How to start a food manufacturing business

The United Kingdom is home to a thriving food manufacturing industry. With access to high-quality raw materials and a skilled workforce, the UK has everything it takes to produce world-class food products.

In recent years, the UK food manufacturing sector has undergone something of a renaissance, with new businesses springing up across the country. From artisanal cheese-makers to innovative vegan companies, there is a wealth of talent and creativity in the UK food scene.

If you’re thinking of starting a food manufacturing business in the UK, there are a few things you need to consider. Be sure to check the local regulations and obtain a Food Business Registration from your local council.

This will ensure that your business complies with all the relevant regulations. You’ll also need to have appropriate premises for your business, as well as the necessary equipment. Once you have all of this in place, you can start planning your product range and marketing strategy.

The food manufacturing industry produces many items, ranging from delicatessen specialties to supermarket staples. With our guide, you will learn how to start and run a food manufacturer.

Research your target market

Finding out how much demand there is for your intended food products is very important.

Food manufacturers and processors that produce on a large scale and keep their unit costs low can have a hard time competing with small and medium-sized firms. Instead of trying to break into a very competitive national market, you could produce a specialty food line for a local or regional market. You might be able to find similar products in your local shops if you look around. Make sure your products are competitive with existing products.

Possibly yours will be better quality or more affordable, or maybe you have developed an innovative process or product. Make your product ranges more appealing to customers by identifying the things that make them appealing.

There may already be a gap in the market that you can fill. It is possible that you will supply the restaurant trade with a traditional, local specialty you intend to market through delicatessens, farm shops, and visitor centres. Alternatively, you might supply a local specialty food retailer with artisan products made from organic ingredients sourced locally to fill its gourmet hampers. Considering the export market might be a good idea.

Please produce some samples of whatever product ranges you have in mind. Your products could then be sold to individuals (such as retailers and buyers) and companies (such as wholesalers). By exhibiting at a major food and drink show, you’ll have the opportunity to display your product ranges to buyers from all over the world. Make sure they are aware of any special features of the products, such as:

• Using only local ingredients – maybe you intend to participate in the EU Protected Food Names scheme until the negotiations for leaving the EU are complete
• Traditional recipes
• Hand-crafted/finished
• Wheat-free, dairy or gluten-free
• Organic
• Vegetarian or vegan
• Fairtrade ingredients
• Low sodium/low fat/low sugar
• No preservatives or artificial colourings/flavourings

You could mention the following to prospective customers when you show them your samples:

• Orders must meet a minimum value or volume
• Frequency of delivery
• Their willingness to do business with you
• Can unsold products that have reached the end of their shelf life be returned to you

They may also be able to help you with:

• What they think of your product ranges
• How they feel about your pricing and terms
• If they have any suggestions for improving or enhancing your products

Contact the Department of International Trade (DIT) for advice on researching overseas markets. You can find guides that tell you how to research export markets, as well as guides covering many different countries, including:

• Economic and industry information
• Local legal requirements
• How to protect your intellectual property
• Language and cultural issues
• Financing export deals

As a result of your market research, you will be able to identify:

• How likely is it that your products will be in demand
• They will be sold at a certain price
• You should know how much each of your prospective customers is willing to spend

Decide how many customers you are likely to have and how much each will spend to estimate your annual sales income.

Your market

Depending on the market sector you are targeting, your customer base might include:

• Other manufacturers of food
• Distributors and wholesalers
• Stores such as supermarkets, delicatessens, butcheries, convenience stores, petrol station forecourts, off-licences, and health shops
• Tourist and visitor centres, garden centres, airport shops, gift shops
• Farmers markets
• Food specialists (such as gourmet hamper and fine food suppliers). Some of these companies may only trade online and have no retail outlets
• A catering outlet, a pub, a nursing home, a hotel, etc.
• Rail and airline companies

Some smaller food manufacturers also cater to the export market, but most focus on local or regional markets.

If you want to export your food and drink products, the Department for International Trade (DIT) can help and guide you.

Producing high-quality, specialty food products will require finding wholesalers, retailers, and others who target a specific clientele. In order to promote your products to the Guild’s retail members, you will need to join the Guild as a producer member.

You need to find out if there are enough suitable customers in your area if you intend to sell high quality, niche foods directly to consumers. People over 40 without children living at home are most interested in regional, specialty foods. In addition to having a high level of disposable income, they are keenly interested in food and support local retailers. The ONS website provides you with information about the area in which you propose to operate, including its population and economic status, as well as the results of the most recent government census.

ESources provides details of UK food and drink wholesalers, organised by type. This will help you to locate buyers for your products if you are planning to sell into the mainstream supply chain.

Special offers and discounts

In exchange for volume purchases and regular orders, your larger customers will want sizeable discounts from you.

If customers pay their bills on time, you might offer early settlement discounts, as well as retrospective rebates.

If you do make any discounts or special offers, make sure they work for you. Nevertheless, these kinds of promotions may encourage extra sales, but they will also affect your profit margins.

What to produce

Depending on your target market, the type of food products you manufacture will vary. Your business plan may include producing food items for the consumer market, distributing them through retailers, wholesalers, catering outlets or directly to consumers via your website, retail outlet or market stall. It is possible that you will develop products that will be used by other food manufacturers in their product ranges. The sauces might be incorporated into ready-prepared meals, for instance.

To appeal to ethically conscious consumers, you might manufacture Fairtrade food products. Fairtrade ingredients can be used to manufacture a variety of food and drink products. There is a comprehensive list of these products on the Fairtrade Foundation’s website.

Consumers have a wide variety of food products to choose from if you target them. Here are a few ideas:

• Various types of ready-made meals for adults, pubs, catering outlets, etc. Whether these are ready-to-eat or need to be heated or cooked is up to you. You could specialise in a particular niche range such as organic, vegetarian and vegan or ethnic
• Sandwich box fillers and baby foods targeted at children. There is a growing emphasis on providing healthy school meals to children, which you may be able to take advantage of
• Gourmet foods such as pates, smoked fish, and meat products, as well as other delicatessen items
• Snack items such as biscuits, crisps, and sweets
• Desserts
• Jams, preserves, chutneys, pickles, etc.

The options are pretty limitless.

Additionally, you should consider how your food products will be stored and sold. Among them are, for example:

• Products such as cakes, biscuits and crisps provided at ambient temperatures, such as canned, bottled or dried goods
• They must be refrigerated because they are chilled
• It is necessary to keep them in freezers because they are frozen

Your operating practices, your packaging requirements, and how you distribute your products will all be affected by how your products are sold and stored.

Taking advantage of seasonal produce

If you are producing hand-made biscuits, your product range may not change at all over the year. Food manufacturers, however, often change their recipes to reflect the seasons and local ingredients. People are becoming more concerned about the impact of ‘food miles’ on the environment, which has increased demand for locally sourced products.

On the Eat the Seasons website, you can find out what fruit, vegetables, meats, and fish are in season each month. Planning production several months in advance can be done using the information.

The market can be fickle and people will soon look for something new if you are not flexible and innovative with your products.

Production methods

It is likely that you will be manufacturing large quantities of food for the mass market, where your processes will be highly automated. It is likely that you will invest in sophisticated packaging equipment to ensure that your products remain in optimum condition by wrapping, bottling, or canning them quickly and easily.

Another option is to start a much smaller operation, producing food items in limited quantities for a local or regional market, perhaps on a custom basis. Even though you may use catering equipment and appliances of industrial quality, you will still prepare and package most of your products by hand. Niche food products can benefit from this.

The type of packaging you require will also play an important role in maintaining the quality of your product, as well as the packaging’s appearance. You may want to make sure the packaging reflects the unique characteristics of your local area if you are targeting a tourist market. You may need to include a barcode in the design of your products destined for retail.

You must display nutritional information on your pre-packed products unless you supply a local market. The packaging of your product must include certain detailed information if it makes a specific nutrition or health claim. You can find guidance on the Gov.uk website.

On the Food Standards Agency website, you can learn more about the legal aspects of food packaging.

Fairtrade

Consumers are increasingly seeking ethical products that help producers and farmers in developing countries. Offering Fairtrade teas and coffees, or using Fairtrade ingredients in your dishes, could meet this demand. In this way, you would demonstrate your commitment to fighting global poverty to your customers. Your business can also differentiate itself from its competitors by offering Fairtrade products.

Licensing

The Fairtrade Foundation does not require licensing for cafes and restaurants that already carry the Fairtrade Mark. The Fairtrade Foundation must approve any use of the Fairtrade Mark in your advertising or menus.

Where to get Fairtrade goods

Licensees of the Fairtrade Foundation, such as manufacturers and importers, are the only ones that can use the Fairtrade Mark. A UK wholesaler or catering distributor will likely sell you Fairtrade items. You should ask your current suppliers if they have a Fairtrade range available. More and more suppliers are offering Fairtrade products. Food service distributors and wholesalers who sell Fairtrade products throughout the UK can be found on the Fairtrade Foundation website.

Pricing

You can probably expect to pay more for Fairtrade certified food and drink products when you buy them from a registered wholesaler or caterer. In addition to the set price and social premium that are paid to farmers and producers, supply chain costs and certification and licensing costs are also covered by the slightly higher trade prices.

You may benefit from extra business even though trade prices for Fairtrade products are higher. If you want to cover the extra cost, you can also raise your own prices. When setting your prices, consider the aims and purpose of the Fairtrade movement. Profit margins on Fairtrade items should not be higher than on similar products, according to the Fairtrade Foundation.

Promoting Fairtrade goods

You can attract ethically aware customers to your cafe or restaurant by offering Fairtrade products. Your Fairtrade products must be known to potential customers.

To help you advertise your Fairtrade products, the Fairtrade Foundation is responsible for promoting Fairtrade in the UK. Menus and promotional posters containing the Fairtrade Mark must be approved by the Foundation.

During Fairtrade Fortnight, the Fairtrade Foundation promotes the Fairtrade system. If you offer Fairtrade food and drinks, this might be a good time to raise awareness of them. You could, for instance, organise a Fairtrade tasting evening. Make sure you emphasise the social benefits of Fairtrade products.

Where to find out more

The Fairtrade Foundation is responsible for all aspects of Fairtrade in the UK – including the registration of licensees. For more information on Fairtrade, the range of products available and how you can get involved visit the Fairtrade Foundation website.

Promoting your business

It is important to think about how your prospective customers will learn about you. Marketing and advertising your business can be done in a number of ways.

On the Gov.uk website, you can learn more about government assistance for improving competitiveness in the food industry.

Meet retailers at food business fairs

As a food business owner, one of the best ways to meet potential retailers is by attending food business fairs. These fairs provide an excellent opportunity to introduce your business and products to a wide range of potential customers.

In addition, fairs offer a great opportunity to network with other business owners and learn about the latest trends in the food industry. By attending food business fairs, you can make valuable connections that could lead to new business opportunities.

Advertise in trade magazines

Trade magazines offer a unique opportunity for businesses to introduce themselves to a new audience. By advertising in a trade magazine, businesses can reach out to potential customers who may be interested in their products or services. In addition, trade magazines can be a valuable networking tool.

They can help businesses connect with other businesses in their industry, exchange information, and find new opportunities. For businesses in the food industry, trade magazines can be an especially valuable resource. They can help business owners keep up with industry trends, learn about new products and services, and find new suppliers. Trade magazines can offer a wealth of information and opportunities for businesses of all kinds.

Pricing policy

It is very important to get the price right. All of your operating expenses, including your own drawings, must be covered by the difference between the cost price and the selling price of your food items.

You should also allocate some future income to investing in new technology and equipment. To reduce your unit costs, you may want to upgrade to labour-saving equipment in addition to replacing broken machinery when it breaks down.

Costs associated with raw materials and staff are likely to be your two largest expenditures.

Monitoring your ingredient costs and ensuring your workforce remains productive as well as reducing wasteful processes is very important. Currency fluctuations as well as fluctuations in farmgate producer prices can affect your costs if you import raw materials.

Analysing your raw material costs and turnover as well as your direct labour costs is a good way to monitor your performance.

Your trade customers will expect a discount from the recommended retail price if you plan on selling both to them (for example, through mail order or online).

Read more:

• Invoice Financing for Manufacturing

Buy an existing business

The alternative to starting a business from scratch might be to buy an existing food manufacturing company. Going concerns can come with existing products, customers, regular sales, staff, facilities, and equipment.

You should have the right legal and financial expertise on your team before buying a business, as buying a business is a hazardous, costly process. Make sure a business is in a healthy financial and trading position before paying a high price.