Scotland’s £24 billion food and drink industry is delivering strong long-term growth but continues to struggle for investor attention, according to Scotland Food & Drink’s Iain Baxter. Speaking with Larder Magazine, Baxter said Scotland now needs a clearer investment identity, stronger brands and better financial literacy if the sector is to realise its full potential.
Scotland’s food and drink sector has grown steadily for the past 15 years, making it the country’s largest manufacturing industry and supporting tens of thousands of jobs. Yet investment has not kept pace with the sector’s performance, with relatively few deals completing compared with other areas of the economy.
Baxter also noted that the food and drink sector is still perceived as traditional and less dynamic, despite being Scotland’s largest manufacturing industry with steady growth over the past 15 years.
He added: “Its innovation, creativity, sustainability credentials and economic weight are often overlooked. That’s exactly why we produced the investor prospectus – to change that perception.”
What investors are looking for
Scotland Food & Drink’s chief executive said the businesses best placed to attract funding are those that can clearly show why they are needed and where they fit. He said: “The businesses that will find it easiest to attract investment are those that can clearly demonstrate consumer demand, market need and an identified gap.”
From Scotland Food & Drink’s recent roundtable, a particular pattern emerged around where investors are focusing. Baxter said: “What emerged from the roundtable is that investors are particularly interested in where food and drink connects with other growth areas like health, technology or sustainability. That crossover seems to be a sweet spot.”
“Two-thirds of UK consumers say where their food comes from matters to them, and more than half of non-Scottish UK consumers actively want to buy more Scottish products.”
Financial literacy and funding routes
Scotland Food & Drink warns that too many firms struggle when conversations shift from product to numbers. He said: “Businesses need to be able to answer a few critical questions: what’s in it for the investor, what is the return on investment, where is the market need and gap, what are the working capital requirements, what are the margins on the product and brand, and why should an investor back you over anyone else?”
The organisation says companies often find it difficult to articulate their story in financial terms and to distinguish clearly between different types of funding. “Too many businesses struggle to articulate their story in numbers, don’t fully understand working capital, and are unclear on the difference between debt and equity,” Baxter said. “It’s crucial we all understand that investors are backing a future, not just a present.”
While some producers access grants, angel investment or crowdfunding, many smaller firms still lean heavily on short-term finance such as business credit cards. Scotland Food & Drink wants to see more formal and accessible routes so producers can secure the right kind of capital at the right time.
For Scotland Food & Drink, underinvestment in branding is one of the biggest brakes on value. “The strongest investment returns in food and drink come from strong brands. But brands take years to build, and they need investment to get there,” Baxter said.
Many Scottish food businesses still focus on supplying third-party brands rather than building their own, which can limit margins and long-term value. “As we develop this work further, we’ll be reiterating the importance of brand building and examining how it can be better supported. It’s a prerequisite for attracting serious investment.”
Creating a clearer ‘front door’
The organisation also believes investors need a more obvious route into the sector. “First, Scotland Food & Drink will create and facilitate an investor forum, building directly on the roundtable we held in March,” Baxter said. “Secondly, we’ll work in parallel to introduce investor-ready businesses to those looking to invest. Deal flow is thin but not absent. Investable businesses exist, but they aren’t being connected to the right investors at the right time.”
You Might Also Like:
Calls for more investment in Scotland’s £24bn food and drink industry
Scotland’s food and drink industry breaks £19 billion barrier despite global challenges
Scotland’s food and drink manufacturing industry grows 20% to £5.7bn
Scotland’s food and drink manufacturers call for bold action to secure the sector’s future
Scotland Food & Drink argues that Scotland currently lacks a visible investment identity for food and drink, with no dedicated fund, no specialist network and no obvious front door for potential backers. “Through our leadership role, we’ll ensure the sector’s profile stays front of mind and connect with anyone who can help deliver the growth ambitions that Scotland’s food and drink businesses have,” Baxter told Larder Magazine.
With a new investor forum, a stronger focus on brand building and improved financial skills across the sector, the aim is to ensure Scotland’s £24bn food and drink industry is recognised not only for its products and people, but as a serious long-term investment opportunity in its own right.
