A report from UK industry body the Food and Drink Federation (FDF) suggests manufacturers have “turned the corner” and are looking to invest again.
The body’s State of Industry Q2 2024 report, published today (15 August), revealed almost nine out of ten food and drink manufacturers expect to maintain or increase investment over the coming year after facing inflation in their supply chains and consumer resistance to price increases.
“This is a signal that the sector has turned the corner after the policy turmoil and external shocks that have disproportionately impacted food and drink businesses, leading to a 30% drop in investment since 2019,” the report concluded.
But the FDF has called on the newly-installed Labour government to take action to unlock the sector’s full growth potential.
Its findings show that food and drink manufacturers are seeking out opportunities to make long-term investment decisions in manufacturing and supply chains. Over one third of manufacturers also plan to increase their R&D spend over the coming year.
But the report found that businesses remain concerned about policy and regulatory uncertainty and worry that non-tariff barriers could risk denting the industry’s export competitiveness.
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By GlobalData
Balwinder Dhoot, the FDF’s director for sustainability and growth, said: “Despite investment in our sector being down by a third compared to 2019, it’s encouraging that manufacturers are planning to increase or sustain their investment this year.”
He added: “ A well-crafted industrial strategy – working in partnership with the UK’s largest manufacturing sector – will also allow us to seize investment opportunities and tackle some of the nation’s critical challenges around food security, health, productivity and net zero.
“It is crucial for government to help establish a stable business environment that removes the burden of unnecessary and costly regulation and bureaucracy.”
The report also suggests that reforms to the country’s Apprenticeship Levy would help the industry thrive by addressing both the skill gaps and labour shortages.
More than half of manufacturers would like to be able to use the levy funds for engineering conversion modules or business improvement techniques.
