Britain has no shortage of food innovation. From advanced processing and automation to alternative proteins and new approaches to sustainable production, the UK has the research, businesses and talent to develop the food technologies of the future. But when a business is ready to take that innovation out of the laboratory and into commercial production, does Britain have the infrastructure to help it scale?
The UK’s food and drink manufacturing industry is the country’s largest manufacturing sector, contributing £37.1 billion in GVA and employing more than 18% of the UK manufacturing workforce. Yet, as the June2026 Reinvigorating the UK Food & Beverage Sector report highlights investment in food and drink manufacturing has fallen by 30.5% since 2019,while investment across the wider UK manufacturing sector increased by 5.4%.With 98.6% of food and drink manufacturers classed as SMEs, this decline is particularly significant for the businesses trying to move from successful product development into commercial-scale production.
The reasons for this investment gap are complex. Rising energy and labour costs, narrow margins and uncertainty around regulation all make it harder for manufacturers to commit capital to new facilities and technologies. The Food& Drink Federation’s State of the Industry reporting has similarly highlighted the pressure facing manufacturers, with investment constrained by changing business conditions, uncertainty around demand and the cost of finance.
But there is another, more physical barrier to growth: the cost of creating afood factory.
A food manufacturer cannot simply move into an empty warehouse and begin production. Food-grade manufacturing requires a very different environment from standard logistics or industrial space. The June2026 report estimates that food manufacturing facilities can cost up to four times as much as equivalent-sized ambient warehouses, with approximately a third of the budget going towards the building, a third towards fit-out and a third towards equipment. Hygienic and high-care environments, specialist machinery and automation all add to the capital required before a product can even reach the production line.
For businesses attempting to scale, retrofitting existing warehouse stock is not necessarily a solution. The report highlights the structural and technical changes required to turn a logistics warehouse into a food-grade facility, including additional steelwork to support hygienic ceilings, surface drainage, upgraded insulation panels and ventilation systems. At the end of a lease, manufacturers can then face significant dilapidation costs in returning the building to its original state.
This makes the question of manufacturing space inseparable from the question of innovation. A business may have developed a commercially successful product, secured investment and identified a market, but if the cost of creating an appropriate manufacturing facility is prohibitive, scaling that business becomes considerably more difficult.
Government has recognised that physical infrastructure andinvestment incentives can play a role in addressing this challenge. Freeportsare intended to create hubs for investment, trade and innovation, withincentives covering tax, infrastructure, planning and innovation. The currentgovernment guidance also includes enhanced capital allowances and structuresand buildings allowances for qualifying investment in Freeport tax sites.
However, the June 2026 report argues that food and drink manufacturing has not benefited sufficiently from these schemes. While Freeports and Investment Zones have been available to manufacturing more broadly, the report notes that early Freeport development plans focused predominantly on logistics, renewable energy and heavy industry, with little evidence of food-specific tax or infrastructure incentives.
This is a missed opportunity. The UK Government itself describes Freeports as places intended to create economic regeneration, attract investment and act as hubs for innovation. The challenge is ensuring that the incentives and infrastructure available reflect the very different requirements of different manufacturing sectors. A food factory is not simply a warehouse with machinery inside it; the capital required to make a building suitable for food production is substantially greater.
At SmartParc, we believe that Britain needs to make it easier for food businesses to move from innovation to production. The answer is not for every growing manufacturer to take an empty warehouse and spend millions transforming it into a suitable food-grade facility. Purpose-built infrastructure can remove that barrier, allowing businesses to invest their capital in the things that drive growth: new products, new technologies, people and production.
The SmartParc SEGRO Derby campus has been designed around this principle. Scalable food-grade manufacturing space, shared infrastructure and the Food Manufacturing Innovation & Technology Centre will bring merging businesses, established manufacturers and research expertise together in one environment. The aim is to create the conditions in which food businesses can develop and scale without having to build the infrastructure from scratch.
Britain has the ideas. It has the businesses. It has the research and the talent.
What it needs is the infrastructure to turn innovation into production.
Bibliography
SmartParc (2026). Reinvigorating the UK Food & Beverage Sector: The Case for Economic Incentives to Safeguard our Food Security, Drive Inward Investment, and Provide an Export Model for UK PLC. June 2026.
Food Manufacture(2024). ‘Can the food sector arrest the investment decline?’ Food Manufacture, 23 July 2024.
UK Government(2026). Freeports Handbook: Introduction. Department for Business andTrade.
UK Government(2026). English Freeports Subsidy Scheme. Department for Business andTrade.
Food & Drink Federation (2026). State of Industry Report, Q1 2026.
Food & Drink Federation (2024). The Future Factory: Supercharging Digital Innovation in Food and Drink Manufacturing.
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