Official statistics reveals that annual investment in non-financial assets for UK food and drink manufacturing shrank by almost a fifth in 2022-2024. This stands in contrast with the broader national trend, where business investment rose by 4.5% over the same period. SmartParc analysis finds that food and drink manufacturing ranks fifth among industries with the steepest decline in business investment.
According to a June 2024 Food and Drink Federation (FDF) open letter to party leaders, the priority for the food and drink sector to boost capital investment in infrastructure and machinery is a targeted policy framework, such as tax incentives and a streamlined planning system. This sentiment is emphasized in the FDF State of Industry Report Q2 2025, where 50% of the surveyed food manufacturers reported uncertainty regarding business environment as the main challenges that limit investment in the next year.
Beyond domestic investment, the food and drink sector has also frequently missed out on national policy programs seeking to drive inward investment into the UK economy. Despite the applicability of UK Enterprise Zones, Investment Zones, and Freeports to all manufacturing sub-sectors, and their transformational potential to incentivize investment, food and drink manufacturers have seen minimal direct benefit from these schemes. This is reflected in the sector’s difficulty in attracting foreign capital, as shown by the persistent net Foreign Direct Investment (FDI) outflows in the past five years.
A research brief from the UK Parliament's Commons Library further indicates that Enterprise Zones have predominantly attracted sectors like advanced manufacturing, digital, and clean energy. While Food Enterprise Zones were announced in 2015, with 17 zones designated in 2021 to boost agrifood clusters, no meaningful projects have in practice come to fruition. Similarly, in the initial roll-out of Freeports (2021-2022), local development plans highlighted logistics, renewable energy, or heavy industry clusters, with no significant mention of F&B-specific tax or infrastructure incentives. Without formal financial incentives – such as dedicated R&D tax credits or sector-specific capital allowances – local programs must rely on patchwork funding, constraining their ability to attract large-scale investment.
Despite these challenges, the food and drink sector is a cornerstone of the national economy. The manufacturing sub-industry alone accounts for £32.4 billion in GVA or 15.7% of the total manufacturing industry. This makes food the largest manufacturing sector in the UK, outstripping both the aerospace and automative sectors combined. According to the FDF, with over 12,500 businesses, food and drink manufacturers employ over 18% of the whole UK manufacturing workforce and has added 38,500 new jobs since 2015. An estimated 98.6% of food and drink manufacturers are small and medium sized enterprises (SMEs), signaling the strength of local supply chain integration.
Another study also indicates that UK food and drink manufacturing has historically generated high yields that outperform several other manufacturing subsectors. For instance, in the past 25 years, investment in the F&B manufacturing sector has made up roughly 30% of the investment in transport and engineering; but F&B manufacturing has returned £8.57 for every £1 invested in that period, with transport and engineering only returning £6.05 for every £1.
By highlighting F&B superior returns and reinforcing them through targeted government incentives, the UK can attract significantly more FDI into its food and drink sector. For instance, as an enabler for sustainable and collaborative food production, SmartParc SEGRO Derby is a collection of 2 million sq ft of buildings dedicated to food and drink production and distribution. With 5,000 new jobs in a new sector for the city, SmartParc provides a dynamic environment to challenge outdated food systems. As a new asset class, offering scalable and leasable food grade facilities connected by a sustainable shared energy network, SmartParc represents a gateway to greener and more efficient manufacturing which food businesses can easily click in to. SmartParc’s anchor tenants are HelloFresh and Greggs, who have invested in 440,000 sq ft and 400,000 sq ft state-of-the-art facilities, respectively.
With one operational park, SmartParc provides a low-risk template for how F&B-specific incentives could translate into hard economic returns. With funding from the Government’s post-covid ‘Get Building Fund’ and additional grant funding from Derby City Council, SmartParc SEGRO Derby is on track to create billions in GVA, a double-digit boost to UK food exports, and thousands of skilled green jobs. Scaling this model could create a £16.5 billion-per-year export-acceleration engine, positioning Britain as Europe’s benchmark for low-carbon, high-tech food production.
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