The results from the Food and Drink Federation (FDF) new quarterly business confidence survey have been published, showing that over half of the manufacturers polled believe that general business conditions have remained the same in the first quarter of 2018, when compared to the last on of 2017. Over 25% said that conditions had deteriorated, while less than one in five participants have seen business conditions improve.

The key growth opportunity for businesses during the rest of the year is the increased demand for healthier food products. Almost half of manufacturers reported an increase in volume sales in the UK in Q1, anticipating increased domestic demand for produce and planned investment in new product launches.

“It is encouraging to see that business conditions for the food and drink industry have remained stable,” said FDF Chief Executive, Ian Wright CBE. “It is not surprising that the industry is fearful over the uncertainty that surrounds a post-Brexit UK-EU relationship, and the results rightly reflect this as a barrier for business in the coming year. Despite the woes of Brexit, it is great to see that food and drink businesses have found hope in the ever expanding demand for healthier food products.”

Food and drink manufacturers were split over their expectations for UK economic growth for 2018, when looking at the wider economy. Around two thirds expect a rise in input prices, with heightened ingredient costs ranked the top barrier to food and drink manufacturing success throughout the rest of the year.

Overall, the key impacts on food and drink businesses in Q1 2018, as voted by the survey participants, are: increased packing costs (77%), increased ingredient costs (72%), increased average wages in their business (65%), increased product margins (60%), productivity gains (56%), increased energy costs (52%) and increased volume sales to the UK (49%).

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