Margin compression with nowhere left to cut

Food and drink manufacturing is a £42bn industry and confidence in it has been negative for nine consecutive quarters. The FDF has revised its food inflation forecast up to 9–10% by the end of 2026 on the back of energy and global logistics shocks.

Employer NIC and National Living Wage rises have already been absorbed. When you can’t raise prices and can’t cut labour, operational efficiency is the only lever left — and most businesses lack the data to see where efficiency is leaking.

Avoidable waste hiding inside legacy systems

The cost nobody budgets for. Our research with over 500 UK supply chain managers found:

• £156,600 lost annually by the average business to avoidable waste
• 7.29% of perishable stock lost to internal errors alone
• 36.6% name outdated technology as a primary driver

The uncomfortable finding was a complacency paradox: waste rising while confidence in the systems causing it stays high.

A regulatory pile-up, not a regulatory calendar

2026 is the year packaging compliance stopped being an admin task and became a cost line: modulated pEPR fees from July 2026 under the Recyclability Assessment Methodology, with the Red multiplier at 1.2x now, 1.6x in 2027 and 2.0x by 2028.

Base fees are rising too, and the Product Regulation and Metrology Act 2025 has been in force since 1 January 2026. Add FSA traceability duties and BRCGS audit cycles and compliance becomes a data problem.

Traceability you can’t prove in under an hour

Most food businesses can trace a batch. Fewer can do it fast, and fewer still under audit pressure with the auditor in the room.

When traceability lives across a WMS, a spreadsheet, a supplier email and someone’s memory, a mock recall takes half a day. A real one takes longer than you have. The cost isn’t the fine — it’s the width of the recall. Every hour of uncertainty means more product pulled than necessary.

Labour cost, churn and seasonal peaks

Wage costs are up and availability is down, but food and drink operations still need to scale headcount for Christmas, Easter and summer.

Every temporary worker who needs three days of training before they are productive is a margin drain — and an accuracy risk in an environment where the wrong batch shipped is a food safety incident, not a returns cost.

Fragmented systems and no single version of the truth

Orders in one system, stock in another, transport on a whiteboard, packaging data in a spreadsheet. It works — until you need to answer a question that spans all four.

Interoperability gaps and rising cybersecurity exposure now sit near the top of the risk register for most food and beverage supply chains, and fragmented system estates are the root of both.