The squeezed middle: Why medium-sized food manufacturers face the toughest 2026

82% of medium-sized food and beverage manufacturers identify credit risk as critical - a 34 percentage point gap over large businesses forcing these professionals to enter the new year making impossible choices about which strategic priorities to protect.

Our recent food industry audit report drawing on risk statements from 150 food and beverage businesses, shows credit risk has surged to the top concern at 64% while liquidity jumped 16 percentage points to 62% - the fastest-growing risk tracked. But these headline figures mask a crisis concentrated in companies caught between agility and scale.

The squeezed middle 

Medium-sized firms with £100-250m (US$132-330m) turnover face a brutal squeeze. They're too large for nimble, bootstrapped operations yet too small to access the capital markets that larger corporations leverage when margins tighten.

For a finance director at a mid-sized bakery manufacturer, the new year brings no respite - instead of fresh-start planning, they're renegotiating terms with ingredient suppliers while watching larger competitors secure better rates simply through market access. For an operations manager at a dairy processor, January means justifying every quality control investment to a board focused on covenant compliance. These aren't abstract challenges - they're the conversations dominating early-year leadership meetings.

When financial pressure crowds out strategic priorities

Product safety now sits at 11th place in priority rankings - outside the top ten despite being fundamental to the sector. Competition concerns fell to 30%, down from 43% previously. Financial pressures are systematically pushing strategic priorities down the list at exactly the moment consumer expectations for transparency and authenticity have never been higher.

The sector faces seven new risk categories: energy volatility, Middle East conflicts, geopolitical factors, Red Sea shipping disruption, minimum wage increases, poor harvests and plastic packaging tax. Combined with climate-related risks now cited by 49% of businesses and supply chain concerns climbing to fifth place at 49%, operations teams are managing permanent complexity. Meanwhile, 41% of manufacturers are cancelling or scaling back growth investments.

The technology imperative

Yet technology adoption is surging despite constraints. Nearly half of companies plan to prioritize AI investments, deploying solutions for demand forecasting, quality control and supply chain visibility. For businesses wrestling with survival versus strategy, selective technology investment offers a way to maintain operational fundamentals without proportional headcount or capital expenditure.

The choices leadership teams make now will determine competitive position when conditions stabilize. The finance director who finds selective ways to preserve quality assurance systems positions their business to capture market share when competitors emerge having sacrificed core capabilities.

Our recent food industry audit report contains full risk rankings across all business sizes, detailed analysis of emerging risk categories and strategic recommendations for navigating financial pressure while maintaining operational excellence.

Download the full report