Scotland’s Food and Drink Sector Needs Urgent Tax Reform, Top Accountancy Firm Warns

Scotland’s food and drink industry could face critical challenges unless urgent action is taken to reform taxation and regulation, according to leading Scottish accountancy firm Henderson Loggie.

The sector has demonstrated considerable resilience in recent years, supported by growth among independently owned producers, retailers, restaurants, pubs and other hospitality businesses. 

Scotland Food & Drink says the country now has around 17,000 food and drink businesses, with the industry generating a record annual turnover of approximately £19 billion.

However, business owners continue to face rising employment costs, high energy prices, inflation, recruitment difficulties and increasingly complex regulations.

Although demand remains strong in some areas, Savills recorded 38 hospitality openings in Glasgow city centre during 2025, profitability is under severe pressure. Operating margins for some hospitality businesses are now thought to be as low as three per cent, making investment and expansion increasingly difficult.

Matthew McDermott, (PICTURED) Henderson Loggie’s Head of Food and Drink in Scotland, told That's Food and Drink that the company is calling for long-term action, including a review of the increase in employers’ National Insurance contributions and a permanent reduction in VAT for hospitality businesses.

The firm points out hospitality operators in several European countries already benefit from reduced VAT rates. 

Restaurants and catering businesses pay nine per cent in Ireland, seven per cent in Germany and generally around ten per cent in France, Italy and Spain. Comparable UK businesses are commonly required to charge the standard 20 per cent rate.

Prime Minister Andy Burnham recently announced an additional 20 per cent reduction in business rates for eligible pubs, social clubs and live music venues in England from April 2027. However, business rates are devolved, so the measure does not automatically apply in Scotland. Scottish hospitality businesses already receive certain forms of non-domestic rates relief, but uncertainty remains over future support.

McDermott warned against assuming the industry’s recent growth means that businesses can continue absorbing additional costs.

He told us: “Producers and exporters are continuously faced with increased regulatory burdens and spiralling cost pressures,” he said. “For the hospitality sector, the pressures are largely home-grown, with increasing costs and regulatory burdens chipping away at already slim profits.”

He added Scotland’s food and drink businesses have continued to innovate, invest and create employment during extremely difficult trading conditions.

Food and drink is central to Scotland’s economy, tourism industry and international reputation. It also plays an important part in sustaining local communities and struggling high streets.

Henderson Loggie believes the time has come for politicians to move beyond promises and introduce practical, lasting policies that give producers, exporters and hospitality operators the confidence to invest in their futures.

Henderson Loggie is an independent, owner-managed Scottish accountancy firm employing almost 200 partners and staff.

Food & Drink Expo Birmingham 2026: What to Expect at the NEC (13–15 April)

The Food & Drink Expo returns to the NEC Birmingham from 13–15 April 2026. Discover new products, meet suppliers, and explore the latest UK food and drink industry trends.

Every year the UK food and hospitality industries gather for one of their biggest trade events, and in 2026 the Food & Drink Expo returns to the NEC Birmingham from 13 to 15 April. For anyone involved in food retail, hospitality, catering, or manufacturing, this three-day event has become a key date in the industry calendar.

Held at the National Exhibition Centre (NEC), the show runs from 10am–5pm on Monday and Tuesday and 10am–4pm on Wednesday, bringing together thousands of industry professionals to discover new products, meet suppliers and discuss the future of the sector.

A Major Gathering for the Food Industry

Food & Drink Expo forms part of the wider UK Food & Drink Shows, a collection of industry exhibitions that also include the Farm Shop & Deli Show, National Convenience Show and Forecourt Show. Together, they create one huge marketplace for ideas, innovation and networking across the food supply chain.

The event attracts around 25,000 visitors and more than 1,200 exhibitors, representing businesses from grocery retail, hospitality, manufacturing, wholesale and specialist food sectors.

For buyers, chefs, retailers and producers alike, it offers a rare chance to explore the latest products and services all under one roof.

What Visitors Can Expect

The expo floor is typically packed with producers showcasing everything from artisan foods and innovative drinks to large-scale supply solutions for restaurants and retailers. Well-known brands such as Belvoir Fruit Farms, Jersey Dairy, Mizkan, Meadow Vale Foods and Grumpy Mule Coffee are among the companies appearing at the show.

Visitors can expect:

New product launches and tastings

Networking with buyers and decision-makers

Industry talks and trend discussions

Opportunities to discover emerging brands

One focus for 2026 is a “Future Foods” spotlight, highlighting companies that are redefining what modern food innovation looks like.

Why Events Like This Matter

Trade events like Food & Drink Expo play an important role in keeping the industry connected. They provide a platform where independent producers can meet large retailers, hospitality businesses can discover new suppliers, and manufacturers can showcase technological advances.

For small producers or speciality brands, the expo can be a gateway to major distribution deals. For buyers, it’s an efficient way to scan the market for the next big trend.

Planning a Visit

Food & Drink Expo is a trade-only event, meaning it is aimed at professionals working in the food and drink sector. Entry is typically free for verified industry visitors who register in advance.

Taking place in Hall 3 of the NEC Birmingham, the event is easily accessible by road, rail and air, with Birmingham International station and airport located nearby.

For anyone working in hospitality, retail, catering or food production, Food & Drink Expo offers three days packed with ideas, connections and inspiration. Whether you are sourcing new ingredients, scouting emerging trends or simply looking to understand where the industry is heading, Birmingham will once again become the meeting place for the UK food and drink world this April.

https://www.foodanddrinkexpo.co.uk

We All Agree Ultra-Processed Foods Are a Problem – But What Comes Next?

What are they doing to our foods?

Over the past decade, there's been growing consensus among nutritionists, public health experts, and everyday shoppers: ultra-processed foods (UPFs) are bad news. 

They're linked to rising obesity rates, metabolic diseases, gut health issues, and even mental health concerns. 

But now that the alarm has sounded, a crucial question remains, what do we do about it?

How can individuals, businesses, and the wider food industry move away from ultra-processed options and return to real, nourishing food?

What Are Ultra-Processed Foods?

Ultra-processed foods go beyond simple convenience. These are products that contain little or no whole ingredients and are made mostly from substances extracted from foods (such as oils, fats, starches, sugar), derived from food constituents (like hydrogenated fats or modified starch), or synthesised in laboratories (such as flavour enhancers, colourings, emulsifiers).

Think ready meals, crisps, mass-produced cakes, sugary cereals, fizzy drinks, processed meats, and many meat substitutes. The problem isn’t just in one or two ingredients, it’s in the entire approach to production.

Why Are They So Widespread?

The answer is simple: profit, shelf life, and consumer convenience.

Ultra-processed foods are cheap to make, can sit on shelves for months, and are engineered to be irresistible. For manufacturers and retailers, they’ve been a dream. For public health? A nightmare.

But now the tide is turning.

How Can the Food Industry Change?

The shift won’t happen overnight, but it is possible. Here’s how the food industry can begin to move away from ultra-processing:

1. Prioritise Minimal Processing

Food companies can commit to reducing additives, preservatives, and artificial ingredients. This might mean shorter shelf lives or different distribution models, but consumers are increasingly demanding clean labels.

2. Invest in Real Ingredients

Relying on whole grains, legumes, real fruit, vegetables, and quality fats can lead to nutritious and delicious products. Some brands are already doing this, proving that natural doesn’t have to mean boring or bland.

3. Transparency and Labelling

Clear labelling helps consumers make informed choices. Highlighting what’s not in the product (e.g. no artificial flavours, no hydrogenated fats) and listing ingredients people recognise can build trust.

4. Reformulate Existing Products

Rather than scrapping entire ranges, brands can reformulate favourites to reduce reliance on emulsifiers, gums, and colourants. Even small improvements in salt, sugar, and artificial content can make a difference. Perhaps seek out older recipes from the pre-UPF days?

5. Support Local and Seasonal Produce

Shorter supply chains using seasonal produce can reduce the need for preservatives. Regional food production also supports local economies and sustainability goals.

What Can Consumers Do?

While industry change is essential, consumer demand drives it. Here's how individuals can be part of the shift:

Cook more from scratch. Even just a few homemade meals a week can reduce your ultra-processed intake.

Shop the edges of the supermarket. Fresh produce, dairy, meat, and whole foods are usually on the perimeter, the middle aisles tend to house UPFs.

Read labels. If the ingredients list looks like a chemistry experiment, it probably isn’t the best choice.

Support small, ethical producers. Many independent brands are already embracing low-processing and sustainable practices.

The Way Forward

We can’t uninvent the convenience of ultra-processed foods. But we can rethink how we make and consume food. A future where taste, health, and convenience coexist, without compromising nutrition, is possible.

If the industry is bold enough to innovate in the right direction, and if consumers continue to demand better, we can replace the ultra-processed norm with something far better: real food.

Let’s keep the conversation going. Wwhat changes would you like to see in the food industry? Would you pay more for minimally processed, truly nutritious food? Share your thoughts in the comments below or on our socials.