Whilst we can be bombarded with information about food safety and quality, there hasn’t been the same emphasis on packaging being of equal importance in the food manufacturing process. However this is starting to change.
Sir David Attenborough highlighted the environmental threat posed by the use of plastic, in his 2017 documentary Blue Planet 2 and more recently in the Seven Worlds, One Planet series which created a societal feeling that ‘something had to be done’. The food industry has traditionally relied on oil-based packaging materials (plastics) to provide consumers with food that is stored and transported to minimise deterioration, however environmental concerns are changing consumer and retailer attitudes and the food packaging industry needs to provide new solutions.
The challenge is to move away from a reliance on plastic packaging as quickly as possible through the use of bio based and biodegradable alternatives. New types of packaging may require changes to the food manufacturing process and the introduction of new technology.
A rapid, consumer driven reduction in the use of plastic will almost certainly result in some up-front additional costs, giving the industry an urgent need to maximise productivity. This will mean increasing or maintaining output without a corresponding increase in cost or decrease in quality. It is in the quest for improved productivity that investing in new technology becomes essential.
Robots that take advantage of artificial intelligence are being introduced to all areas of food packaging and distribution. The online grocery retailer Ocado offers an excellent example of how robots can complement humans to provide a highly efficient warehousing and logistical solution. Smart packaging, involving the use of sensors within packaging, is also increasingly being used to monitor the state of food being stored, reducing both waste and the risk to health.
The need to increase productivity and take advantage of the raft of new technology becoming available involves acquiring new capital equipment. The good news is that leasing allows investment to take place whilst spreading the cost. In this way the equipment is paid for as it pays for itself, which can give a much faster return on investment than a cash purchase. HMRC also allows the cost of leasing to be offset against tax.
Leasing provides a hedge against inflation because payments are fixed for the duration of any lease agreement, typically five years. Payments will not go up even if the Bank of England raises interest rates during the course of an agreement; not necessarily the case with a bank loan.
There are different types of leasing agreement available depending on user requirements as well as a high degree of flexibility with regard to terms and payment profiles. This means that just about any budget constraint can be overcome and food manufacturers and distributors are provided with opportunities for the essential productivity gains they need.
Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.
If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.