As you navigate the complexities of rising costs, supply chain disruptions, and geopolitical uncertainties, it’s crucial to stay informed and proactive. Contact our experts to discuss how they can help support your businesses future development.
In an industry defined by tight margins and complex supply chains, UK food manufacturers need to stay ahead of evolving risks. This article takes a look at what’s shaping the food production industry in the year ahead and beyond—and what it means for your business.
From the cost of raw materials to the climate’s impact on crops and farming, UK food manufacturers continue to face pressure from all directions. For owner-led and private equity-backed businesses across the food and beverage industry, navigating these risks isn’t just about protection. It’s about staying competitive and ensuring the long-term success of the food system.
While headline inflation may be easing, that’s not the full story for the sector. 43% of food and drink businesses reported cost increases of more than 10% in 2025. This is well above the broader economic average. Labour, energy, and raw materials are driving this trend—with 53% citing labour costs as the biggest contributor. 1 With GDP forecast to grow just 0.75%2 and trade tensions mounting, many food companies are having to manage risk in an environment of stagnation, inflation and ongoing supply chain disruptions. And it’s not easy.
Economic pressure meets operational complexity
Economic impact on food costs
Inflation may be cooling, but its legacy remains. While recent data shows prices are stabilising, the economic outlook remains uncertain. Rising employment costs, tax changes, and commodity volatility continue to put pressure on margins.
This is particularly challenging for manufacturers and suppliers who are absorbing cost increases to protect long-standing customer relationships. They must also meet consumer demand for quality and sustainability in the food produced.
2. Vulnerability of infrastructure
At the same time, property rebuild costs remain elevated. This situation raises the risk of underinsurance if policies haven’t been recently reviewed. The food manufacturing industry is especially vulnerable here, with:
- Ageing infrastructure
- Large refrigerated sites
- Equipment that’s costly to replace
3. Geopolitical uncertainty for local economies
As reciprocal tariffs and trade policies continue to evolve, many businesses are facing geopolitical uncertainty. This uncertainty affects their operations, supply chains, and overall strategy.
If your organisation is facing these challenges, visit our Managing the Impact of Trade Policies Hub. It offers insights and resources from the Marsh McLennan businesses (Marsh, Guy Carpenter, Mercer, and Oliver Wyman). These resources focus on risk, strategy, and people in the evolving geopolitical landscape.
More threats—and more claims—on the horizon
1. Weather-related events
A spike in weather-related events has already disrupted crop production and food processing in recent years. From summer heatwaves to waterlogged fields, businesses are seeing the impact of climate volatility on their operations and their bottom line. Add to that rising levels of product contamination—and it's clear the claims landscape is becoming more complex.
2. Cyber threats and artificial intelligence
Cyber threats are a growing problem too—with risks no longer limited to historic data privacy breaches. Ransomware and malware attacks have impacts beyond the office IT system. Not that being locked out of ecommerce, purchasing, invoice and stock management systems aren’t major business issues in themselves, of course. With machines more connected than ever, a successful operational technology attack has the potential to shut lines down altogether. And that gets very expensive, very quickly.
3. Product recalls and food safety
Likewise, food product recalls—often triggered by contamination or labelling issues—can lead to:
- Significant costs
- Reputational fallout
- Legal action
Ensuring food safety and maintaining the shelf life of finished products are critical to mitigating these risks. Implementing automation in quality control processes can help reduce waste and enhance efficiency.
A shifting insurance market brings opportunity
The good news is that insurer appetites are returning. After several years of rate hardening and reduced capacity, we’re now seeing more willingness from insurers. They are beginning to underwrite risks in the food production industry. But not all brokers are equipped to translate that market movement into meaningful outcomes for clients.
Specialist brokers who understand the nuances of the food industry and food and drink manufacturing can present your business in the best light to insurers. They achieve this by:
- Repackaging your risk profile
- Highlighting strengths
- Opening the door to better terms and conditions
Take a fresh look at your risk profile
Now’s the time for food manufacturers and processers to revisit their insurance and risk management strategies. Whether it’s building in more resilience across your supply chain, reviewing business interruption sums insured, or improving your approach to cyber and recall risks. A small adjustment could deliver real value.
With the right insurance broker support, you can gain more than just cover. You can gain clarity, confidence, and the competitive edge you need to grow in the months ahead, even in an uncertain world.
Look out for more food manufacturing industry insights in our upcoming articles on workforce challenges and legal and regulatory risks.
Sources
1. johnstoncarmichael.com/food-drink-insights
2. reuters.com/uk-economy-grows-by-01-q4-2024-2025
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