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Food industry investments focus on replacing capacity rather than growth

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A significant investment need is brewing in the Finnish food industry, as revealed by both the Finnish Food and Drink Industries' Federation (ETL) business survey from autumn 2024 and the Confederation of Finnish Industries (EK) investment survey from January 2025.

To maintain current production levels and enable growth, the food industry urgently requires new investments. However, investments have been delayed due to uncertainty in market development, substantial cost increases in recent years, and fluctuating regulatory policies.

– In our business survey, 70 per cent of respondents stated that they will require significant replacement investments in the coming years. In addition, investments aimed at growth would be needed,” says Bate Ismail, Economist at the Finnish Food and Drink Industries’ Federation.

Investments targeted at growth remain scarce. According to Ismail, continuously tightening and unpredictable regulation creates an uncertain business environment. Instead, a predictable and growth-enabling operating environment is necessary.

– ETL underlines, that Finnish government still has time to withdraw the harmful tax decisions imposed by the government on food and beverages.

Investments are crucial for the food industry to meet future challenges and seize opportunities, such as the transition to a low-emission food chain and the development of new products. The last major wave of renewal in the Finnish food industry occurred 30 years ago when Finland adapted to the new competitive environment brought by EU membership. Now, the sector faces a similar transformation.

The EK investment survey forecasts a 24 per cent increase in food industry investments in 2025 compared to last year. Food and drink companies would plan to invest € 1.2 billion in fixed assets such as machinery, equipment, and buildings. However, investments aimed specifically at growth would be significantly lower, accounting for only 9 per cent of the total planned investments.

The survey further predicts that 35 per cent of investments would be allocated to replacing and renewing existing production capacity, which will also improve operational efficiency.

Meanwhile, 56 per cent of investments would focus on rationalization and other purposes, such as meeting stricter environmental regulations and improving energy efficiency.

– Only 9 per cent of investments would be directed toward expanding production capacity, meaning companies are seeking growth with significantly smaller investment budgets compared to previous years, Ismail points out.

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