Scottish food makers give £5 billion boost to economy but sector at ‘pivotal moment’

Food industry leaders are urging the Scottish Government to “back the sector’s growth ambitions” and protect the nation’s food security as a new report reveals it is worth £5.2 billion to the economy.

The study by the Food and Drink Federation (FDF) reveals that the Scottish food and drink manufacturing sector grew by 36.5 per cent over a decade, based on official data. The industry now contributes £5.2bn to the Scottish economy, accounting for almost a third of the nation’s overall manufacturing turnover.

The “Powering Communities” report also highlights the food and drink manufacturing sector’s role as a major employer, providing some 47,000 jobs in 1,220 food and drink businesses. Employment in the sector is growing, it notes, having added 3,000 jobs across Scotland in the last year alone.

FDF Scotland held its parliamentary reception at the start of April. Picture by Peter Devlin

The main drivers of the sector’s recent growth are said to have been continued high demand for Scottish food and drink at home and abroad, a “strong working partnership” with the Scottish Government and the upskilling of workers “to adapt through challenging times”. At the end of last year, FDF revealed that there was an untapped £14bn “productivity opportunity” for the sector across the UK, which could be unlocked through investments in automation, digital technology and artificial intelligence (AI).

However, according to the latest FDF research, with the sector facing a host of impending challenges, maintaining this growth is “by no means certain”. Food and drink business confidence declined to a reading of -47 per cent in the closing quarter of 2024 on account of growing inflationary pressures, barriers to trade, which have likely intensified amid the current tariff turmoil, and upcoming extended producer responsibility (EPR) fees for packaging.

To ensure the sector’s future health, the FDF is urging the Government to take “decisive action” to address barriers to growth. These barriers include low investment in innovation, falling food and drink export volumes and lack of access to highly skilled talent.

David Thomson, chief executive of FDF Scotland, said: “Our industry plays a vital role in maintaining a thriving food system here in Scotland, providing high-quality, affordable food while boosting productivity, and driving investment and trade. We’re uniquely placed to make a positive impact in every village, town and city, in every constituency across Scotland.

Kate Forbes speaking at the FDF Scotland parliamentary reception. Picture by Peter Devlin

“However, with food and drink businesses under increasing pressure, we’ve reached a pivotal moment for the Scottish Government to collaborate with other nations to minimise costs and complexity for businesses and ensure we can continue to achieve growth. In our ‘Growing Scottish food and drink manufacturing’ report, FDF Scotland sets out priorities for the Scottish Government to remove roadblocks to growth and support the future success of Scotland’s largest manufacturing sector.”

The FDF said it continued to work closely with the Scottish and UK governments to support the growth of the sector and also recently released a report that highlighted regulations that the UK government should reform or eradicate, as well as new policy initiatives that can be introduced to promote growth “for the benefit of every community across the UK”.

Rural affairs secretary Mairi Gougeon said: “Scotland’s world class food and drink industry is a symbol of our nation’s rich heritage and innovation. The sector, which is the largest manufacturing sector in the country, plays a vital role in supporting national food security and creates thriving island and coastal communities.

“However, the sector has been beset by a series of challenges over recent years including Brexit, which has created new barriers to trade, driven up food prices and supply chain costs and contributed to labour shortages. To help alleviate some of these barriers, the Scottish Government has consistently supported the need for a comprehensive sanitary agreement with the EU and we are currently working with the UK and other devolved governments to negotiate this.

Iconic Scottish food producer Baxters was one of the firms displaying its produce at this month's FDF Scotland parliamentary reception. Picture by Peter Devlin

“In addition, since 2023, the Scottish Government has provided £10 million towards the industry led strategy ‘Sustaining Scotland: Supplying the World’ which seeks to bolster the sector over the next decade and supports activity which will increase Scotland’s resilience as well as food security and supply.”

She added: “We remain focused on working in partnership with industry, including Food and Drink Federation Scotland to empower our food and drink manufacturers to thrive; ensuring the sector continues to grow, innovate, and provide for communities across Scotland and beyond.”

Food and Drink Federation Scotland held its annual Scottish parliamentary reception at the start of this month, attended by politicians, leading industry figures and showcasing products from the likes of Baxters, Rowan Glen, Taste of Arran and Tunnock’s.

Speaking at the event, deputy first minister and economy secretary Kate Forbes said: “The work that Food and Drink Federation Scotland does, along with their fellow members of the Scotland Food & Drink Partnership, is crucial to help this sector grow, be more sustainable, with greater productivity, healthier products and more attractive jobs. My cabinet colleagues and I are keen to create an environment in Scotland where businesses can invest with confidence.”

Food and drink also ranks as the UK’s largest manufacturing sector, contributing more than £37bn to the UK’s economy, while supporting 500,000 jobs and driving growth at home and abroad.

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