A report from the Food & Drink Federation (FDF) highlights the contribution of the food and drink sector to the economy but warns of plummeting business confidence.
In its report ‘Powering Communities‘, the FDF reveals that, according to the latest Office for National Statistics data, the food and drink manufacturing sector grew by 17.9% over the past decade and now contributes £37 billion to the UK economy, accounting for 24.2% of total UK manufacturing turnover.
The report shows that the economic contribution stretches across communities in every UK region and nation. For example, it makes up almost a third (30.8%) of total manufacturing Gross Value Added (GVA) in Scotland and a fifth in the East Midlands (20.6%) and Northern Ireland (20.2%).
A major employer
The report also reveals the food and drink manufacturing sector’s role as a major employer, providing 486,500 jobs in the UK’s 12,195 food and drink businesses. Employment in the sector is growing, with 41,000 new jobs across the UK since 2018. The number of food and drink manufacturing businesses in the UK also rose 14% between 2019 and 2024.
FDF says that significant investments in robotics and automation, as well as R&D and innovation to create healthier products, have all helped to drive this growth. And, it states, there is still “more growth for the taking”. At the end of last year, FDF claimed that there is an untapped £14bn productivity opportunity for the sector, which could be unlocked through investments in automation, digital technolog,y and AI.
Future planning
However, according to the latest FDF ‘State of Industry‘ report, the sector is facing a host of challenges, and maintaining this growth is by no means certain. The report found that food and drink business confidence declined to -47% in Q4 2024 on account of “growing inflationary pressures, barriers to trade, and upcoming Extended Producer Responsibility (EPR) fees for packaging”.
FDF is urging government to take action to address barriers to growth and lists these as low investment in innovation, falling food and drink export volumes, and lack of access to highly skilled talent. It has produced a report ‘Ingredients for Growth‘ highlighting 40 actions that it says Government could take to support the food and drink industry for the future, including six key points:
- Secure a fair share of the UK’s R&D spend for food and drink manufacturing, to support industry investment in new product development and healthier options for consumers and the transition to net zero.
- Co-create a workforce and skills plan with Skills England to support our industry as we transition to a higher-skilled, higher-wage workforce.
- Simplify the R&D tax credits system to help more businesses that are struggling to invest in technology to improve productivity and to innovate healthier products.
- Ringfence the £1.4bn annual cost of Extended Producer Responsibility (EPR) to ensure these fees are only used on improving the UK’s recycling infrastructure and not to fund local authority funding gaps.
- Prioritise a more strategic approach to EU trade relations to revive falling EU exports.
- Simplify regulations and remove unnecessary red tape to help business focus on growth and productivity.
“Government must act to safeguard this foundational sector’s future growth.”
Jim Bligh, director of corporate affairs, communications and packaging at FDF commented: “Our industry is vital to ensuring we have a thriving food system here in the UK, providing high-quality, affordable food. And we are a major part of the UK’s wider manufacturing sector, offering good careers, driving investment, and promoting international trade. Food and drink manufacturing is uniquely placed to make a positive impact in every village, town, and city in every constituency in the country.
“But with food and drink businesses under increasing pressure, we’ve reached a pivotal moment where Government must act to safeguard this foundational sector’s future growth and the UK’s food security. We’ve set out more than 40 steps government can take to remove unnecessary roadblocks to growth for the benefit of every community in the UK.”
