Sustainable business models for food & drink

“How can a sustainable business model reduce the net cost of your business?”

There is no denying that many businesses in the food & drink industries have struggled over the last year in one way or another. With the rising cost-of-living, the general employment market, supply chain costs and logistics are proving to be a huge challenge after a significant number of businesses experienced a considerable post-COVID bounce.

Even after the Prime Minister’s “Farm to Fork” summit, the government still seems to fail to commit to any new or meaningful legislation to combat the many issues farmers, food manufacturers and distributors face. With rising inflation, perhaps it is reasonable to assume that businesses with a green agenda have put their environmental plans on hold to save money.

Against this backdrop, at the end of May, PKF Francis Clark hosted a roundtable event – chaired by Steve Ashworth – with food & drink businesses on the subject of sustainability. Speaking to our guests amidst the beautiful landscape of The Pig hotel at Combe, we found the idea that becoming a more sustainable business has a significant net cost is false. Griff Holland, co-founder of Zedible – an early-stage business with a software tool that helps track, map, and offset a company’s CO2 emissions – says, “it’s really important to do some myth-busting around the narrative that it costs to go green. Once [businesses] understand that, then they can make significant changes and often save money at the same time.”

The food and drink production and retail industries combined are the second largest emitters of greenhouse gases. Many SMEs are in the food sector, and, in the UK, SMEs are half the cause for these emissions. Thus, food & drink businesses are a key part in mitigating the climate crisis.

“90% of the carbon emissions in a restaurant – in a food manufacturing environment – is the food itself. Understanding what’s driving your carbon is absolutely key.”

– Griff Holland, Co-founder of Zedible

With insight from these successful, sustainable food & drink businesses, we have put together the following steps on how you can work towards a sustainable business model without breaking the bank.

“I just spent three weeks in the US. It’s very much a hot topic to get out there. It’s on the news every day. From a consumer’s point of view, it’s in their minds with all the issues around inflation, cost-of-living, [and] climate change.”

Steve Ashworth, Director at PKF Francis Clark

Environmental and ethical considerations are becoming more and more important to consumers. Although the cost-of-living crisis has had an impact on consumer priority for sustainable products, shoppers are still choosing to buy ethical and eco-friendly options. Conscious consumers want to assess a brands’ values and actions before buying a product. Brands and retailers that keep sustainability at the core of their business will benefit in the long term.[vcex_spacing size=”20px”]

“Customers do care, and they want to be patrons to businesses that are doing different things, that are going above and beyond.”

– Kate Harvey, Group Sustainability Manager at Home Grown Hotels

One thing everyone immediately agreed on was the necessity of building a sustainable workforce with dedicated training and development for your personnel. “Working on recruitment, training and development is so important to keep staff and have a thriving workforce. It’s something that we focus quite heavily on,” says Kate.

Implementing a sustainable business model not only proves you are dedicated to protecting the environment, but it also shows you are dedicated to the wellbeing of your staff. Nick Cooper, Founder of Salt Media, told us about an internal communication audit they conduct at their company. “Many [employees] are really focused on [the] ESG side of things… it’s sort of reflected in the diversity and inclusion.”

If you want your employees to want to work for you, then you need to give them a reason to be proud to work for you. This could ultimately come down to your Environment, Social, and Governance (ESG) plan. “We certainly find that we have [interviewees] asking, ‘You’re B-Corp? What does that mean? Tell me about what you do for workers…’ If brands want to attract the best candidates and talent, it’s certainly beneficial to talk about” (Myles Hopper, Founder of Mindful Chef).

Griff concurred, “The door is closed to you if you cannot show where you are [on that carbon reduction journey] and how you’re going to get to a better place in the future… Far more doors are open to you if you can confidently and quantifiably explain why you are better than most. Those are key areas that we are seeing where it pays in pounds, not just in planet.”

To build sustainability into the core of your business, you need to know what consumers are looking for within the sector. James Woodward, head of Sustain, told Speciality Food Magazine that businesses will have a unique selling point (USP) if they adapt their business model to be more environmentally conscious. The first step towards this is to supply as much as possible from local farmers who produce high quality food.

Myles Hopper, Founder of Mindful Chef, explains the importance of investing in your suppliers. This means they can work on projects that will reduce their carbon impact, such as regenerative farming. “They are very keen and receptive. But they need to have investment from purchasers because they can’t necessarily afford to change their model right now.”

He continues, “[A major food retailer] buys onions from our supplier, but they are not investing into any regenerative projects. Once we invest in them, some of the bigger companies start replicating. Then we can make a bigger change, which will have a greater impact.” Businesses should build relationships with producers to get to know how they farm. Whether that be in an eco-friendly way, to good ethical standards on things like animal welfare, or wanting to know they are supporting producers fairly. Using small, local suppliers is a more stable way to keep shelves stocked.

One might expect that guaranteeing an affordable supply of fruit and vegetables would be a priority for the government, especially now the cost of healthy foods is elevated. Yet, earlier this year, the country saw empty fresh produce shelves. Most independents have not had issues with shortages in the same way supermarkets have. This could be because they have good relationships with their local supply chain.

“Innovation is absolutely required. Day-to-day businesses can make up to 20% reduction by changing habits, swapping out machinery, more efficient energy uses, and supply.”

With the shortages of fresh produce, customers have started to value the certainty of supplies. They’ve also become more knowledgeable about the seasonality and locality of fresh produce. Retailers should make use of the importance of seasonal food by offering tips and recipes on how to use them.

A perfect example of finding innovative ways to reduce food waste is showcased by Home Grown Hotels. “Our chefs have created amazing recipes using the leftover breakfast croissants and turn them into desserts. We have made caramel out of a by-product of whey. We’re teaming up with our new gin and vodka supplier to make a coffee vodka using our leftover coffee grounds… So, very much the approach of reduce first, then reuse, and recycle” (Kate Harvey, Group Sustainability Manager). The group grows their own produce on-site, and whatever cannot be grown is primarily sourced from within a 25-mile radius of each Pig location.

Other improvements businesses can integrate are by using renewable energy; providing on-site electric vehicle charging points; or installing recycling or refilling stations. There are plenty of ways for food & drink businesses to make sustainability the focus of their business without costing the earth. We can help you invest in innovation through R&D tax relief. All innovative activities in a business are a case of trial and error. Alex Rodda, Retail Account Manager of Rodda’s Clotted Cream, says their highest cost is energy. “We’ve done a couple of things [to try offset the cost, like] solar panels on roofs, but it hasn’t really touched the sides in what we require as a business… Once it’s done, there will be gains made going forward. If that’s your ambition, it’s putting that infrastructure in place and trying.”

“There is a broader point about the concept of sustainability driving profit as opposed to being a cost. I can see that is a bit of a mindset change that’s happening more and more. If I look around the client base, a few years ago it was in the cost line, now it is in the opportunities line.”

– Nick Farrant, Partner at PKF Francis Clark and Head of Food and Drink

“If we are so frightened that it’s going to cost us money, it’s going to lose us customers, etc., then we’re never going to get on the boat and start sailing,” Griff reiterates matter-of-factly.

“Ultimately, it is important not to stand back from the changes we can make as individuals and as a community. Greg Parsons, Owner and Director of Sharpham Dairy, says that sustainable developments in the public sector could be a “catalyst” to reduce our impact on climate change. However, the problem, he says, is that “it’s too unstructured”.

“There are not enough people in the centre that want to lead the change. But you’ve got exceptional cities like Bristol that have taken their own initiative with a very positive mayor,” he says.

“It needs a global attitude,” agrees Henry. He stresses the importance of the first step to making a positive change is understanding the impact of individual businesses. “They’ll need to understand and measure that, then it [determines] where they are on that journey.” “Myles Hopper, Founder of Mindful Chef, speaking at the Food & Drink Sustainability Roundtable.”

“How we can help” As chartered accountants and business advisers in the food and drink sector, we are well placed to help you achieve your business ambitions.

We have a clear understanding of the challenges the sector faces (including gaps in the supply chain, labour shortages and consumer demands for more alternative options). We are able to offer robust commercial support and guidance. Please get in touch with us if you’d like to find out more about how we can help your business adapt to be more sustainable despite rising costs.

With thanks to our guests for their contributions: Alex Rodda, Retail Account Manager of Rodda’s Clotted Cream

Greg Parsons, Owner and Director of Sharpham Dairy

Griff Holland, Co-founder of Zedible

Henry Waite, Founder of Blue Marble: Nick Farrant speaking to Alex Rodda and Nick Cooper at the Food & Drink Sustainability Roundtable. Kate Harvey, Group Sustainability Manager at Home Grown Hotels

Myles Hopper, Founder of Mindful Chef

Nick Cooper, Founder of Salt Media

Photos by Gary Holpin Kate Harvey speaking to Greg Parsons at the Food & Drink Sustainability Roundtable.