2 minute read • published in partnership with ITI Group
Insight: The productivity ingredient UK food and drink manufacturers can no longer ignore
Rising costs, labour shortages and supply challenges are squeezing food and drink manufacturers. Technology and smarter processes are helping them boost output, cut waste and streamline compliance. In part one of a two-part series, ITI Group’s Oliver Stone shows how innovation is turning pressure into competitive advantage.
Feeding millions every day, Britain’s food and drink industry is a remarkable force, powered by skilled farmers, constant product development, and a rich mix of artisan producers and high-tech factories. As the nation’s largest manufacturing sector, it generates £148bn in turnover, £37bn in gross value add (GVA) and employs nearly 500,000 people – supporting a further four million jobs in the wider supply chain.
Internationally, the UK and food drink industry ranks among the best, but domestically it trails in investment. Over the past two decades, it has received just a quarter (27%) of the funding directed into automotive and aerospace – despite offering almost double the return. In the last five years, food and drink manufacturing delivered £7.40 for every £1 invested, compared with £3.80 in automotive and aerospace.
That gap points to a productivity prize worth between £7bn and £14bn. Encouragingly, many manufacturers are moving to claim it. Over half (54%) cite automation as a top investment priority, and three in four see clear benefits from digital solutions. Yet confidence remains low, little changed since the sharp fall following the Autumn Budget in 2024.
Given volatile global conditions, relentless cost pressures, and the impact of recent policy decisions, that caution is understandable. With the stakes so high, the next wave of investment must focus where it counts.
5 Pressures shaping UK food and drink
For food and drink manufacturers, the ultimate test is delivering “on time, in full” – orders arriving when expected, in the right quantity, and at the promised quality. Achieving this simple goal is far from straightforward because of a complex set of interrelated pressures.
1. Ingredient availability and cost
The supply of ingredients is rarely predictable. Seasonal variation, extreme weather events and sourcing location can cut yields, reduce quality or disrupt shipments. A wet season in Egypt can shorten strawberry shelf life drastically, while a drought in Spain may halve olive yields. For fresh produce manufacturers, daily production often depends on what actually arrives, forcing teams to adapt on the fly.
Prices can fluctuate equally sharply. Cocoa, wheat, coffee and beef have all seen marked swings in recent years, leaving manufacturers to balance profitability against customer expectations.
2. Labour constraints
Finding and retaining the right people is a constant challenge. Manual operations need dozens of workers, while highly automated factories can run with a handful. Rising labour costs, driven by National Minimum Wage increases and higher employer National Insurance contributions, are a further squeeze on wages, overtime and training investment, directly affecting productivity and operational flexibility.
3. Rising operational costs
High energy, utilities and transport costs add yet more pressure. Manufacturers, packers and cold-chain operators are having to adjust schedules, storage and logistics constantly to manage bills and maintain reliability. These pressures ripple across every stage of production, impacting efficiency, margins and strategic decision-making.
4. Compliance and legislation
Regulation now shapes not only how products are made but what can be made and how they are sold. Natasha’s Law, governing allergen labelling, forced packaging redesigns and process updates, while the upcoming Extended Producer Responsibility (EPR) packaging levy adds considerations (and costs) around material, recycling obligations and supplier management.
5. Demand volatility and consumer trends
Consumer tastes shift fast, creating sudden spikes or dips in demand. Seasonal trends, retailer promotions and social media-driven fads – from strawberry and cream sandwiches to limited-edition flavours – disrupt production schedules, create bottlenecks and strain supply chains.
Taken together, these pressures can test even the most experienced teams. But they can also be a catalyst for transformation.
Turning pressure into advantage
Across the sector, ITI Group is helping food and drink manufacturers deploy digital tools, automation and smarter production systems to improve efficiency, reduce waste and seize new growth opportunities.
Real-time OEE drives a continuous improvement journey
For example, we helped a leading soft drinks manufacturer achieve efficiency improvements of 20% using a real-time Overall Equipment Effectiveness (OEE) platform. Like many factories, performance was previously tracked on paper, with data often inaccurate or unavailable, time-consuming to process, and no visibility into trends or root causes.
After taking the time to fully understand their needs and goals, our experts implemented a powerful and proven solution that automatically collects machine production counters, equipment status and downtime reasons. Critical information is displayed on large overhead screens, making issues and opportunities immediately visible. Historical analysis enables the team to identify why losses are happening and take corrective action to drive continuous improvement.
Within three months, average OEE rose by 4% – equivalent to an extra 400 cases per shift – and in under three years, the drinks manufacturer achieved a near 20% improvement, helping boost throughput, quality and productivity.
Robotics reduce manual burden and cut costs
In a UK tea-packing factory, high labour costs were putting pressure on margins. ITI Group helped the business rethink how materials were supplied to the packing line. Rather than rely on a team of operators to deliver tea, bags and cotton, the factory introduced automated guided vehicles (AGVs) to pick and deliver materials on demand.
A new software system now tracks machine efficiency and material consumption, generating electronic signals to trigger AGVs exactly when and where supplies are needed. This not only improves process visibility but also significantly reduces labour content.
Over two years, the factory realised savings approaching £1m, while gaining tighter control over efficiency and output.
Simulation de-risks factory layout
A multinational chocolate manufacturer turned to ITI Group to validate its new factory design. Using advanced simulation software, ITI built a digital replica of the entire site, ensuring that the layout rules for operation, staffing levels and production capacity were all in sync with the business plan.
To make the model widely accessible, it was integrated with Excel, giving non-specialists the ability to run scenarios, experiment and provide feedback on the results for review. The platform enabled the team to test variables such as batch sizes, pallet volumes, equipment configurations, shift patterns, cleaning strategies and product mix.
It also included a complex rework system to minimise waste by reusing surplus ingredients (within shelf life). A visual representation of the production flow added further clarity and confidence in decision-making.
By testing different configurations before construction and equipment selection, the manufacturer ensured production targets would be met, resources optimised and ingredient use maximised – reducing risk and delivering a factory designed for performance from day one.
The next chapter for UK food and drink
These examples show that the sector doesn’t have to be defined by cost pressures and volatility. With the right tools, processes and guidance, food and drink manufacturers can meet rising demand, control costs and secure long-term operational stability.
Stay tuned for part two of this series, where I’ll explore how to design a strong transformation journey – assessing what solutions are right for your business, preparing effectively, and embedding the processes and behaviours that turn innovation into lasting success.
