The UK food and drink industry continues to make a substantial contribution to the economy, but businesses are operating in a market shaped by price sensitivity, intense retail competition and growing pressure to improve productivity.

The latest edition of Defra’s Food statistics pocketbook, updated in July 2026, brings together official data covering the food chain, consumer spending, manufacturing, trade and supply. Here are some of the key findings for food producers and brand owners.

The UK food economy continues to grow

The UK agri-food chain contributed £162.3 billion in Gross Value Added in 2024, equivalent to 6.2% of national GVA.

Food and drink manufacturing accounted for £39.3 billion of this total, an increase of 5.9% compared with 2023. GVA also increased across wholesale, retail and non-residential catering, demonstrating the scale of the commercial ecosystem available to producers.

Consumer demand remains significant. UK expenditure on food, drink and catering reached £303.3 billion in 2025 after adjusting for price changes, up 1.1% from the previous year. Spending on food and drink eaten out grew more strongly, rising by 2.3% to £137.7 billion, while expenditure on household food was broadly unchanged at £138.2 billion.

For brands seeking growth, the figures reinforce the importance of considering multiple routes to market, from grocery and independent retail to hospitality, catering and foodservice.

SMEs remain the backbone of manufacturing

There were approximately 24,880 small and medium-sized enterprises operating in UK food and drink manufacturing in 2025, including businesses without employees. SMEs represented 98.8% of businesses in the sector.

This diverse base of producers supports innovation across categories, but smaller businesses must compete for attention in a concentrated grocery market. In the 12 weeks ending 17 May 2026, the four largest food and drink retailers held a combined market share of 65.7%, while Aldi, Lidl and Iceland together accounted for 21.6%.

Producers therefore need a clear understanding of where their products fit within a retailer’s range, the consumer need they address and how they can deliver value. Independent, wholesale, foodservice and export channels can also provide important opportunities beyond the largest supermarkets.

Affordability remains central to purchasing decisions

Food and non-alcoholic beverage prices increased by 2.2% in the 12 months to May 2026. Although this is considerably below the exceptional levels seen in 2023, affordability remains a major concern for consumers.

Food prices were the most commonly selected concern in the Food Standards Agency’s Food and You 2 survey, cited by 69% of respondents. The pressure is particularly significant for lower-income households. In the financial year ending 2025, the least affluent 20% of households spent an average of 15.2% of their expenditure on household food and non-alcoholic drinks, compared with 7.9% among the wealthiest 20%.

Brands must consequently communicate value in ways that extend beyond headline price. Product quality, versatility, portion size, convenience, shelf life and reduced waste can all influence whether shoppers consider a purchase worthwhile.

Quality, health and packaging matter too

Price is not the only issue influencing consumers. Food waste was selected as a concern by 58% of respondents, while 57% cited food quality and the amount of sugar in food. Packaging concerned 55%, and 52% identified both healthy eating and animal welfare.

These findings demonstrate the breadth of expectations now placed on producers. Successful product development increasingly requires businesses to consider formulation, nutrition, packaging, sourcing, quality and affordability together, rather than treating them as separate priorities.

Organic food and drink sales also continued to grow, reaching approximately £3.9 billion in 2025. This represented a 4.2% increase year on year and the sector’s 14th consecutive year of growth. Supermarket organic sales rose by 7% to £2.6 billion, indicating that consumers continue to support clearly differentiated products despite financial pressures.

Productivity presents an industry-wide challenge

The total factor productivity of the UK food chain beyond the farmgate showed no significant change in 2024, while productivity in food and drink manufacturing declined by 0.5%.

For manufacturers facing pressure from labour, ingredient, energy and compliance costs, improving efficiency remains essential. Automation, better use of operational data, reformulation, waste reduction and more resilient sourcing can all play a role, but investment decisions must be suited to the needs and scale of each business.

Isabelle McKeever, Event Manager for IFE and IFE Manufacturing, comments: “These figures demonstrate both the enormous value of the UK food and drink industry and the complexity of the market in which producers are operating. Businesses need to balance affordability with quality, health, sustainability and operational efficiency, while continuing to innovate and differentiate themselves. Bringing brands, manufacturers, buyers and industry partners together is vital to sharing solutions, building new relationships and identifying opportunities for sustainable growth.”

IFE and IFE Manufacturing return to Excel London as part of Food, Drink & Hospitality Week on 5-7 April 2027. To showcase your products, meet buyers and connect with food and drink industry decision-makers, find out more about exhibiting at ifemanufacturing.co.uk/enquire-to-exhibit