Six for 2026: What food businesses must prepare for
08 January 2026Six predictions shaping 2026 for businesses, consumers, and policymakers from IGD’s latest Viewpoint Quarterly report.
As we enter 2026, the UK food industry faces persistent challenges and transformative change. This article draws on six key predictions from IGD’s latest Viewpoint Quarterly report: What to plan for in 2026 to explore what will shape the year ahead for businesses, consumers, and policymakers.
1. Geopolitical unpredictability and political change
With the US action in Venezuela marking a turbulent start to 2026, the geopolitical landscape is likely to remain highly volatile. Businesses should anticipate continued exposure to shocks and maintain robust contingency plans.
In the UK, political dynamics will be in flux. By the end of 2026, the UK will be halfway through the current Parliament, with potential changes in devolved governments and ongoing global geopolitical tensions. Local elections could reshape policy implementation, especially in Wales and Scotland, impacting everything from HFSS restrictions to deposit return schemes. Businesses must stay agile and plan for possible shifts in the regulatory and political landscape.
2. Regulatory change
2026 will bring significant regulatory shifts. New HFSS (high fat, salt, sugar) advertising restrictions come into force, alongside promotion and location restrictions in Scotland and Wales. Businesses are likely to see changes to the rules governing which products are classed as HFSS, and they must prepare for the Deposit Return Scheme and new obligations under the Employment Rights Act. UK businesses trading with the EU will also face new deforestation reporting requirements, adding complexity to compliance.
3. Persistent food inflation
Food inflation remains stubbornly high, with IGD forecasting only a slight easing - from an average of 4.3% in 2025 to 3.8% in 2026, and 3.3% in 2027. This persistence is driven by a mix of government policy interventions (notably around labour) and ongoing market forces such as rising energy and ingredient costs. The UK is not alone; other European markets are experiencing similar pressures, making food and drink an outlier compared to general inflation. The food supply chain remains highly exposed to “shock” events such as bad weather and any fresh shocks could drive inflation even higher than IGD estimates.
4. Growth challenge
Economic growth is expected to remain sluggish. The Office for Budget Responsibility (OBR) has downgraded its forecast for UK growth to just 1.4% in 2026, with productivity also falling short of previous expectations. This means businesses will need to focus on restoring margins and volumes amid weak demand and ongoing cost pressures. There are opportunities for growth for businesses willing to seize them. Download the recent Viewpoint Special report Driving Growth Through A Thriving Food System, which explores the food system’s potential to support good economic growth. It also suggests policy measures which might support expansion, especially in horticulture and poultry. Businesses are encouraged to input into the government consultation on a revised National Planning Policy Framework which could help to unlock some of these growth opportunities.
5. Flatlining incomes
Living standards are set to remain under pressure. Real household disposable income per person is expected to stay below pre-pandemic levels, with wage growth slowing and income tax thresholds frozen until 2031. While the National Living Wage will rise, middle- and higher-income groups will be hit hardest by higher taxes, limiting any real-term improvement for many households.
6. Muted confidence
Consumer confidence is fragile and likely to remain so. IGD’s Shopper Confidence Index shows only marginal improvement, and 84% of consumers expect their tax bills to rise in 2026. With discretionary spending under pressure, especially for eating out, businesses must adapt to value-driven consumers while seeking growth from more resilient segments. Essential spending will be prioritised, but selective trade-up opportunities, especially around seasonal occasions, may offer pockets of growth.
What should businesses do?
Monitor inflation and cost pressures: Be ready to explain price rises and act to protect consumer interests.
Harden the supply chain: Analyse vulnerability to shock and consider steps to limit this (e.g. diversifying sources of supply).
Focus on operational efficiency: Target investments where demand is sustained, not on hopes of rapid recovery.
Stay ahead of regulatory changes: Prepare for new compliance requirements and engage with policymakers for timely guidance.
Track consumer sentiment: Adapt ranges and promotions to reflect cautious spending and selective trade-up.
Plan for political uncertainty: Watch for changes in government that could impact policy rollouts and business operations.
2026 promises to be a year of consolidation, resilience, and strategic adaptation. Food businesses that stay informed and agile will be best positioned to navigate the challenges and seize opportunities in the evolving economic and policy landscape.