The UK’s Food and Beverage industry is the country’s largest manufacturing sector, accounting for 17% of all UK manufacturing gross added value (GVA) at more than £28 billion per annum.
There are currently more than 6,800 companies operating in the sector, which employs nearly 400,000 people.
But unfortunately, the sector is facing significant challenges, including rising costs, increasing regulation, labour and skill shortages, as well as threats to export markets, to the point where many are struggling (particularly smaller producers).
The Food & Drink Federation (FDF) paints a particularly concerning picture in its State of Industry Report Q2 2024, at a time when consumer demand remains uncertain.
There are also concerns that margins may be further squeezed in the not-too-distant future by the government’s focus on worker rights, sustainability, and regulatory reforms, all of which could increase pressure on operational costs. Whether these are passed on to the consumer is hard to predict, mainly because the majority of consumers remain reluctant to pay extra for their weekly shop.
For those manufacturers who rely on exports the news isn’t much brighter. Export volumes were down by 20% in 2024 compared to the same period in 2023. And there are clearly threats of tariffs, particularly from the USA, at a time when many producers are already grappling with additional post-Brexit administration costs and border checks. Not surprisingly, therefore, improving the UK's relationship with the EU is among the key policy priorities for industry leaders (alongside employment and skills policies, and packaging reforms).
Despite all of the challenges producers face, it’s clearly vital that they can rebuild their margins so that they can invest, innovate, and feed sector growth.
Major investments in technology and automation along with data-driven supply chain improvements support good decision-making and offer longer-term cost savings. These savings should offset the current additional costs of doing business and enable UK businesses to remain competitive.
Some of these technologies are already regularly deployed; for example, robot technologies to automate production lines, but we’re seeing these supplemented by smart and predictive maintenance tools, including the IoT, and AI, which collectively can optimise equipment performance, while helping to pre-empt failures by ensuring timely intervention.
Further automation supports efficient warehousing and just-in-time delivery, helping to reduce the levels of wastage of perishable goods.
And digital technologies can be employed to help maintain regulatory compliance, particularly around operational sustainability. Companies can underline the validity of their environmental claims and provide transparency across their supply chains by creating digital footprints and data sharing through technologies such as blockchain.
However, these digital assets need to be protected, as well as compliant with strict health and safety regulations.
Delicate electrical circuitry and sensors that are routinely placed on the production floor must be safeguarded from either contaminating - or being contaminated by - the manufacturing process. Any sensitive drives or switchgear that operates production lines must comply with the UK’s strict food safety regulations and be able to withstand increasingly ambitious CIP procedures.
Rittal’s Food & Beverage Ebook
In Rittal’s Food & Beverage ebook, we consider all these issues in more detail, and we explore how the sector can increase margins and build-in greater resilience through investing in digital technologies and automation.
We consider: