How Scotland’s food and drink producers can rewrite the playbook to survive the winter squeeze
Ben Sutherland December 16th 2025
This was written by Ben Sutherland, Director at MHA and originally published in The Scotsman (Dec 2025 edition)
As we begin writing our Christmas shopping lists, and thousands prepare to unwrap festive hampers filled with fine Scottish produce – such as whisky, gin, shortbread, honey and smoked salmon - it’s worth pausing to consider the pressure facing the businesses behind these luxuries.
Food and drink - one of Scotland’s most important export pillars - is navigating its most complex landscape in decades, caught between inflation, farm-support reform and tightening export conditions.
The value of Scotland’s international goods exports fell by 2% to £18.4 billion in 2024, underlining the sector’s exposure to global cost pressures.
Yet amid this disruption, many producers are quietly rewriting the playbook - finding new ways to safeguard margins, build financial resilience and protect Scotland’s reputation for premium-quality goods.
The value of Scotland’s international goods exports fell by 2% to £18.4 billion in 2024, underlining the sector’s exposure to global cost pressures.
The quiet margin squeeze no one sees
Behind every premium Scottish product lies an ingredient list few shoppers ever think about: rising feed costs, fertiliser price volatility, stubbornly high energy prices, and one of the steepest increases in labour costs in modern times. These pressures have left many producers facing margin compression that cannot simply be passed on to consumers already living through a cost-of-living squeeze.
In practice, most producers are adopting a tiered strategy. Some are staggering price increases to avoid denting customer loyalty. Others - particularly primary producers tied to world commodity prices - are absorbing costs and focusing instead on operational efficiencies and reductions in non-essential spending. We are also seeing producers narrow their product ranges, doubling down on higher-margin lines or smaller premium goods better suited to gifting and festive hampers.
A quiet trend is also emerging: shrinkflation with integrity. For some, reducing pack sizes while holding prices steady is a way to protect both margins and consumer trust when raw-material spikes leave little alternative. Seasonal demand adds another layer of complexity.
Festive ‘premium windows’ demand their own financial discipline
For many Scottish producers, this winter isn’t just a seasonal peak - it’s a stress test.
Seasonality creates a deceptively difficult operating environment. Premium festive products – such as hampers, gift packs and short-run distillery editions - all require significant upfront spending on raw materials, packaging and labour months before revenue even arrives.
This is an area where accounting discipline can make the difference between a profitable season and an overstocked February clearance sale.
From our experience of supporting the sector for many years at MHA, the most resilient producers tend to:
- Use rolling monthly cashflow and profit forecasts, with prudent downside scenarios modelled for potential lower sales or greater costs.
- Treat festive ranges almost as a separate business unit, with standalone profit-and-loss reporting to expose true margins.
- Negotiate seasonal overdrafts, short-term borrowing facilities and in some cases deposit payments from large customers to reduce debt reliance.
- Review demand weekly to avoid overproduction - an especially costly trap in short-window seasonal markets.
In short, the festive premium is real - but so is the risk.
Export ambition meets hard reality
For Scotland’s leading export categories - whisky, gin, beef and seafood - scaling internationally brings both opportunity and significant financial complexity.
Longer credit terms (sometimes stretching to 120 days), currency swings, and higher working-capital requirements all introduce volatility. Exporters must now forecast for potential currency movements, hedge exposure where appropriate, and plan for longer production cycles that tie up cash for extended periods.
Trade friction and increased documentation - especially export health certificates - add both cost and administrative strain. Many producers are now outsourcing compliance or joining cooperative export groups to share the resource burden, a quietly growing trend that may become essential for smaller operators.
Farm-support reform: The next big financial test
Scotland’s Agricultural Reform Programme adds another structural pressure for primary producers feeding the food and drink supply chain. From 2025, farms must complete baseline environmental audits and prepare a whole-farm plan to access payments, with a four-tier support system rolling in from 2027.
The challenge? Many smaller producers do not yet know which tier they will fall into, and therefore cannot reliably forecast support income at a time when investment in new equipment, digital record-keeping, soil testing and emissions measurement is becoming unavoidable.
Those investing early stand to benefit most. New capital allowances, grants for sustainability upgrades, and R&D relief for packaging or product innovation all remain underused tools that can soften investment burdens.
Three accounting and tax priorities for 2025-26
For a mid-sized Scottish food and drink producer running a premium hamper business or contributing to one exporting to EU and non-EU markets, the most important actions are:
- Maximise available tax reliefs From R&D relief on shelf-life or packaging innovation to full expensing on new equipment, these incentives meaningfully improve cashflow and support investment.
- Strengthen working-capital controls Long lead times, upfront raw material purchases and extended export payment terms all make liquidity management more critical than ever. Close forecasting and tight stock planning reduce the risk of costly overproduction.
- Improve revenue-recognition discipline Export transactions often transfer risk and ownership to the customer at later stages. Mis-timing revenue recognition distorts profitability and misguides planning - a common issue for fast-growing SMEs. Understanding of the revenue recognition timing on each contract is key to accurate reporting.
A sector under strain, and one worth safeguarding
Scotland’s food and drink sector is a national asset - vital to rural economies, central to the country’s global identity, and increasingly dependent on skilled financial management to navigate the pressures ahead.
This festive season, as consumers purchase Scottish gifts for loved ones or enjoy a dram by the fire, they are supporting producers working harder than ever to maintain quality and reputation. With smart planning, disciplined forecasting and strategic investment, these businesses can not only withstand the turbulence of reform and inflation - they can emerge stronger, more sustainable and more competitive in global markets.
"With the right financial planning, Scotland’s producers can ensure that the global appetite for Scottish quality continues to grow long after this season’s hampers are opened and enjoyed."
