Secondly, we wanted to act more effectively as the voice of the industry and increase our media presence, and have driven a substantial rise in coverage over the past two years. Thirdly, we wanted to increase our member base, and in the last two years have grown member numbers by circa 10% and, with the addition of professional affiliates, have increased revenue by 18%. So overall, things are moving in the right direction.”
Moving into 2018, what are FDF’s key areas of focus for the industry?
“This is a critical year for the industry. Firstly, and I am sure this issue holds true for every business irrespective of sector, we will look to support all of our members as they prepare for the implications of Brexit and any trade deal, or lack of, that might arise. Dependent on the scale and resources of each business, the requirements and implications will vary. At the moment, we are focusing on ensuring businesses have access to pertinent information that will help inform future strategy. For example, helping organisations to understand the variety of tax and consumer legislation they may have to deal with when exporting, as well as potential frameworks such as the Authorised Economic Operator model. We will also continue to lobby Government and the EU for a comprehensive trade deal which protects all the benefits and ease of trading that we currently enjoy.
Alongside critical macro-economic issues, we are involved in consultation with the Scottish Government at a local level on a variety of initiatives. Key consultations we are currently involved with include the national Counter-Obesity Strategy and the creation of a plastic bottle deposit scheme.”
What are the current challenges the Food & Drink sector face and how can businesses address these?
“There are a number of areas in which the industry faces challenge, but with challenge also comes opportunity:
Workforce: Given the impact of Brexit and the potential stem of inward migration, businesses will have to be proactive in maintaining staffing levels. The sector currently employs around 45,000 people, and we will need 19,000 additional recruits by 2024 to meet the skills needs of the industry. There is a significant opportunity here for UK manufacturers to utilise Technology and Automation as part of a larger solution to this issue. Whilst many people see Technology as a threat, the automation of some processes could plug the gap in resource scarcity and help move UK manufacturers forward in becoming sector leading producers.
Export Opportunity: Until we see the outputs of any global export agreements, we do not know how this will work in reality. Our role is to ensure that our members are ahead of the curve and as proactive as they can be in terms of gearing up for change.
Regulation: The Food sector is the second most regulated sector in the UK [driven in part by EU legislation], and given the current position taken by the Department for Environment, Food & Rural Affairs, and in some areas by the devolved Governments, we envisage that this will only grow more stringent. Our role is to try to ensure that the voices of our members are heard and their interests taken into account with regards to the creation and implementation of effective legislation.
Prioritisation: We are fortunate that the Scottish Government understands the value of the sector to the economy [which accounts for 25% of all manufacturing jobs] and is a positive supporter of the industry. On a UK level, significant strides have taken place in raising awareness for the industry. However, despite the sector being valued at more than Aerospace and Automotive combined, we still feel there is more to be done in terms of promoting and investing in the sector from a UK wide perspective.”
What role will you take in supporting the goal of making the sector a £30bn industry by 2030?
“FDF are one of the founding members of Scotland Food & Drink and I am the Innovation Champion for the organisation – a big role! James Withers (CEO, Scotland Food & Drink) and I have a very cohesive working relationship, and FDF support James and his organisation in helping to drive the strategic agenda and by providing regulatory advice and guidance. All in all, it is a very positive relationship and one which is growing more collaborative over time.”
[The Ambition 2030 initiative which is by driven Scotland Food & Drink aims to grow the value of the Food & Drink sector to £30bn by 2030; in 2017 the industry was worth nearly £14bn].
Do you see opportunity or areas in which businesses could better collaborate to promote innovation?
“‘Collaborate to innovate’ is something we believe in strongly, and we try and take a lead role in promoting collaboration and making the space to innovate accessible to all of our members. Although Scottish R&D statistics have almost doubled in the past few years, as a sector we could do a lot more. If you look at the Netherlands, there is a very dynamic and collaborative approach to innovation, with strong links between large cooperatives (agriculture), manufacturers, technology centres and academic institutions, and I feel we can learn a lot from their sector model.
We do have lots to be positive about in Scotland, especially in academia, with forward-thinking research, and its application, happening across a range of institutions, including the Rowett Institute for Nutrition and Health and Queen Margaret University. We are also seeing some fantastic innovation occurring in businesses which are proactive in the market and open to change; one in particular I would highlight is Macphie of Glenbervie. As part of an investment programme by Macphie, an ‘Arctic robot’ has been introduced which stacks boxes at temperatures of minus 30 degrees celsius. Macphie was keen to minimise the exposure of its workforce to severe temperatures and this investment allowed them to move workers into more skilled areas of the business and into higher-value jobs.”
How does the organisation cope with changing consumer trends?
“Interestingly, it is very difficult. Consumer trends are evolving and changing at a never before seen speed and customer loyalty is becoming harder to retain due to increased competition. We also have to contend with cyclical consumer behaviours: the most obvious example being sugar free drinks. With public opinion increasingly negative towards sugar, both the consumer and government [sugar tax] are driving us toward low-calorie sugar free products. However, if you look at current trends in the US there is some evidence that consumers are now moving back to sugar based drinks. Another example would be the re-emergence in popularity of full fat products following years where the predominant trend has been for low-fat products, which in some cases can be higher in sugar content to replicate taste. These are just some examples of how industry, regulators and government bodies are dealing with a ‘see-saw’ of consumer habits and behaviours.
The reality is that this is a difficult part of the job and change is the one constant. In order to provide the best value for our members, we need to ensure that we are in constant communication with the industry, regulators and government to anticipate and act on the information from the consumer base.”
So, do you feel the role of the regulator has changed over time?
“Absolutely. The traditional and primary role of the regulator was to protect the consumer by ensuring appropriate trading standards and safety measures were in place and that product integrity was upheld. However, we are now seeing that regulators, irrespective of industry, are taking a lead role in trying to shape consumer behaviour and being more prescriptive in terms of the limitations of product type. So, in some respects, you could argue the regulators don’t just react to industry changes any more, but are now largely responsible for them. An example of this would be the increasing focus on health and wellness across the entire Food and Drink Sector.”
If you could ask one thing of your members and the wider industry, what would it be?
“It would be to actively get involved. We need your voice and opinions in order to act effectively as your representatives.”
A Carlyle Perspective:
Change breeds uncertainty and FMCG businesses are already beginning to experience the impact of Brexit in this regard. Many large-scale food producers are seeing an outward movement of their EU workforce and there is real concern around how to maintain the appropriate volume of skilled workers as demand increases. At a senior level, companies need to consider strategies for retaining and developing their leadership and Board members (which may include non-permanent or interim appointments), as with the potential reduction in talent able to move freely to the UK, the competition for qualified candidates will intensify.
Search and Advisory firms can play a key role in supporting businesses to maintain and improve leadership capability, but attention also needs to be paid to medium-term succession plans and in-house leadership development.
About David Thomson
David is responsible for the work of FDF Scotland and is part of the UK FDF senior management team. He liaises with government, regulators and other external organisations to identify and act on issues that impact on food and drink manufacturers. FDF Scotland works in partnership to contribute to the growth of the sector and David sits on Scotland Food & Drink’s Executive Group. David is also champion for innovation for Scotland Food & Drink.
Food & Drink Federation Scotland Overview
The Food and Drink Federation (FDF) Scotland is an independent, industry funded trade association, representing food and drink manufacturers from major global brands through to small and medium-sized enterprises in Scotland.
Carlyle is an advisory Search partnership who undertake executive and non-executive mandates across the UK. In addition to permanent Search, Carlyle operate dedicated Interim and Board & Advisory practices, which focus on identifying and attracting the best non-permanent talent for senior, Board and advisory roles. Food and Drink and Manufacturing are key and growing areas within Carlyle. If you would like to discuss this further, please contact Jamie Brown, firstname.lastname@example.org.