Small and medium enterprises (SMEs) are the lifeblood of the European food scene. A massive 99.1 per cent of food companies have fewer than 250 employees, according to the Confederation of the Food and Drink Industries of the EU’s (CIAA) 2008 figures. Between them, they generate 48.5 per cent of food and drink turnover.
They may not be big, but they can be cleverer and more nimble than industry megaliths that are juggling a huge slate of mature brands. As innovative young firms grow up, they become fodder for private equity or bigger players wanting to invest in the next generation of successful brands.
Without SMEs, the food and beverage market place would be a whole lot less interesting. So would our diets.
That is why it is crucial that policy makers consider the capabilities of SMEs. Where the spirit may be willing to comply with regulations or recommendations, the costs – sometimes running to six figures – can be prohibitive.
Right now, several food regulations have competitors lining up on the starting blocks; SMEs are shaking their piggy banks to see if they can afford the entry fee. To apply for a health claim, for example, some serious – and seriously expensive – science is needed. The same looks likely to get additives and enzymes onto the new positive list under FIAP (food improvement agents package).
The race courses of still more new regulations are being drawn up, too. Will new labelling laws require repeated packaging redesigns? And could novel foods come to market more quickly, bringing sooner returns for their promoters?
It is vitally important that SMEs, their capabilities and limitations, are taken into consideration in the planning stages. But equally, regulations should not create a two-tier system. ‘The big boys must comply by date X, but we’ll give smaller chaps X+2 years’.
Fair competition will only be possible if the initial pace is set to suit SMEs. Whoever heard of bigger, stronger competitors getting a head start?
The UK’s Food Standards Agency last week recognised in its publication of new voluntary guidelines for sugar and saturated fat reduction that SMEs may face special circumstances. It is encouraging them to consider what work is possible on nutrient profiles and portion sizes, and to discuss their limitations.
Make no mistake. Healthier products should be a priority for all food and beverage manufacturers, no matter their size. But big companies that can meet targets with minimal sweat will be basking on the podium while small companies have yet to complete the first lap.
And on the supermarket shelf, the most competitive arena of all, will the consumer – the ultimate referee – make the distinction between the achievements of brand from a heavy weight firm and that of a light weight competitor?
Not likely.
The danger is that SMEs’ sales will slow, the gap will widen further, and they may not be able to last the distance.
Where’s the sport in that?
Jess Halliday is editor of award-winning website FoodNavigator.com. Over the past twelve years she has worked in print, broadcast and online media in both Europe and the United States.