UK Food and Drink Outlook – 2024 Capex Project Update

We last published an article covering the outlook of the UK food and drink sectors in the UK in 2023. As things have developed, we have revisited the sectors to examine the current outlook halfway through 2024.

So far in 2024 there is a great deal of capex in the pipeline. We are, however, seeing very fluid timescales with few fixed milestones in place. Manufacturers are taking this extra time to reassess supply chains and investigate alternative technologies and solutions. We are seeing a higher number of tenders emerging, though many manufacturers are continuing to prioritise value engineering while costs remain higher than expected.

While this is good news for suppliers looking to secure new relationships and win orders, the uncertain timescales mean it is difficult to plan and predict when projects may move forward.

We are expecting more project implementation to start in the second half of 2024, more toward Q4 2024. As such, suppliers should be looking to build positive relationships as soon as possible to ensure they are able to secure orders as opportunities arise.

Trends

We are seeing many projects in the areas of bakery, snacks, drinks, brewing/distilling, ingredients, meat and dairy. Other areas of emphasis for manufacturers include:

• Low / no alcohol brewing
• Bone broth
• Plant based seems to have plateaued
• Meal kit delivery (higher quality and health conscious)
• Gut health – Pro Biotic and Pre Biotic & fermented
• High protein and single protein sources
• Natural ingredients and recipe reformulation
• Sustainable supply chain
• Less focus on heavily processed foods
• Food that supports fitness and health goals / lifestyle
• Packaging & plastic reduction – biodegradable plant materials
• AI / automation
• Consumer cost savings, responding to squeezed household budgets

Our Coverage – UK Food and Drink Capex Project Trends

Many projects are being managed internally for cost savings. Suppliers should therefore make relationship building with internal teams a priority. We are seeing more new build projects and larger extensions coming into the pipeline for H2 2024, where before there was more of a focus on smaller (and lower value), internal upgrade projects.

On our MyProtel capex project database, we are currently covering 361 active food and drink sector projects, with a total combined potential investment value of over £6bn.

Conclusion

The outlook for the food and drink sectors in the UK is changing as we move toward the second half of 2024. A period of intense cost pressure, while present, is easing, and allowing manufacturers to focus once more on longer term planning. This means that larger, new build projects are entering the project pipeline once more. There are encouraging signs in new and continued growth areas that mean the longer-term outlook is slightly more positive than a year ago.

Suppliers should be aware that timescales are very uncertain with emerging and planned capex, so it is vital to stay ahead of decisions by building positive relationships with key stakeholders to be in the right place at the right time. It is therefore possible to capitalise on the brighter outlook ahead.

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