While food and drink is the largest manufacturing sector in the UK, it faces ongoing challenges in 2026. However, as Wales is proving, a supportive government can make a marked difference to sustainable success even amid financial and market pressures.
As 2026 gets under way, pressures on the UK’s food & drink manufacturing sector look set to continue for the foreseeable future and businesses are casting around to find solutions.
Key among these are the financial pressures of continued food inflation, impacting consumer spending, the ongoing rise in production costs, and the balance between attracting and retaining skilled workers and creating greater efficiency and streamlining in the workplace.
In its State of Industry Report for Q3 2025, the Food & Drink Federation notes that more than two-fifths (45%) of businesses are concerned about new government policies that will negatively impact household finances, with 50% worried about the risk of more burdensome regulation. And while the Institute of Grocery Distribution (IGD) has predicted a “slow decline in retail food inflation, going from an average of around 4.3% in 2025 to 3.8% in 2026 and 3.5% in 2027”, according to a recent report in Food Manufacture sister title British Baker, the staying power will remain challenging for food and drink businesses of all sizes and the country’s financial recovery is set to be slow.
Collaboration for food and drink business success
However, as companies look to governments, both national and local, to help them weather the storm, the Welsh Government continues to be intent on helping its food and drink industry not only survive, but flourish amid these challenges – and not only that but do so sustainably.
In 2024, the Welsh Government published an overview of all its food-related policies, with a key declaration that food is “at the heart of our lives, our communities, and our nation”. Food Matters: Wales illustrates how the Welsh Government is supporting the agri-food industry and how its Strategic Vision for economic success, launched in 2021, underpins business success, both in Wales and the wider UK and international markets.
In particular, programmes such as the HELIX Programme, previously known as Project HELIX, has delivered over £676m in impact to Welsh food and drink companies via technical and innovation support since 2016, as well as creating or safeguarding over 11,000 jobs and helping to launch over 2,600 new products. Delivered by three food centres across Wales – Food Centre Wales in Ceredigion, ZERO2FIVE Food Industry Centre at Cardiff Metropolitan University and Food Technology Centre at Grŵp Llandrillo Menai in Anglesey – it helps businesses based in Wales to develop innovative products, from concept through to design, development and manufacture. More recently, since its relaunch as the HELIX Programme last year, it has added Aberystwyth University’s AberInnovation to its list of support centres.
Innovation, efficiency and strategy have always been at the heart of the support that the HELIX Programme delivers, but it has evolved over the years in response to changing economic, social and political factors. For example, in more recent times increasing process efficiencies and reducing waste have become even more important to Welsh manufacturers, resulting from the rise in cost of raw materials, energy and labour and the increasing demand posed by climate targets.
Gavin Taylor, who is a senior process waste technologist at ZERO2FIVE, explains that the organisation acts as knowledge transfer partners, helping companies to streamline and identify waste throughout their business – be that product, time or energy. Within this the Welsh Government’s HELIX Programme funds a waste diagnostic for companies, where Taylor and his team can analyse their production processes from start to finish, helping them identify where waste might be occurring with the goal of improving productivity and the bottom line. The aim is also to encourage an improved waste ethos right from the shop floor to management and emphasise why waste reduction is so important to company success. While this is just one aspect of the Welsh Government’s support, it’s an enviable advantage and, as Taylor points out, “leads the way in the UK in supporting its food and drink industry”. With a background in food production, he is now hoping to conduct a survey on Welsh businesses to give a more broad-based insight into barriers to waste reduction across the country.
Companies that have benefited from this knowledge transfer include Just Love Food Company, with the HELIX Programme helping them better understand their processes and waste streams, which chief executive Mike Woods says will allow it “to improve our capabilities and make waste reduction a natural way of operating at every level of the business”. Meanwhile, baking company ANR-Probake notes that ZERO2FIVE’s report helped them look at their losses and yields – and what they can do as a team to drive more efficient plant performance and potential cost savings.
Support does not end there, however. A raft of other initiatives across the country include assistance on trade development, and support for new and established exporters, focused on addressing skills and competency gaps in their operations and market insights. In addition, Welsh Government Food Division, through the Cywain Programme, delivers market and business strategy advice to companies of all sizes, helping them to scale up their businesses by putting together tailored packages that enable them to grow and become more profitable. And, importantly, a Cluster Network of groups in different food and drink sectors helps companies to share knowledge with peers, bringing like-minded knowhow and mutual support from businesses faced with similar challenges.
Statistics that tell a story
Wales’ overall focus on its food and drink industry is reaping benefits. The latest (2024) food and drinks supply chain figures from Wales show an industry in rude health, worth £27bn in turnover and employing 223,500 people. Food and drink manufacturing alone saw a 2024 turnover of £6.3bn in this small nation (up from £5.2bn in 2019), with 87% of businesses small or micro and 26,000 people employed. And turnover in food and drink manufacturing increased by 5% in 2024 or £318.7m. There are now 663 food and drink manufacturing business units in Wales, with the other foods, bakery, meat and drink sectors being the largest employers.
Recognising the sector as a cornerstone of the Welsh economy, the broad range of support also includes its biennial Blas Cymru / Taste Wales event, last held in October 2025. The brokerage-style event, which hosted buyers from across the world has generated over £45m-worth of domestic and internatiional business opportunities - a resounding testimony to the vibrancy and resilience of the Welsh food and drink industry.
Case studies
Two other companies that have benefited from Welsh Government support are Henllan Bakery, based in Denbigh and South Caernarfon Creameries, a cheese manufacturer located in Pwllheli.
Henllan Bakery received support from the HELIX Programme at the Food Technology Centre in Llangefni to improve the bakery’s design and production methods, as well as product shelf-life. Director Ed Moore reveals that the company, which produces 10,800 baps an hour and employs 140 people, has drawn on Welsh Government grants to help it improve building and infrastructure – as well as train staff and apprentices.
Moore believes every business based in Wales – whether it be manufacturing, export, retail or foodservice should speak to the Welsh Government to see what they can offer. “There’s vast knowledge there which companies in Wales should make use of,” he says “The funding from the Welsh Government has allowed us to grow sustainably. We don’t let customers down and we don’t take on anything we can’t do,” he adds. “We’ve invested in staff with apprentices coming through. Ultimately, the funding has allowed us to increase jobs within the local area.”
Meanwhile, South Caernarfon Creameries, a dairy co-operative with 152 members, processes the milk from those businesses to produce butter and cheese. It currently produces around 15 different cheeses under the Dragon brand as well as retailer branded products. Their recent ‘Project Dragon’ initiative was worth over £20m to the business, supporting its growth in volume over the coming years. Managing Director Alan Wyn Jones says the business had support through Welsh Government’s Food Business Investment Scheme to help with this. The support has been broad-based from training to marketing. Alan Wyn Jones says that it would have been difficult for the company to advance as quickly as it wanted without the support available. He also strongly encourages other food and drink businesses to engage with Welsh Government to see what support is available to them.
Resilient framework
Some of the strongest evidence of the success of Welsh food and drink manufacturing is that global brands, ranging from Kellogg’s to AB Inbev, have production facilities based in Wales – and, while it continues to develop a broad range of mechanisms to support existing food manufacturers, the country is keen to attract more inward investment.
To discover more about the range of support to Wales-based food and drink businesses, go to gov.wales/foodanddrinkwales
