Data from the Food and Drink Federation (FDF) shows that the food and drink manufacturing sector now contributes £42 billion to the UK’s economy.
FDF said this accounts for almost a quarter (23.7%) of total manufacturing turnover, while the entire food and drink supply chain is worth £172 billion to the national economy.
However, FDF identified that following “many years of rising costs and rapidly changing policy and regulation”, businesses face a “challenging” investment environment, which could limit their growth. It said conflict in the Middle East and rising energy price had added further strain to businesses, as energy is “embedded in every stage of food manufacturing”.
Food sector represents a third of Scottish and Northern Irish manufacturing
The ‘Powering Communities’ report aims to show how the industry’s economic contribution extends across every region of the country while supporting jobs, infrastructure and local communities. It highlighted an additional £75 million investment made by Kellanova to create what it called Europe’s “biggest cereal factory” in Wrexham, Wales.
It went on to spotlight a recent investment by Haribo, which is set to open a new warehouse in Castleford, Yorkshire, while revealing that the sector now represents around a third of manufacturing in Scotland (32.4%) and Northern Ireland (35.1%).
Global uncertainty slows investment
FDF called 2025 a “challenging year” for the industry, as food manufacturers saw production costs increase 4.4% on average, rising up to 5.3% for small businesses. Piling cost pressures over recent years, along with further global uncertainty in 2026, have reportedly hampered businesses’ ability to invest in the technology, innovation, skills and productivity growth they need to be able to be competitive into the future.
FDF said this is putting the long-term resilience of the sector, the jobs it provides, and the country’s status as a global hub for food innovation, at risk.
“If we want a sustainable, resilient food system fit for an island nation, we need companies to be investing in future technologies, new manufacturing methods, new packaging materials and new, healthier ingredients and products.”
Karen Betts, chief executive of The Food and Drink Federation (FDF), said: “This report shows how much food and drink manufacturing matters – it happens in every corner of the country, providing jobs, building skills and bringing prosperity to communities, while ensuring that everyone, everywhere has an amazing array of choice when they do their food shopping.
“But manufacturers are squeezed. The last six years has been a rollercoaster of regulatory change combined with geopolitical shocks, all driving inflation and the cost-of-living crisis. More often than not, manufacturers are now running to stand still, investing to maintain operations rather than to fit them for the future. But if we want a sustainable, resilient food system fit for an island nation, we need companies to be investing in future technologies, new manufacturing methods, new packaging materials and new, healthier ingredients and products.
“We need Government to back the future of food manufacturing in the UK by ensuring we’re at least on a par with automotive, aerospace and other sectors. It can do this by helping us handle soaring energy costs, as they are with other sectors, mitigating the risks for SMEs investing in new technologies, ensuring engineers and scientists can access training for our sector, helping companies use the latest trade deals, or improving access to R&D funding to nudge consumers towards healthier products.”
