Why has beverage weathered inflation better than food?

The Manufacturers Health Index, published by software company Unleashed, presents the ‘health’ of a number of UK industries, which Unleashed defines via 16 performance metrics including purchasing, sales and internal efficiencies impacting stocking levels and lead times. Food is second from the bottom out of the sectors included, while beverage is near the top.

According to Unleashed, high inflation has had a significant role in this. Inflation is still significant: according to the UK’s Office of National statistics (ONS), ‘the overall price of food and non-alcoholic beverages rose around 26% between December 2022 and December 2023.’

“Food producers have come under more pressure than most to keep their prices low to support struggling households – and that’s reflected in their performance and profitability,” said Jarrod Adam, head of product at Unleashed.

“Food and beverage inflation was more than double that of the consumer price index (CPI) in 2023 affecting commodities, transportation, energy prices, with the cost of ingredients, packaging and distribution particularly significant for F&B manufacturers,” Phil Peters, head of supply chain services at FMCG consultancy YF, told FoodNavigator.

The rise of beverage

According to Unleashed’s report, beverage is, unlike food, relatively successful in the current economic landscape, scoring near the upper end of the sectors assessed. The key to this disparity may be, suggested Unleashed’s Adam, the UK’s large luxury drinks sector, which does not need to lower prices to be appealing to consumers.