Yorkshire firms have right ingredients to deal with changing food and drink trends: Cindy Hrkalovic
Yorkshire is one of the UK’s premier food and drink powerhouses. Its supply chain generates more than £3.8 billion in GVA and provides jobs for approximately 67,000 people.
West Yorkshire alone is home to more than 500 food and drink manufacturers, contributing £1.2 billion to the local economy.
Yet the sector is operating through considerable uncertainty. Climate change, regulation, supply chain disruption and changing consumer behaviour are creating new pressures, while rising costs continue to challenge margins.
Having completed more than 250 deals in food and drink over the last five years, we have seen first- hand how businesses are responding.
The Food and Drink Federation’s confidence measure fell to -64 per cent in the first quarter of 2026, from – 31 per cent at the end of 2025. Weak consumer demand and ongoing cost pressures are forcing difficult decisions about investment and employment.
Labour costs are adding to the pressure. The rise in the National Living Wage is encouraging 53 per cent of businesses to consider automation. However, automation itself requires investment, meaning businesses must balance longer-term capacity alongside immediate cost savings.
More optimistically, the same changes creating pressure are also opening new markets.
Social media has created a more informed and demanding consumer base, with trends increasingly travelling from markets such as Japan, Korea and Dubai into the UK. Matcha, ube, pistachio, truffle and bubble tea have all benefited from growing demand for new premium products.
Health and nutrition are also influencing product development. Protein and fibre are major areas of interest, while demand for vegan, vegetarian and gluten-free products continues to shape the market.
Yorkshire is well placed to respond, with the region growing expertise in alternative proteins and plant-based foods, supported by research capabilities including the University of Leeds’ National Alternative Protein Innovation Centre. The emergence of GLP-1 medications adds another dimension, with changes in appetite, portion control and attitudes towards nutrition beginning to influence product design.
For manufacturers, the opportunity is to distinguish between short-term trends and lasting changes in behaviour, and respond quickly to genuine shifts in demand.
Consumer demand is changing what businesses make, while technology is changing how they make it. The Food and Drink Federation found that 39 per cent of businesses planned to focus on developing new products this year, while 13 per cent planned to develop healthier products.
Yorkshire’s established manufacturing base provides a strong foundation for this investment. Major businesses continue to commit to the region, with Nestlé investing more than £85 million in its York site and Haribo expanding its operations in Castleford.
Supply chains also bring challenges - climate change, fertiliser restrictions, fuel costs and unreliable yields are all increasing exposure to disruption. North and East Yorkshire produce 20 per cent of the UK’s agri-food, giving the region a significant role in the wider food supply chain. Diversification will nevertheless be important to reduce exposure to individual sources.
The pressures facing the sector may also create opportunities for businesses willing to invest. 2026 is proving to be a buyers’ market, with strategic M&A offering routes to consolidation, diversification, vertical integration and entry into new markets.
Drinks M&A, particularly around low and no-alcohol products, has been a strong area for deals, while healthy eating trends are supporting interest in protein-based, fresh and unprocessed foods.
For Yorkshire businesses, M&A can provide a way to build on existing regional strengths. Buying can provide capabilities, products or markets that would take years to develop organically, while selling can provide capital for the next stage of growth.
Yorkshire has the ingredients needed to respond to the pressures facing food and drink: a substantial manufacturing base, agricultural expertise, established supply chains and growing research capabilities.
The businesses best placed to grow will be those that balance immediate cost pressures with investment in future capacity. Yorkshire’s opportunity is to use its existing strengths to respond to changing consumer demand, build resilience and capture new opportunities across the food and drink sector.
Cindy Hrkalovic is partner and Head of Food and Drink at BDO