SALES SURGE SIGN of RETURNING CONFIDENCE AMONG FOOD MANUFACTURERS, REPORT SHOWS

UK food manufacturers are riding high on a wave of newfound confidence, as figures reveal a dramatic uplift in sales revenue and purchasing.

Small and mid-sized firms saw their average sales jump by 133% in the third quarter of this year, while the number of purchase orders (POs) placed with suppliers was also up by 102%, according to a report from inventory management software provider Unleashed.

Food manufacturers saw the second biggest jump in sales revenue out of all the 12 manufacturing categories analysed. It also saw the fifth biggest rise in POs.

Its counterpart – beverages – saw sales jump by 63% and POs by 71%.

Revenue and POs were both up by 88% across the manufacturing sector – signalling high confidence among consumers, retailers and other businesses.

Phil Peters, Head of Supply Chain Services at consultancy YF, said:

“We’ve definitely seen more positivity in the last few months across many of the manufacturers we work with, driven by brands who are feeling (cautiously) optimistic and reflecting this in more confident purchasing strategies as they prepare for rising consumer demand.

“We are working closely with clients of ours to improve their strategic planning as they feel able to take a longer-term view and balance growth opportunities with cash flow challenges – this is especially relevant when it comes to inventory management. The rise of retailer accelerator schemes – and their explicit commitment to innovation in FMCG – has meant that our brands are more confident in securing new retailer listings and expanding their product lines to capitalise on this momentum.

“While the overall sentiment is positive, we’re still advising clients to remain cautious about overstocking, as investing too heavily in inventory will impact profitability and create vulnerabilities if market conditions shift again, as we have become accustomed.”

The report also shows that food manufacturers are buying more inventory in anticipation of further orders.

Consumer confidence in Q3 2024 reached its highest level in five years rising to -7.9% – putting them on track to beat the record £4.8bn spent on groceries during Christmas week last year.  Already, UK grocery sales are at their highest level since the Covid pandemic, following Halloween and preparation for Christmas.

Joe Llewellyn, GM of Cloud ERP at The Access Group, the parent company of Unleashed, said:

“This uptick in sales revenue and purchasing bodes well for the manufacturing industry.

“Firms are buying more inventory – and while this might bring back bad memories of post-Covid disruption, when manufacturers were forced to adopt a ‘just in case’ strategy – it’s actually a positive sign in the current climate.

“Lead times remain low, so the orders we currently see flowing through the supply chain look like genuinely robust business confidence.”

“It will also be interesting to see what impact the recent Autumn Budget will have on the wider manufacturing industry. On the one hand, business leaders have warned that rises in National Insurance, minimum wages and business rates will hit them hard. However, the government has pledged to invest in housing, public infrastructure, clean energy and technology, which could provide a welcome boost to manufacturers in the construction, energy and electronics sectors.”

Sales revenue – Q2 2024 – Q3 2024

Purchase orders – Q2 2024 – Q3 2024

Profitability (Gross Margin Return on Inventory) – Q2 2024 – Q3 2024

Lead times – Q2 2024 – Q3 2024

View the full Unleashed Manufacturing Health Index