Food manufacturers see decline in revenue – but beverages buck the trend

By Rachel Arthur

- Last updated on GMT

Pic: getty/msthazerabegum
Pic: getty/msthazerabegum

Related tags Manufacturing Investment Uk

Small and medium food manufacturers in the UK saw revenue drop 6% in the first quarter of the year: but revenue in the beverage category leaped 63%. Why are beverages bucking the trend?

In fact, drinks manufacturers saw the highest increase in revenue out of all industry categories, ranging from electronics to furniture. That’s according to supply chain tech company Unleashed, which has released The Manufacturing Health Index Report, which is based on tracked data from purchases, sales and stock movements among SME (Small and Medium Enterprise) manufacturers in the UK.

Beverages – both alcoholic and non-alcoholic – saw a 63% increase in revenue compared to the previous quarter. That compares particularly well to the clothing, footwear and accessories category (down 40%) and home furnishing (down 26%). Overall, the SME manufacturing category was down 10%.

Factors such as high inflation have battered the manufacturing industry, explaining the decline in most categories. But why have beverages done so well against this backdrop?

Dan Pope is host of food and drinks industry podcast Hungry​, which tracks challenger brands and categories. And it’s these challenger-style brands that could be the reason the beverage industry is punching above its weight.

“After waxing lyrical to tonnes of challenger food and drink founders on the podcast, my gut instinct is that drinks are having their moment right now,” he said.

“First, pretty much every trend under the sun is filtering into the drinks market; from CBD brands like TRIP and GoodRays, functional gut health drinks like Fix8 and Living Things, protein drinks like Fiesty, nootropic drinks like Nuetonic and Brite, and of course, alcohol free brands like Lucky Saint.”

Another factor, he says, is the drinks have a winning format when it comes to D2C sales. That’s backed up by Unleashed’s data, which suggests those SME using B2B digital sales channels (around a third of manufacturers in total) see an average 25% uplift in revenue.  

“Supermarket shelves aren't expanding, buyers are under more pressure and brands are under more pressure to prove rate of sale - usually six months tops,” said Pope.

“Challenger drink brands are having to find "other ways" vs. traditional bricks and mortar stores to reach their consumer. Canned drinks are perfect for D2C vs. a food product; they're less likely to break, you can usually sell in bulk i.e. 12 cans, meaning your average order value and gross margin increases. 

“It feels like drinks are having their moment.”

Related topics Manufacturers

Related news