In-House Production Gains Stronger Foothold (Image Credits: Unsplash)
Food and beverage manufacturers entered 2026 with tempered enthusiasm, prioritizing operational refinement over bold expansions. A new report from Wherefour Inc., drawn from a December 2025 survey of hundreds of industry leaders, highlights this pragmatic turn amid economic pressures and regulatory demands.[1][2] With nearly half of respondents having faced recalls in recent years, the sector now focuses on strengthening core processes for sustainable growth.
In-House Production Gains Stronger Foothold
Eighty-five percent of food and beverage manufacturers reported relying primarily on in-house production in the survey, surpassing the 79% average across all manufacturing sectors.[1] This preference underscores a drive for tighter control over quality and compliance. Regulatory bodies like the FDA, USDA, and FSMA demand precise traceability and swift responses to issues such as audits or recalls.
In-house operations enable quicker adaptations to changing standards and customization needs. Ten percent of respondents leaned mainly on contract manufacturers, while hybrids filled the remainder. Such strategies position companies to handle perishability and demand fluctuations more effectively.
Inventory and Scheduling Remain Top Bottlenecks
Inventory management topped operational challenges for 44% of food and beverage respondents in the prior year, with production scheduling close behind at 33%.[1] Staffing shortages exacerbated these issues, demanding real-time data and coordination in environments marked by short shelf lives. Manufacturers increasingly view robust systems as key to overcoming these hurdles, rather than simply hiring more personnel.
Perishability adds unique complexity, requiring precise forecasting to minimize waste. The report reveals ongoing reliance on manual processes, which hampers scalability. Addressing these pain points through better tools promises greater resilience.
Investment Priorities Shift Toward Optimization
Investment plans cooled significantly from 2025, when 52% anticipated increases; only 28% expect rises in 2026, with 20% holding steady and others cutting back.[1] Leaders now target high-impact areas: equipment and hardware at 35%, sales and marketing at 25%, and technology, software, or staffing each at 17%.
| Investment Area | Percentage |
|---|---|
| Equipment/Hardware | 35% |
| Sales & Marketing | 25% |
| Technology/Software | 17% |
| Staffing | 17% |
This selective approach favors enhancing existing assets over new ventures. Tariffs, once a major worry, now impact 38% mildly, 25% somewhat, and 15% significantly, reflecting adaptation.[1]
Compliance Matures, But Automation Lags
Compliance handling showed advancement, with 88% managing it internally or via software – 33% with dedicated managers and 36% sharing responsibility internally.[1] Just 8% used consultants. Yet only 11% reported fully streamlined, automated processes.
Software use stood at 78% for inventory or production, but integration faltered: spreadsheets led at 32%, ERP at 31%, and over half had partial connectivity. Manual forecasting persisted for 45% in food and beverage. AI adoption remained low, with 65% not using it, 34% partial, and 1% full, due to security concerns.[1]
Cautious Optimism Fuels Strategic Discipline
Despite constraints, 51% expressed cautious optimism and 29% strong optimism for 2026 growth.[3] “Manufacturers are entering 2026 with a clear understanding that growth requires discipline,” noted Matthew Brown, CEO of Wherefour Inc.[3] Success will hinge on mastering visibility, compliance, and efficiency before pursuing scale.
- Nearly half faced recalls recently, sharpening focus on traceability.
- Supply chain and staffing top anticipated challenges at 43% and 40%.
- Domestic chains buffer tariff effects effectively.
- F&B investment drops to 28% planning increases from 52% last year, emphasizing optimization.
- 88% handle compliance in-house or with software, though just 11% automate fully.
- 65% avoid AI due to security and infrastructure gaps.
Food and beverage leaders who refine foundational operations stand best positioned to thrive. The full 2026 State of Manufacturing Report offers deeper insights.[1] What strategies will your operation prioritize this year? Share in the comments.
