The cost of living remains the top concern for UK shoppers, with 36% continuing to cut back on groceries, while 48% are shopping around to make savings, new data shows.

According to Circana’s latest State of the Nation 2025 report, which highlights significant trends and challenges facing the UK’s FMCG sector, the food and drink market is forecast to see modest growth of 1% in 2024 as cost of living pressures ease slightly.

Meanwhile, health-focused products are thriving with the gut health market, which is valued at £367m, growing 12% year on year.

Alcohol-free beverages have also seen a 25% increase, while nicotine pouches have risen by 92%. 

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However, the sector still faces significant challenges. New regulations, including the £3bn extended producer responsibility (EPR) scheme and changes to working practices, are mounting pressure on businesses already facing increased costs.

Restrictions on high in fat, salt, and sugar (HFSS) products are also impacting growth, with further government intervention possible as trends in fat, salt and calorie intake remain stagnant.

Circana said for manufacturers and retailers to drive growth in 2025, they should focus on distribution, make use of off-shelf displays to drive promotional uplifts, use price elasticity for pricing decisions, choose round-pound promotions over multibuys and explore health-conscious trends and functional health products for accelerated growth.

Circana senior strategic insight director Alex Lawrence said: “2025 is shaping up to be another challenging year for the FMCG sector but for manufacturers that invest efficiently, solid growth is achievable.

“With health-conscious trends on the rise, smarter promotions and better use of retail channels, there are also opportunities to accelerate growth.”