Kiwi manufacturers consolidate in Q2 after a record start to 2025, according to the newly released Unleashed report.
The food and beverage sectors continue to face strong headwinds from high input costs, but Unleashed’s data also shows notes of optimism, as outlined in a new report from Unleashed.
In line with continuing profitability challenges in recent quarters, the beverage sector retreated slightly in Q2. Average beverage sales fell NZD 84k, and gross margins dropped 3pp.
For food manufacturers, sales declined NZD 62k QoQ to NZD 220,482, with profit margins falling 6pp as electricity, freight, and packaging costs weighed heavily. However, the overall sector still shows significant YoY improvement, with revenue up more than 100 percent compared to the same period last year.
“These are sectors where volatility in inputs can erode profitability quickly,” Adam said. “While sales softened, we're seeing firms being disciplined about working-capital management rather than letting costs spiral.”
However cash flow was likely impacted by an uptick in excess stock as both food and beverage manufacturers replenished inventories in response to lengthening lead times. Beverage manufacturers more than tripled their excess stock QoQ to an average of just under NZD 20,000, while food manufacturers more than doubled theirs to NZD 25,000.
This contrasts starkly with the same quarter last year, when the average food manufacturer held only NZD 5,000 in excess stock and beverage makers just NZD 1,000.
“It’s been a tough few years and input costs have been spiking, especially around freight and labour, which has taken the shine off margins in some channels, "said Leighton Cosgrave, GM of Radix Nutrition, a health convenience brand that also provides specialist freeze-dried contract manufacturing.
“We’ve been proactive in establishing supplier relationships and shared material lines to ease raw material holdings, even offloading stock across partners where needed. Stability is finally emerging, and as we pace into the second half of the year, the usual summer confidence is allowing decisions to be made and positivity to enter the market.”
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