More than a quarter of food and drink businesses have reported a slump in their economic confidence in the first quarter of 2018, amid rising fears over the outcome of Brexit, according to a major new poll by the FDF.
It found that while 55% of manufacturers said their confidence had remained the same when compared to the last quarter of 2017, more than 25% of participants said conditions had deteriorated and fewer than one in five have seen business conditions improve.
The survey also found more than half of businesses had seen product margins fall in Q1, while around two-thirds expect input prices to increase in 2018, with heightened ingredient costs highlighted as the top barrier to the success of the food and drink industry.
Increased domestic demand, planned investment in new product launches and increased demand for healthy food products were identified as the top three opportunities by businesses in the survey.
Almost half reported an increase in volume sales in the UK in Q1, despite the fall in confidence. The federation said it had received responses from businesses with a combined UK turnover of over 10% of food and soft drink manufacturing, with 60% of responses from SMEs.
FDF chief executive Ian Wright said: “It’s encouraging to see that business conditions for the food and drink industry have remained stable.
“It’s 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’s great to see food and drink businesses have found hope in the ever expanding demand for healthier food products.”