State of industry report Q4 2023

01 March 2024

Food and drink manufacturers are cautiously optimistic about the future after a turbulent few years which has brought significant disruption to the sector. However, this optimism is fragile and a challenging business environment, with burdensome regulation in the pipeline, could kill off the green shoots.


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Companies are firmly focused on growth during 2024, with 73% of manufacturers determined to grow UK sales and 66% looking to new product development and innovation to drive sales.

Challenges still remain for the sector, particularly for SME’s, who have been disproportionately impacted by the fallout from events the industry has faced since 2020.

Executive summary

  • The Q4 FDF net confidence score fell to 0%, the first decline in five quarters. The outlook confidence score for Q1 2024 is 31%. Businesses are more optimistic as they expect stability or improved market conditions.
  • Labour vacancy rates fell to 5.2% in Q4 from 6.5% in Q3, but remained significantly above rates in manufacturing (2.7%) and the UK (3.0%). SMEs were impacted the most by labour shortages, with vacancies running at 6.0%, higher than those of large businesses (5.5%) or mid-size businesses (4.3%).
  • We estimate that persistent labour shortages have cost the industry about £1bn in lost output in 2023.
  • With the new Border Target Operating Model in effect from 31 January 2024, manufacturers are most concerned by new inspection fees (36%) and the readiness of EU suppliers (23%).
  • The industry is firmly focused on growth in the new year, with 73% of manufacturers aiming to grow sales in the UK market and 66% to develop new products.
  • 43% of respondents aim to increase their investment in skills in 2024 and 41% in plant and machinery. 65% of manufacturers intend to make use of full expensing capital allowance now that it is permanent.

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