The Food and Drink Sector Experiences Partial Confidence Recovery
According to a survey conducted by the Food and Drink Federation (FDF), business confidence in the food and drink manufacturing sector has started to recover, though it remains in negative territory. The confidence score for the second quarter of 2026 was reported at -31%, marking the ninth quarter of negative sentiment. This shows an improvement from the first quarter's record low of -64%.
Company Challenges Remain
The survey covered a range of businesses, revealing that small and medium-sized enterprises (SMEs) recorded the highest confidence at -9%, an improvement from the prior quarter when they were heavily impacted. In contrast, larger enterprises reported a net confidence score of -25%, with 75% indicating stability in conditions compared to the first quarter.
Rising Costs and Investment Reluctance
The FDF detailed that businesses had faced an average increase of 3.8% in production costs over the past year, encompassing expenses for labor, energy, and ingredients. Notably, more than 75% of manufacturers indicated a need to raise consumer prices to manage these increased costs, which the FDF views as inevitable for the upcoming year.
In addition, the survey highlighted a notable reluctance to invest in growth areas, with 87% of businesses having no intention to enhance investment in skills and 84% not increasing research and development funding in the coming year.
Call for Government Action
The FDF emphasizes the necessity for urgent governmental intervention to rebuild business confidence. The manufacturers expressed a desire for reduced energy costs, the implementation of the SPS agreement to ease EU trade friction, and improved support in developing skills. These measures are particularly significant given the increasing pricing pressures caused by extreme weather conditions.
Balwinder Dhoot, the FDF's director of growth and sustainability, urged for immediate actions in the forthcoming budget to restore confidence and strengthen the sector's resilience. The FDF believes that addressing the highlighted areas will help create a more competitive and innovative food system, ultimately benefiting the broader community.
