Compiled by inventory management specialist Unleashed, the data reveals that small and medium-sized enterprises (SMEs) operating in the food manufacturing sector have seen their average sales revenue fall by 37% in the first quarter of the year.
This follows a broader trend across all manufacturing, which has seen an average sales revenue drop of 39%.
Average sales revenue only reached £375,299, in contrast to the previous quarter when it stood at £592,222.
These stark figures reflect a “drop in business confidence”, Unleashed says, directly tied to the economic fallout from the joint US-Israeli intervention in Iran.
Iran’s subsequent blockade of the Strait of Hormuz, a key international shipping lane, has caused serious concerns for the global economy.
However, Unleashed notes that the sector remained resilient compared with much of the wider manufacturing industry, with food producers among the few categories to record year-on-year sales growth (20%).
The data also indicated that food producers outperformed beverage manufacturers, whose quarterly sales revenue fell by 31% to £261,386.
Commenting on the figures, Joe Llewellyn, general manager of enterprise resource planning (ERP) small business at The Access Group, the parent company of Unleashed, said: “Tensions in the Middle East, including the Strait of Hormuz blockade, have created significant market uncertainty – and our data suggests this is now taking its toll on manufacturers.
“Having started the year on a growth footing, the first quarter of the year saw the biggest drop in sales revenue we’ve recorded since 2024. With fuel prices already up, and energy prices expected to rise later this year, the coming months could reduce confidence, increase costs, and squeeze margins even more.”
He continued: “While many SMEs have slim buffers to weather these changes, our data suggests they’re taking steps to mitigate the impact by reducing stock on hand to protect their margins.”
According to Unleashed’s analysis, food manufacturers ranked sixth out of the 12 categories evaluated.
Manufacturers in the furnishings category fared worst, with revenue plunging by 61% from £239,280 to just £92,410. Construction industry suppliers were next, seeing their revenue fall by more than half (57%) from £486,638 to £209,662.
