Britain’s biggest food and drink manufacturers have begun to invest in their operations again, having largely recovered margins from the 2022-23 inflationary surge.
Capex among the UK’s top 150 suppliers rose to 3.4% of revenue in 2024, up from 2.8% the previous year, according to an annual report from strategy consulting firm OC&C and The Grocer.
Increased investment follows a strong recovery in margins among branded players, whose operating margin averaged 9.6% in 2024 – up from just 5.6% in 2022. Own-label margins were up to 3.3%, having fallen to a low of 1.8% in 2022.
Growth among the top 150 likewise returned to long-term average levels in 2024, falling from inflation-linked highs – though suppliers under £500m in revenue continued to grow faster than their larger counterparts.
The list’s fastest growers included premium salmon company Scottish Sea Farms (+61.5%), stone fruit seller Direct Produce Supplies (+36.2%), potato supplier Albert Bartlett (+36%), seafood company Mowi (+29.7%) and The Scottish Salmon Company (+26.5%).
“Confidence for people to invest in the industry has gradually rebuilt over the past two years, having really taken a hit in the waves of inflation, and you can see that in the recovering capex rates,” said OC&C global managing partner Will Hayllar.
Stateside Foods led the pack for largest relative upswing in capex in 2024, followed by Unilever and Signature Flatbreads.
However, consistent capex – rather than on-and-off spending – defined some of the standout players in 2024, according to Hayllar.
“Some of the winners we have identified are businesses that have invested consistently through the past few years and have seen the fruits of that come through,” he added.
“It’s helpful to see the successes of those who have been investing significant amounts behind distinctive products and new technologies – and getting returns from that,” he said.
The return of M&A activity can also be taken as a sign of the industry’s health.
“You can also see [confidence has improved] in the amount and nature of M&A that’s happening,” OC&C partner Nilpesh Patel said.
Headline deals such as Greencore’s purchase of Bakkavor, ABF’s proposed takeover of Hovis, Newlat’s merger with Princes, and Nature’s Way’s purchase by California-based Taylor Farms have increased confidence in the sector.
Increasing confidence, tariffs notwithstanding, helped foster a return of private equity buyers.
Between January and October 2025, the number of deals made surpassed the same period the year before, thanks in part to this return.
Making up just 1% of disclosed deal value in 2024, private equity buyers spent 34% of disclosed deal values so far in 2025.
“Although it’s not an easy or particularly buoyant market at the moment, it is one where there is enough stability that good investment opportunities are starting to appear,” said Patel.
The full report and in-depth feature on this year’s report will be available in this weekend’s magazine and will be online at thegrocer.co.uk later today.
No comments yet