UK drinks producers see unexpected sales spike
The first quarter sales performance for UK drinks manufacturers has shown an uptick in profitability, according to new data. The post UK drinks producers see unexpected sales spike appeared first on The Drinks Business.
The first quarter sales performance for UK drinks manufacturers has shown an uptick in profitability.
Data from more than 600 UK firms has revealed that the average small-medium UK drinks manufacturer made 64% more sales revenue in Q1 2025 than Q4 2024, and 1% more year-on-year.
The findings – based on direct data from Unleashed’s inventory management software, fly in the face of recent Q1 business confidence surveys showing how overall confidence had become negative for the first time since 2022 following tax rises, inflation, weak growth and increased global uncertainty, exactly the situations discussed by the WSTA at Wine Paris this year.
However the sales performance in the drinks industry – alongside a 113% uptick in profitability against Q4 – has suggested that international market turmoil may have created a silver lining for UK alcoholic and non-alcoholic drinks businesses.
Speaking about the situation, Joe Llewellyn, general manager of ERP Small Business at The Access Group which owns the Unleashed data, said the unusual business conditions of the first three months of the year had generally played out well for the country’s smaller producers, as had falling bank rates.
Llewellyn explained: “Anecdotally, what we’re hearing from some of our customers is that Q1 brought welcome windfalls. Some tariff-affected international customers have turned to UK firms to do business, while others raced to order more before tariff pauses came off. That’s delivered a shot in the arm for some firms, but more importantly we’re hearing that steadily falling bank rates are starting to stimulate the economy, which obviously is very welcome to UK manufacturers who’ve posted a really strong start to the year.”
The data has also highlighted how profitability is improving as manufacturers have held off from buying new stock, instead preferring to use up inventory reserves where possible.
The findings show that Gross Margin Return on Inventory (GMROI) for the average SMB manufacturer lifted 57% YoY, to £2.68 return on every pound spent on buying stock.
According to the analysis, this was partly due to further falls in delivery lead times, which were down to 11 days on average. Faster delivery times have otherwise allowed businesses to reorder in smaller quantities, a move which has become a more cost-efficient way to generate sales and can assist in improving margins.
Another possible contributing factor assessed could be down to the higher profit margins seen in Q1 having been caused by purchasing managers deferring their inventory replenishment spend in response to low GDP-USD exchange rates.
For instance, in January the pound dipped to US$1.22, making international purchases more expensive for UK buyers of US-dollar denominated goods.
However, it was noted within the analysis that, by the end of March, the exchange rate had trended favourably and reached US$1.34 at the end of April.
Looking at the bigger picture for all SMEs across all of the 12 manufacturing categories analysed, it was noted how sales were up by 30% in Q1 2025 compared to Q4 2024 – and 13% year-on-year. Profitability also jumped by 10% in Q1 2025 with £4.03 generated for every pound spent on stock.
As background, this means that almost all manufacturing categories saw a positive quarter-on-quarter sales performance, with only a few categories seeing a decline. As such, all categories benefited from reduced lead times. The amount of excess stock held by each company also fell in many categories assisting in their first quarter profitability.
Data from more than 600 UK firms has revealed that the average small-medium UK drinks manufacturer made 64% more sales revenue in Q1 2025 than Q4 2024, and 1% more year-on-year.
The findings – based on direct data from Unleashed’s inventory management software, fly in the face of recent Q1 business confidence surveys showing how overall confidence had become negative for the first time since 2022 following tax rises, inflation, weak growth and increased global uncertainty, exactly the situations discussed by the WSTA at Wine Paris this year.
However the sales performance in the drinks industry – alongside a 113% uptick in profitability against Q4 – has suggested that international market turmoil may have created a silver lining for UK alcoholic and non-alcoholic drinks businesses.
Speaking about the situation, Joe Llewellyn, general manager of ERP Small Business at The Access Group which owns the Unleashed data, said the unusual business conditions of the first three months of the year had generally played out well for the country’s smaller producers, as had falling bank rates.
Llewellyn explained: “Anecdotally, what we’re hearing from some of our customers is that Q1 brought welcome windfalls. Some tariff-affected international customers have turned to UK firms to do business, while others raced to order more before tariff pauses came off. That’s delivered a shot in the arm for some firms, but more importantly we’re hearing that steadily falling bank rates are starting to stimulate the economy, which obviously is very welcome to UK manufacturers who’ve posted a really strong start to the year.”
The data has also highlighted how profitability is improving as manufacturers have held off from buying new stock, instead preferring to use up inventory reserves where possible.
The findings show that Gross Margin Return on Inventory (GMROI) for the average SMB manufacturer lifted 57% YoY, to £2.68 return on every pound spent on buying stock.
According to the analysis, this was partly due to further falls in delivery lead times, which were down to 11 days on average. Faster delivery times have otherwise allowed businesses to reorder in smaller quantities, a move which has become a more cost-efficient way to generate sales and can assist in improving margins.
Another possible contributing factor assessed could be down to the higher profit margins seen in Q1 having been caused by purchasing managers deferring their inventory replenishment spend in response to low GDP-USD exchange rates.
For instance, in January the pound dipped to US$1.22, making international purchases more expensive for UK buyers of US-dollar denominated goods.
However, it was noted within the analysis that, by the end of March, the exchange rate had trended favourably and reached US$1.34 at the end of April.
Looking at the bigger picture for all SMEs across all of the 12 manufacturing categories analysed, it was noted how sales were up by 30% in Q1 2025 compared to Q4 2024 – and 13% year-on-year. Profitability also jumped by 10% in Q1 2025 with £4.03 generated for every pound spent on stock.
As background, this means that almost all manufacturing categories saw a positive quarter-on-quarter sales performance, with only a few categories seeing a decline. As such, all categories benefited from reduced lead times. The amount of excess stock held by each company also fell in many categories assisting in their first quarter profitability. 
