Young Foodies has sent an open letter to the Prime Minister in response to the Government’s outlined COVID-19 business support plans.
As a representative of challenger brands, we are taking the lead in calling for change and urging the Prime Minister to address the issues within these support plans which render them largely not applicable to – or beneficial for – the thousands of high-growth start-up food and drink businesses operating in the UK.
Dear Prime Minister,
We are the UK’s largest community of food and drink businesses and represent thousands of startups and scale-ups – we call them challenger brands. These businesses are small in size, but certainly not in numbers. In fact, they make up 96% of Britain’s total food and drink businesses and are responsible for the majority (59%) of total FMCG market growth.
These challengers contribute a highly significant £18bn to the UK economy and have created 120,000 jobs. On top of driving sales, innovation and employment to one of the UK’s key industries, challenger brands are also instrumental in upholding Britain’s reputation as a world leader in food and drink innovation.
In a recent survey carried out with our members, 73% told us that the survival of their business is under threat as a direct consequence of the COVID-19 outbreak, with an average projected revenue loss of at least 33% this year, but in reality this is likely to be much higher. This is partly because supermarkets have had to deprioritise them in favour of big brands and commodities. It’s also partly because of overnight loss of business with the foodservice, leisure and hospitality sector. If the situation continues as it is, we will lose the very businesses that are pushing us forward in food innovation.
In response to the COVID-19 outbreak and its effect on the industry, we have launched a timetable of regular crisis webinars with our members over the past few weeks. These sessions give our brands a chance to talk to us and each other about the challenges they face and potential solutions to those challenges, but the reality is that the current situation constitutes a massacre for startup brands in Britain.
On paper, the support outlined last week by the government for businesses is perfect. However, as we unfolded it we discovered that this support is largely not applicable to – or beneficial for – the thousands of businesses we represent. These brands are at significant risk of falling through the cracks of the current government measures. We have compiled a list our key concerns below:
– A lack of communication and clarity has left many challenger brands unsure of whether they are eligible for government support or not. Our members have told us they have struggled to find cohesive information on who qualifies for support from the government and how to access it. Banks are inconsistent, making the likelihood of gaining government support dependent on who you signed up with when you set up the business.
– CBILSS: Challenger brands have told us that banks are requesting 100% personal guarantees for loans and, frighteningly, in the desperation we are seeing business owners take these and put more of their livelihoods at risk in this uncertainty. Beyond this, as you know start-ups are often loss making during their growth phases and they naturally have a short trading history, which means many are being refused these loans altogether.
– Many challenger brands do not currently pay business rates as they are operated from home spaces or co-owned offices, making them ineligible for government grants.
– There is a lack of clarity on whether the government will support challenger brands who have credit risk from the sectors most affected by COVID-19 such as airlines and foodservice. Failure to do so will put many out of business and insurance is not covering it.
Along with addressing these concerns, we are asking the government to provide support through PAYE, NI or VAT tax breaks, not deferrals, to allow small businesses to recoup some of the losses they are suffering. We also ask for the provision of an alternative to the EFG programme that works for start-ups, as this will be crucial for these businesses to survive the coming months.
Thus far, the government has focused its COVID-19 support measures on hospitality, leisure and retail sectors. Without extending and tailoring that support to the entrepreneurial businesses powering them, we will lose a vital part of our food and drink industry, go back 50 years in innovation, and risk many, many jobs.
Thank you for your consideration
Thea Alexander and Chris Green, co-founders of Young Foodies
If you agree with us that smaller brands are at risk of falling through the cracks of the government’s current support plans, reach out to your local MP today and let them know your concerns.
Together, we can make a difference for our industry.
Read more here about how we are helping our Community through this period