New report highlights £14 billion untapped potential in UK food and drink manufacturing sector

The UK food and drink manufacturing sector holds the potential to unlock a staggering £14 billion growth opportunity, according to a new report released at the inaugural Food and Drink Investment Summit. However, achieving this ambitious goal requires greater investment in technology, skills, and data to drive productivity gains and ensure the industry remains competitive on a global scale.

The report Future Factory: Supercharging digital innovation in food and drink manufacturing, released by the Food and Drink Federation (FDF) in partnership with strategic delivery consultancy Newton, highlights how, despite a doubling of investment in the sector over the past two decades, growth lags behind other industries due to systemic barriers in the business environment.

A new taskforce

The summit —attended by Secretary of State for Environment, Food and Rural Affairs, Rt Hon Steve Reed MP, and Minister for Industry, Sarah Jones MP— also marked the launch of the Food and Drink Technology Taskforce, a new initiative bringing together industry leaders, technology providers, academics, and financial organisations. The Taskforce aims to accelerate the uptake of advanced technologies such as automation, robotics, AI, and data analytics within the sector, with a focus on supporting SMEs, which comprise 97 percent of the industry.

Karen Betts, Chief Executive, The Food and Drink Federation, highlighted the sector’s strategic importance: “The UK has one of the most efficient and sophisticated food industries in the world, with shoppers everywhere able to choose from a wide range of nutritious, delicious and exciting food and drink every day, while prices remain below the European average. However, like other advanced manufacturers, the food and drink sector is facing into a range of challenges, from decarbonisation and digital transformation, to public health and supply chain resilience.”

Betts added that technology-driven growth could bolster productivity, create high-quality jobs, enhance exports, and ensure food security.

The new taskforce will collaborate with the UK Government to foster the right conditions for investment, including stable regulation and targeted initiatives such as a ‘Food and Drink Sandbox’ to test innovative ideas.

Barriers to progress

Although three-quarters of food and drink leaders recognise the benefits of advanced technology, barriers to adopting these practices remain significant. UK manufacturers often operate within tight financial constraints, typically requiring a return on investment within 18–24 months, meaning this is a particular challenge for SMEs, which may lack the resources to invest in costly innovations.

Junaid Mujaver, Partner at Newton said, “The rate and range of digital innovation in food and drink manufacturing across the country is incredible.”

However, he believes that while the “UK performs well” when compared to other economies, it has “the potential to become world-leading” through better adoption of both digital and AI technologies.

The government has also expressed its commitment to supporting the sector.
“The UK’s world-class food and drink manufacturing sector plays an integral role in driving growth to every part of the country. Increasing investment is a mission at the heart of this government,” commented Sarah Jones MP, Minister for Industry.

Jones added, “By working in partnership with industry, we’re looking to deliver long-term, stable growth that supports skilled jobs and raises living standards across the UK.”

Economic and social impact

With more than 12,500 businesses employing 500,000 people, the food and drink manufacturing industry contributes £38 billion annually to the UK economy. Its role in communities across the UK is significant, but the sector must align itself with global standards for innovation to maintain its competitive edge.

Over the past two decades, every £1 invested in the sector has generated £9 in wider economic value, compared to £5 for every £1 in transport and engineering, underlining its potential as a driver of economic renewal.

As the UK government and industry collaborate, the Food and Drink Technology Taskforce could represent a crucial step towards harnessing the sector’s untapped potential, driving innovation, and unlocking unprecedented growth opportunities in the years ahead.