Report

State of Industry Report Q1 2025

14 May 2025

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Executive summary

The UK food and drink manufacturing industry is under intense pressure, caught between relentless cost increases, a wave of new regulations and weakening consumer demand, with little ability to pass on higher prices.
The confidence in the food and drink manufacturing remains significantly depressed, standing at -43% in Q1 2025 compared to -47% in Q4 and -6% in Q3.
The top priority for food and drink manufacturers remains increasing domestic sales, with 65% of respondents focusing their efforts on this area.
Labour shortages in the sector rose in Q1, with the vacancy rates now at 3.9% from 3.6% in Q4 2024. This is considerably higher than vacancy rates in broader manufacturing (2.1%) and the UK overall (2.4%).
Between April 2024 to March 2025, pay in the industry is estimated to have risen by 2.9%. This is up from 6.0% the previous year, but below last year’s anticipated rise of 4.7%.
For the year to March 2026, manufacturers expect their costs to rise by 4.8% and prices by 2.8%, on average.
Packaging EPR fees are expected to drive up food prices.

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The food and drink industry is the UK’s largest manufacturing sector, and forms part of a diverse and complex supply chain. Read on for an outline of key industry data, highlighting the economic impact of the sector and achievements across diet & health and environmental sustainability.

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The UK’s food and drink manufacturing sector is a cornerstone of our national economy and a vital part of communities across every region of the country. This report showcases the contribution of the sector to every region and nation of the UK, pulling together statistics and case studies which demonstrate the industry’s impact.

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Previous reports

State of Industry Report Q4 2024

Business confidence plummeted to -47% in Q4, the lowest score since 2022, with businesses impacted by measures announced in the Autumn Budget.

State of Industry report Q3 2024

Confidence remained steady among food and drink manufacturers in Q3, with two fifths of businesses intending to boost their investment in the next 12 months.

State of Industry report Q2 2024

Business confidence fell to -6% in Q2, the first negative result since Q2 2023. A sharp drop in SMEs’ confidence was the main driver of the overall fall in confidence.

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