Diversification growth in 2021, but with mixed prospects

Farm diversification business overall will grow next year, but with mixed fortunes, as the effects of the pandemic continues, says Savills.

On track for growth are food businesses with the right offering, with a further rise expected in home delivery, and the trend for assured provenance and convenience accelerating.

While wholesale markets collapsed and cafes closed in the first lockdown, demand for vegetable boxes rocketed, more than doubling in six weeks. Spending on so-called “lockdown treats” is also expected to rise.

Lockdown influence

  • Half of consumers intend to continue online shopping at lockdown levels
  • 3.5m veg boxes were delivered between the end of February and mid-April
  • 13.5% of grocery sales are ordered online
  • Consumers plan to spend £9.3bn on post-lockdown treats
  • Camping bookings are said to have risen sixfold

Sources: Savills Research, American Express, Deloitte, Pitchup, Kantar, Food Foundation

See also: How farm retailers are retaining lockdown customers

UK holiday options, or staycations, are also set to benefit from the lack of overseas holiday options in 2021.

As interest in spirits such as gin continues to rise, smaller businesses have been better able to adapt to local, direct and online retail compared with larger businesses that are more exposed to the hospitality sector, says Savills Research.

Lockdown has exaggerated society’s increasing demand for rural content online, says the firm, with social media growing in importance in promoting rural and farming interests, as well as satisfying the booming interest in food and drink provenance.

It is also leading to a growing interest in rural property, with four in 10 people moving house considering a rural location. In turn, this will bring in more potential new local consumers for farm produce and activities.

Challenges

However, some sectors will be challenged in 2021, says the firm’s farm diversification report, including breweries, which are particularly vulnerable to restrictions on socialising and are suffering from a lack of government support.

Despite some buoyant market prices, farming income is due to come under pressure as direct payments are reduced, while continued and changing restrictions mean overseas travellers will not see the UK as a favoured destination.

Major heritage attractions will continue to suffer from a lack of traveller confidence, says Savills Research.

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