SCOTLAND’S burgeoning food and drink sector has declared its intention to create an additional 14,000 jobs by 2020, as companies forecast achieving average annual turnover growth of 19 per cent.

Confidence in the industry’s future prospects has been underlined in research published today, which highlights a thirst among producers to develop export sales, win new customers abroad, invest in product innovation and collaborate with others.

According to the Bank of Scotland’s fourth annual Fresh Opportunity & Growth report, two-thirds of producers plan to create new roles in the next five years.

That could lead to the creation of 14,000 new jobs in the next five years, if those intentions are replicated across the industry, the report claimed.

The food and drink sector in Scotland currently employs around 360,000 staff, according to industry body Scotland Food and Drink.

Nearly half (46 per cent) of respondents highlighted taking on staff as a way of achieving growth for their business.

Graham Blair, head of food and drink at Bank of Scotland, said promotions such as the current Year of Food and Drink have raised awareness of the quality and range of Scottish produce, giving producers the confidence to recruit and invest in research and development.

And he said it was not just the producers of premium products such as whisky and salmon which have plans to add hire. Companies engaged in craft beer, biscuits and “imaginative” products such as seaweed and salt are also displaying confidence by innovating and taking on staff, he said.

Mr Blair said Scottish producers have always enjoyed a good reputation but believes they are now better at marketing themselves.

He said: “What were traditionally Scottish businesses going quietly about their way are now having the confidence to take that to new markets, new products, research and development.

“Whilst Western Europe is still really the key area, the producers, the manufacturers are having [the] confidence to take them elsewhere, and they are being well received.

“Scotland is now being recognised as a land of food and drink and I think the provenance of our products is helping. If there is new business, new orders, it leads to more people being employed.”

Developing export markets was also revealed by the report to be a major priority for producers.

Buoyed by the confidence shown in Scottish produce, 62 per cent of respondents said they plan to engage with new international customers in the next five years.

Nearly four in five (78 per cent) said they have benefited from the strong reputation Scottish produce enjoys overseas. That reputation was highlighted by Scottish Government figures published in May, which revealed the value of food exports exceeded £1.1 billion for the first time in 2014. The combined value of food and drink exports reached £5.1bn.

The top target market remains Western Europe, revealed as the focus for 61 per cent of companies. North American was ranked as the second most popular destination overall (favoured by 52 per cent), followed by the Middle East (50 per cent) and the Far East and Asia (30 per cent).

The provenance of Scottish produce was highlighted as a key asset for firms looking to export, with 63 per cent stating that it is important to export activity. Nearly three-quarters (71 per cent) said they currently capitalise on their Scottish heritage in a bid to boost sales abroad.

Four out of five producers signalled plans to use new product development or packaging redesign as a means to expand overseas.

Asked whether producers were concerned about the economic slowdown in China, Mr Blair would only state that it is always “prudent” to consult trusted advisers before moving into any market.

Meanwhile, innovation was found to be high on the agenda for producers, which Mr Blair said is driven by the confidence businesses have gleaned from opening new markets.

Nearly two-thirds of respondents signalled their intention to grow by developing new products, with businesses stating they will invest 27 per cent of their current turnover into research and development over the next five years.

More than half said they plan to collaborate with other organisations in their supply chains, develop products, boost productivity and streamline manufacturing processes.

Mr Blair said: “Innovation is exciting, because the sector was quite traditional. It is now moving away from high-end whisky [and] salmon and innovation is spreading.”

Although the stock of Scottish food and drink appears to be riding high, there remain challenges for producers.

Increasing regulation and compliance was cited by 39 per cent of respondents as a concern, alongside a possible exit from the European Union, highlighted by 34 per cent.

The challenge brought by rising labour costs was cited by 42 per cent of respondents.

The majority of respondents (67 per cent) said trade sanctions such as those being applied by the EU against Russia are having no impact on the Scottish food and drink industry.

More than a fifth (22 per cent) said sanctions were having a negative effect, and two per cent said the impact was very negative.