Navigating cost pressures and capitalising on growth in food and beverage manufacturing

The Australian food and beverage (F&B) manufacturing sector continues to evolve against a backdrop of economic pressure, shifting consumer expectations, and growing regulatory demands. After a challenging 2025, industry leaders are now balancing minimising cost increases with new opportunities for innovation and growth. 

Consumers are demanding more for less 

Recent trends across the F&B manufacturing industry show consumers have become increasingly focused on value for money, shaped largely by the ongoing cost-of-living crisis. Customers are seeking F&B options that are not only affordable, but also sustainable, and nutritious. Younger demographics are seemingly driving this shift, embracing healthier food choices and reducing alcohol consumption. This is reflected in data from the Australian Institute of Health and Welfare, showing a decline in alcohol available for consumption per capita from 10.88 litres in 2020–21 to 9.79 litres in 2023–24.

To keep up with the pace of change, companies are expanding into health foods such as protein and plant based alternative proteins. They must develop innovative healthier recipes at a price point that remain accessible to increasingly cost-sensitive consumers.

Increasing trends and the growing complexity of cost pressures and competition 

Competitive intensity is growing in the F&B sector. Particularly in supermarkets as they expand their private‑label ranges, offering similar products at lower prices to their competitors.

At the same time, regulatory obligations have increased, with environmental, social and governance (ESG) reporting requirements now applying to Group 1 entities, adding further operational complexity.

Industry trends in Australia emphasise the impacts of these changes. MyIBISWorld reports the health snack food manufacturing sub-sector achieved 4.4 per cent annual revenue growth between 2019 and 2024 and currently reports a strong current net profit margin of 8 per cent. Forecast growth of 3.1 per cent per annum is expected through to 2029. 

The fast food and takeaway services sub-sector show similar momentum, with predicted annual revenue growth of 4.3 per cent from 2025–2029 and a current net profit margin of 8.1 per cent. Meanwhile, cafés, restaurants, prepared meal manufacturers and coffee shops remain under pressure as customers reduce discretionary spending and competition tightens, resulting in slower growth and squeezed margins. 

Across the Australian manufacturing landscape, cost pressures have continued to build. Key challenges facing the sector include: 

• Persistent workforce shortages and wage expectations 
• Global volatility, including the impact of US tariffs on export-related costs 
• Supply chain disruptions requiring alternative ingredients or suppliers 
• Rising energy, packaging and logistics costs. 

Despite these pressures, the F&B sector remains one of Australia’s most significant economic contributors. The industry is a key pillar in agricultural production, export activity, food security, and regional employment. It continues to outperform many other manufacturing segments in revenue growth, supported by the strong consumer demand for healthier, more sustainable products, even against the backdrop of cost escalation and supply chain disruption.

Building organisational capability, embedding sustainability and energy resilience 

To sustain growth in this environment, leading businesses are investing strategically in their people, processes, and long-term capabilities. Workforce development remains a central priority, with companies focusing on strengthening critical thinking, problem solving, and decision-making skills so employees can identify risks early and resolve operational issues proactively.

Sustainability initiatives have also accelerated. Beyond meeting corporate reporting requirements, businesses are pursuing ethical sourcing, waste reduction, and carbon lowering initiatives, recognising that these practices not only appeal to customers and lenders but also reduce avoidable costs. Given the energy-intensive nature of F&B manufacturing, investment in renewable energy is increasingly viewed as a hedge against future price volatility. 

Risk management frameworks are being enhanced to ensure compliance obligations, particularly in health, safety, and ESG, are integrated into core operations. Diversification of supply chains is emerging as a critical resilience strategy for the industry as it continues to face climate related disruptions, including floods, fires, frost, and other events that affect ingredient availability. Expanding supplier networks and geographic reach helps reduce both the likelihood and the impact of these disruptions. Businesses are also deepening their use of hedging strategies to manage commodity price fluctuations, exploring alternative ingredients that maintain quality at lower cost, and increasing investment in research and development (R&D) and improved manufacturing processes. 

Position for growth beyond 2026 

It is clear that businesses must make deliberate choices about where to invest their time and resources, including whether further investment in machinery or its systems is required to meet these challenges. Determining which risks are most likely to materialise, and which carry the greatest potential impact, is now fundamental to strategic planning. A well-constructed risk matrix has become essential for prioritising issues that require immediate focus and capital investment, while maintaining the agility needed to respond to a rapidly shifting environment.

After a year defined by resilience, 2026 presents an opportunity for the sector to shift its focus toward investment, innovation, and sustainable growth. Those who continue to adapt, balancing cost challenges with emerging consumer behaviours, will be best positioned to grow and take advantage of new industry opportunities. 

Whether you are reassessing your risk profile, evaluating investment decisions, improving cashflow and working capital, or preparing for new ESG requirements, our manufacturing team can support you in navigating the next phase of growth.