Report
State of Industry Report Q4 2025
25 February 2026
Topics
Business confidence remained downcast at -31% over food manufacturers’ crucial Christmas trading period in Q4, making only a partial recovery from –60% in Q3. However, half of small businesses reported that conditions worsened over the period.
Despite this, the sector’s smaller businesses continue to show a healthy appetite for growth. FDF is urging government to not overlook their potential, by calling to see real action on its blueprint for growth.
5 key takeaways
- 2026 is likely to be defined by weak consumer demand and sustained structural cost pressures.
- Growing sales in the UK market remains the overwhelming priority for 69% of food and drink manufacturers, with 74% also planning to maintain or increase overallinvestment over the next year.
- Businesses are becoming more cautious ahead of the Employment Rights Act with slower hiring, increased automation, and higher HR and legal spend expected. Payroll and staffing costs were identified as the biggest concern by 66% of businesses.
- The sector’s labour vacancy rate inched to 5.0%, up from 4.9% in Q3, remaining well above the rate in manufacturing as a whole (2.1%) and the UK average (2.3%).
- Total production costs increased by 4.4% over the year to December, while selling prices rose by 4.6%.
