AVARA FOODS has detailed how it is adapting to “structural and systemic” challenges in the labour market by investing in efficiency and upskilling staff in its most recent results, which cover the year to 31 May 2021.
The poultry integrator has a 20% market share producing 4.5 million chickens a week.
“Labour challenges emerged in March 2021, linked to Brexit, the EU Settlement Scheme and the extension into summer 2021 of the government’s COVID furlough scheme,” the directors’ report says.
“As this developed, a shortage of key skills began to impact performance with available labour prioritised to deliver core products, negatively impacting the margin mix.”
But the firm said a new range of fresh poultry products that were easier to handle at home reduced plastic use by 50% had launched following a £12m capital investment.
“This key automation project will complete in 2021-2022, upskilling operational roles and future-proofing supply amidst an increasingly competitive labour market.”
Avara Foods said over the period, retail demand for chicken had risen by 15%-20% as shoppers prepared more food at home.
But foodservice sales proved more challenging, with a “changing picture” of local and national lockdowns.
The company’s turkey division was particularly hard-hit by foodservice constraints because of its higher exposure to that sector, the directors’ report said.
“The long pipeline for turkey means this sector is unlikely to fully recover until 2022,” it added. “A new operating model will be introduced to ensure this sector is sustainable, can meet customer demand and financially supports the reinvestment needed.”
Avara Foods also closed its duck operation in July 2020, with costs of doing so in line with a £5.9m provision made to do so the previous year.
It also added that additional costs of exporting produce post-Brexit were about £2.5m a year.
Turnover remained broadly flat at £1.19m in 2021 compared with £1.2m a year earlier.
Pre-tax profits were £53m, compared with £47m in 2020.