Economic Contribution of UK Food and Drink Manufacturing Revealed
A Recent Analysis Highlights Sector’s Impact on Economy
- New data reveals that food and drink manufacturing contributes £42 billion to the UK economy, supporting nearly half a million jobs across the nation.
- Growth has been observed in every region, yet production costs have risen by an average of 4.4%, reaching 5.3% for small businesses.
- Soaring energy costs are a pressing concern, as energy plays a critical role in the entire food production process. The sector is advocating for inclusion in the British Industrial Competitiveness Scheme to alleviate these expenses.
- The Food and Drink Federation (FDF) is urging the government to support the sector in reaching its goal of £50 billion Gross Value Added (GVA), enhancing industry resilience amid inflation and economic shocks.
Current figures place the food and drink manufacturing sector at the forefront of the UK’s manufacturing industry, accounting for approximately 23.7% of total manufacturing turnover. The entire food and drink supply chain is valued at £172 billion in the national economy.
The Challenges Facing the Sector
Despite its significant contribution, the sector has faced challenges due to rising costs and fluctuating regulations. Since 2019, the insolvency rate in UK food manufacturing has escalated nearly threefold compared to other manufacturing sectors. Recent global events, including the conflict in the Middle East and increasing energy prices, have further imposed strain on operations, as energy is a foundational element in food manufacturing.
Regional Contributions of Food and Drink Manufacturing
The Powering Communities report outlines how food and drink manufacturing enhances economic health throughout the UK. Over 12,000 food and drink manufacturers operate nationwide, bolstering jobs and supporting local infrastructure.
Notable investments include a £75 million initiative by Kellanova to establish Europe’s largest cereal factory in Wrexham, Wales, and a new warehouse by HARIBO in Castleford, Yorkshire. Furthermore, food and drink manufacturing represents about a third of manufacturing turnover in Scotland (32.4%) and Northern Ireland (35.1%).
This sector employs nearly half a million individuals—489,333 people—having created 43,833 jobs since 2018. It offers diverse career opportunities, from food technologists and microbiologists to engineers and sustainability experts, comprising around 19.3% of the total manufacturing workforce.
Future Outlook and Industry Resilience
Food and drink manufacturing is not just a significant employer but also plays an essential role in achieving governmental objectives aimed at reducing regional disparities and promoting economic growth. However, businesses are under pressure: an average production cost increase of 4.4% has been recorded, reaching up to 5.3% for smaller enterprises. Coupled with global uncertainties, the prospect of investing in innovation and technology remains challenging, endangering long-term sector resilience and the UK’s reputation as a food innovation leader.
According to Karen Betts, Chief Executive of the Food and Drink Federation (FDF), “This report emphasizes the significance of food and drink manufacturing—it thrives in every region, providing jobs and enriching communities while ensuring a diverse range of food choices for all.”
“Manufacturers are feeling the crunch. Recent years have been marked by regulatory changes and geopolitical disruptions, leading to inflation and a cost-of-living crisis. Manufacturers are often forced to invest merely to maintain existing operations rather than to innovate for the future. If we aim for a sustainable and resilient food system, it’s vital to support investments in technology, manufacturing methods, packaging, and healthier ingredients.”
The FDF has laid out a plan to accelerate the industry’s growth to £50 billion within the next decade. Achieving this potential depends heavily on the government’s willingness to create a supportive environment and bolster the aspirations of businesses in the UK food and drink manufacturing landscape.
