Exploring challenges and opportunities in Scotland’s food and drink sector

Scotland’s food and drink sector is celebrated worldwide for its exceptional quality and rich heritage. However, rapidly evolving and volatile global markets bring new challenges, requiring businesses to adapt and optimise their supply chains.

Of course, the industry also faces significant obstacles, such as labour shortages, rising costs, and supply chain disruptions. The sector employs one-fifth of Scotland’s manufacturing workforce yet currently faces a shortfall of more than 10,000 workers, particularly in soft fruit, horticulture, and seasonal vegetable production.

Labour costs are also a pressing concern for many businesses and will continue to be a key challenge over the next five years. Additionally, economic and political events have disrupted trade and contributed to food price inflation, which has now hit a 45-year high.

Despite these challenges, the sector continues to demonstrate resilience, with businesses adopting innovative strategies wherever they can. Collaboration, technology investment, and sustainability initiatives can drive progress. By forging partnerships and embracing change, we can strengthen supply chains and build resilience to withstand uncertain times.

Be clear about provenance

Provenance has become a cornerstone of Scotland’s food and drink sector, reflecting a growing demand for transparency. Many modern consumers care deeply about where their food comes from, how it is produced, and its ethical and environmental impact. For Scottish producers, provenance must be therefore more than just a buzzword, it is a crucial competitive advantage.

This concept extends beyond geography to include sustainability, ethics, traceability, and storytelling. By sharing unique narratives through labelling and marketing, Scottish producers can forge meaningful connections with consumers. This focus on provenance not only builds trust and brand loyalty but also aligns with consumer desires to support sustainable and ethical businesses.

Boost sustainability efforts

As provenance strengthens consumer trust and brand loyalty, sustainability emerges as a natural extension, reinforcing ethical production practices while enhancing supply chain efficiency. Far from being a mere environmental goal, there are tangible benefits such as reduced waste, using less energy, and making supply chains more resilient.

In Scotland, many food and drink businesses are pioneering circular economy models, where materials and products find new life through repurposing, reusing, refurbishment, or recycling. This not only reduces waste, but it also maximises resource efficiency.

The notable rise in eco-friendly packaging solutions is a shift which helps to address the growing consumer demand for sustainable products and solutions. This shift is not a temporary trend but a fundamental change. By prioritising sustainable practices, businesses can position themselves as being aligned to a future where efficiency and environmental stewardship go hand in hand.

To fully realise the benefits of sustainability, the sector must also invest in a skilled workforce capable of driving innovation and adapting to evolving supply chain demands. As supply chains grow more complex and technologies evolve, businesses need a workforce equipped to handle these changes. Investment in skills and training ensures that employees can embrace innovation and meet modern demands.

Upskilling supports innovation across the supply chain, enabling adoption of emerging technologies to drive operational efficiency. Additionally, training initiatives can address current labour shortages and keep businesses agile in an ever-shifting landscape. This focus on skills development is critical not only for individual businesses but for the sector, ensuring it remains competitive on both a national and global scale.

Advanced technologies are also transforming and revolutionising supply chain efficiency. From blockchain for enhanced traceability to automation and artificial intelligence, these tools can help your business to optimise logistics, reduce costs, and streamline production.

Go further together

Innovation projects, like the Highlands and Islands Enterprise (HIE) Food and Drink TechHub, can provide access to cutting-edge technologies and foster collaborative, fruitful relationships between businesses and tech experts. These partnerships can help to accelerate growth and improve market reach, ensuring that you stay competitive.

Strategic collaborations are also vital for expanding market access. Partnerships between producers, retailers, and technology firms create blended expertise and resources which create opportunities for knowledge sharing, creativity, and finding solutions to shared challenges. By working together, businesses can strengthen their supply chains and position themselves for sustained and shared success.

In the Food and Enterprise team, we help businesses to navigate this evolving landscape. With tailored guidance and initiatives grounded in Environmental, Social, and Governance (ESG) principles, we support them to adopt sustainable practices, improve competitiveness, and meet regulatory standards.

Businesses must keep a clear focus on sustainability, technological innovation, and talent development to drive future success for the sector - meeting the consumer demands of today but also preparing for the market challenges of tomorrow.

Get in touch: luisa.riascos@sac.co.uk