Strategic Research Programme 2011-2016: economic impact

9 Food And Drink

Scotland's food and drink industry was identified in Scotland's Economic Strategy as one of the growth sectors in which Scotland can build on existing comparative advantage and increase productivity and growth. In 2014, the food and drink sector ^[23] generated a turnover of £14.4 billion and a GVA of £5.3 billion for the Scottish economy in 2014. ^[24] The sector is therefore of fundamental importance to the Scottish economy.

9.1 New Product Development

SRP funding supports research and development in the food and drink sector as well as facilitating knowledge transfer. This supports the development of new and reformulated food products. As well as addressing public health targets these products contribute to the success of individual companies and the success of the sector as a whole.

One example of this is the role of one of the MRPs as a core partner in the Food & Health Innovation Service ( FHIS) programme, which ran over the period 2010-15. The investment made by the SRP and its commitment to the research undertaken at the MRP created a platform of knowledge and capability that made the MRP a natural partner for the £4.5 million programme. The programme provided practical support to over 500 Scottish food and drink companies. The aim of FHIS was to help businesses realise growth opportunities in the healthy food and drink products marketplace. The programme therefore provided easy access to a group of companies who were likely otherwise not to have had access to expertise. Of the 500 companies supported, around 250 companies benefitted from support of some kind from the MRP partner in the programme.

An initial evaluation of the project forecasted a £40 million GVA impact ^[25] by 2016 from the programme. The core expertise and competence provided to businesses came as a direct result of the long-term commitment from SRP to support the research of the MRP in question. This long-term commitment enabled the MRP to undertake early-stage, pre-commercial research that would have been of limited interest to industrial partners and would therefore not have otherwise have been funded. The GVA impact of the programme can therefore be attributed in part to the SRP - i.e. it can be considered additional. A further example of how SRP funding has supported product development and generated economic benefits for the food and drink sector is the relationship between one of the MRPs and the major British retailer Marks & Spencer. This is described in more detail in the case study below.

Case Study 9‑1 - Balanced for You

The Balanced for You food range (formerly known as Fuller Longer) was developed by Marks & Spencer (M&S) with expertise from one of the MRPs. Product development was based on SRP funded research into the efficacy of high protein and mixed carbohydrate diets for sustained appetite control and weight loss. The research partnership with M&S took the research findings of protein-induced satiety from the laboratory through to the marketplace. Together the development of a new range of calorie controlled food products was undertaken.

Obesity and its associated health issues are a major public health concern. The development of the Balanced for You range provides consumers with a way to make sensible meal choices in order to manage their weight. The range has a menu plan which features a carefully calculated balance of proteins and carbohydrates for calorie-counted meals and snacks to achieve sustained weight loss.

This industry-academia partnership to develop a food range based on scientific input, was a first for M&S, and has led to one of the UK's most popular retail healthy-eating food ranges. M&S has 20 million weekly customers and figures for one week's sales in January 2012 indicate it was the number one food diet brand in M&S in healthy meals.

As the underpinning research was funded by the SRP the economic contribution from the annual sales of the Balanced for You range can be attributed in part to the SRP. As well as contributing economically to the success of the overall food and drink sector, the Balanced for You range provides a practical and convenient way for people to manage their weight.

Source: BiGGAR Economics

In order to quantify the annual economic impact of the FHIS, a proportion of the FHIS's forecast GVA impact was attributed to the SRP. Annual sales information provided by Marks & Spencer was used to estimate the turnover from the Balanced For You range. Appropriate economic ratios and multipliers were then applied in order to estimate the direct and indirect effects.

By adding together the impacts considered in this section it can be estimated that research in the food and drink sector supported by the SRP has resulted in an economic contribution worth £3.3 million GVA and 143 jobs to the Scottish economy. At the UK level this was estimated to be worth £11.2 million GVA and 441 jobs.

Table 9‑1: Annual impact of SRP research in the Food and Drink sector

Source: BiGGAR Economics

The impacts described in this section were all realised during the 2011-16 period and represent annual impacts. However, these impacts would not be possible without previous rounds of SRP funding creating the research strength and underpinning capacity of the MRP in question. For example, the MRP partnership with the FHIS programme would not have happened were it not for previous SRP investment in research creating the core competence and expertise at the MRP.

It is also important to note that the impact on the food and drink sector of SRP funding will grow in the future. Research supported by the 2011-16 SRP will underpin future economic benefits, as described in the following section.

9.2 Development of New Market Opportunities

The Scottish food and drink industry aims to increase the sector's turnover from £14.4 billion in 2014 to £16.5 billion by 2016. The food and drink industry performance review highlights investment in R&D as one of the key components for driving growth in GVA and turnover in the sector. SRP supported underpinning research therefore has an important role to play in the development of new varieties and new markets as well as supporting Scottish businesses to maximise these opportunities.

One example of this is the potential market for UK grown blueberries. Blueberries account for 17% of fruit sales in the UK but it is estimated that only 1-3% of the blueberries purchased in the UK are grown here. MRP researchers have been undertaking research to develop new varieties of blueberries which are better suited to the Scottish climate. This research opens up the possibility for Scottish growers to capture a share in a growing market, as discussed in Section 7.6.

MRP researchers have also been working in conjunction with Interface Food and Drink to promote collaboration between food and drink companies. For example, one of the MRPs has been working with small to medium sized rapeseed oil enterprises in Scotland to establish a common interest group. The Scottish Rapeseed Oil group comprises all eight Scottish rapeseed oil manufacturers. The MRP has been working with the group to help establish a unique selling point for Scottish rapeseed oil against other UK manufactured and imported oils.

Rapeseed oil the fastest growing oil type, growing at 21% year on year and increasing its share to 2.6% of the total UK oils market. This is largely due to rapeseed oil being considered a healthier alternative to olive oil due to its higher levels of omega 3 and half the saturated fat. The UK market value of rapeseed oil is £7.2 million and retail sales in Scotland amount to £479,699. ^[26] In order for Scottish producers to gain a larger market share it is important that they are able to differentiate themselves from other regions and brands by communicating what makes them, their sourcing, taste profile, nutritional profile or manufacturing process different or better.

MRP scientists have been working with the Scottish Rapeseed Oil group in conjunction with a number of universities to understand the regional and environmental factors affecting the composition of the oil. Developing a research based USP for Scottish rapeseed oil will help Scottish SMEs realise new market opportunities and accelerate their growth.