The Welsh food and drink manufacturing sector has grown 45.3% over a decade and contributed £1.7 billion to the Welsh economy.
The Powering Communities report from the Food and Drink Federation (FDF) also shows the food and drink manufacturing sector’s role as a major employer, providing 26,500 jobs in Wales’ 575 food and drink businesses. Employment in the sector is growing, having added 3,750 new jobs across Wales since 2017.
Food and drink manufacturing accounts for 14.7% of the region’s total manufacturing GVA says the report, which is based on the latest ONS data.
The report reveals that this significant economic contribution stretches across communities in every UK region. For example, food and drink manufacturing makes up almost a third (30.8%) of total manufacturing GVA in Scotland and a fifth in the East Midlands (20.6%) and Northern Ireland (20.2%).
Significant investments in robotics and automation, as well as R&D and innovation to create healthier products, have all helped to drive this growth. And, there is still more growth for the taking. At the end of last year, FDF revealed that there is an untapped £14 billion productivity opportunity for the sector, which could be unlocked through investments in automation, digital technology and AI.
However, according to the latest FDF State of Industry report, with the sector facing a host of impending challenges, maintaining this growth is by no means certain. Food and drink business confidence declined to -47% in Q4 20242 on account of growing inflationary pressures, barriers to trade, and upcoming Extended Producer Responsibility (EPR) fees for packaging.
To ensure the industry can continue to power communities and protect the nation’s food security, FDF is calling for governments across the UK to work with industry to address barriers to growth. These include low investment in innovation, falling food and drink export volumes and lack of access to a highly skilled talent pool.
Jim Bligh, Director of Corporate Affairs, Communications and Packaging, FDF said:
“Our industry is vital to ensuring we have a thriving food system here in Wales, providing high-quality, affordable food. And we are a major part of the Welsh wider manufacturing sector, offering good careers, driving investment, and promoting international trade. Food and drink manufacturing is uniquely placed to make a positive impact in every village, town and city in every constituency in Wales.
“But with food and drink businesses under increasing pressure, we’ve reached a pivotal moment for the Welsh Government to collaborate with other nations to minimise costs and complexity for businesses and ensure we can continue to achieve growth. We’ve set out more than 40 steps government can take to remove unnecessary roadblocks to growth for the benefit of every community in Wales and across the UK.”
Huw Irranca-Davies, Deputy First Minister with responsibility for Climate Change and Rural Affairs, said:
“Wales' thriving food and drink sector is a cornerstone of our economy, as this impressive growth demonstrates. The Welsh Government is proud to provide world-class support focused on sustainable growth, productivity improvement, innovation in products and processing, strong provenance and healthier eating – essential ingredients that build long-term successful businesses.
“As a nation passionate about our food and drink, Welsh producers offer exceptional quality and authenticity that helps new businesses, expanding businesses and well established multi-nationals. We remain committed to working collaboratively with industry and academia to navigate challenges and unlock further potential, ensuring this vital industry continues to flourish throughout Wales, supporting jobs, communities, our Net Zero ambitions and our economy.”
FDF has set out its Ingredients for Growth, offering the recipe for how government and industry can work together to make the UK the most competitive and dynamic food and drink sector in Europe. The report highlights more than 40 actions that government can take to secure a thriving, productive food and drink industry into the future.
