UK food manufacturers have posted a “disappointing” first quarter sales result, according to software provider Unleashed.
The firm found that the average small UK food manufacturer had made 34% less sales revenue in Q1 2025 than Q4 2024, and 28% less year-on-year.
It also said that recent Q1 business confidence surveys had showed overall confidence turning negative for the first time since 2022 on the back of tax rises, inflation, weak growth and increased global uncertainty.
Unleashed’s data showed profitability had improved as manufacturers held off purchasing new stock, preferring to eat into inventory reserves where possible. Gross margin return on inventory (GMROI) for small food manufacturers jumped 70% against Q4 and 108% year-on-year, up to £5.02 return on every pound spent buying stock.
“Ongoing global tariff tensions and the persistent cost of living ‘crisis’ have significantly impacted consumer confidence.”
Catherine McNeil, director of operations at Ice Cream Alliance, said: “The first quarter of 2025 has been undeniably challenging for the ice cream industry, and the broader food sector has not been immune to the pressures either. Ongoing global tariff tensions and the persistent cost of living ‘crisis’ have significantly impacted consumer confidence.
“We’ve seen this trend echoed across our membership base, particularly among small and independent manufacturers who often bear the brunt of such economic shifts. While large corporations may weather a difficult quarter, smaller producers feel the impact immediately, with tighter margins and less room to absorb losses.
“We’re also seeing promising momentum in product innovation among ice cream producers, particularly in healthier alternatives that offer pickier consumers more perceived value. Whether it’s low-sugar, plant-based, or protein-enriched options, these developments show the industry’s ability to adapt to changing tastes and dietary needs. We remain confident that this innovation and creativity will help keep consumers engaged and returning to the category.”
Joe Llewellyn, GM of ERP Small Business at The Access Group, the parent company of Unleashed, said despite headwinds felt in the food manufacturing sector, the “unusual business conditions” of the first three months of the year had generally played out well for the country’s smaller producers, as had falling bank rates: “Anecdotally, what we’re hearing from some of our customers is that Q1 brought welcome windfalls. Some tariff-affected international customers have turned to UK firms to do business, while others raced to order more before tariff pauses came off.
“That’s delivered a shot in the arm for some firms, but more importantly we’re hearing that steadily falling bank rates are starting to stimulate the economy, which obviously is very welcome to UK manufacturers who’ve posted a really strong start to the year.”
