By Matthew Brown, CEO of Wherefour Inc.
Key takeaways:
F&B manufacturers are pulling back on investment in 2026, down from 52% planning increases last year to 28%, focusing on optimizing what they have rather than adding new technology.
Compliance ownership is maturing, with 88% now managing it internally or through software, but only 11% have processes that are actually streamlined and automated.
AI remains largely untouched: 65% of F&B manufacturers aren’t using it at all, with data security and gaps in foundational digital infrastructure as the main barriers to adoption.
Many food and beverage manufacturers have entered 2026 with confidence, but with more discipline than a year ago. New research shows a shift to a pragmatic approach to operations, compliance, and execution. Findings from Wherefour’s 2026 State of Manufacturing report reveal an industry intent on improving operations, based on a December 2025 survey of hundreds of manufacturers.
Insights from food and beverage manufacturers, who make up 70% of the report’s respondents, show that regulated sectors are adjusting priorities in response to economic pressures, staffing challenges, and rising expectations for digital maturity. Compliance and traceability are also at the forefront of manufacturers’ minds in 2026, with nearly half of those surveyed experiencing a recall (mock or real) in the past two years.
In-house production ensures operational control
Food and beverage manufacturers participating in the study continue to favor in-house production more than other segments. In 2026, 85% of food and beverage respondents reported producing primarily in-house, compared to 79% across all manufacturing. Ten percent rely mainly on contract manufacturers, while the rest use hybrid models.
The findings suggest that food and beverage manufacturers prioritize in-house production to maintain operational control. Regulatory oversight from the FDA, USDA, and FSMA requires visibility, traceability, and rapid response. In-house production gives greater control over product quality, customization, and regulatory oversight. This approach lets manufacturers manage audits, recalls, and compliance changes more quickly and confidently.
Inventory and scheduling pressures persist
Staffing challenges continue in 2026, with inventory management and production scheduling still the most resource-intensive functions in food and beverage operations.
In 2025, 44% of food and beverage respondents identified inventory management as their main operational bottleneck, followed by production scheduling at 33%.
These roles require constant coordination, accurate data, and real-time decision-making in settings constrained by perishability, shelf life, and volatile demand. Manufacturers recognize that resilience here depends more on mature systems and processes than on staffing levels.
Investment becomes more selective
One of the most notable changes from 2025 to 2026 is in investment sentiment. In 2025, 52% of manufacturers were willing to increase investment, reflecting strong confidence and momentum. In 2026, this enthusiasm has moderated. Twenty-eight percent plan to increase investment, 20% expect spending to remain flat, and the rest anticipate reductions.
This shift demonstrates prioritization across industries, with manufacturers directing investment toward areas with the greatest operational impact. Equipment and hardware lead planned investments at 35%, followed by sales and marketing at 25%. Technology, software, and staffing each account for 17%.
Compared to 2025, when digital transformation was a higher priority, manufacturers now focus on optimizing existing systems rather than adding complexity and cost.
Tariff anxiety has shifted from fear to management
Tariffs remain a factor in manufacturing, but their perceived impact has lessened since 2025. In 2026, 38% of food and beverage respondents say tariffs affect them “a little,” 15% report a significant impact, and 25% describe the impact as somewhat significant.
This distribution reflects adaptation. Manufacturers with domestic supply chains report little disruption, while those relying on imported ingredients or export markets continue to face pressure. In 2025, respondents expressed greater concern about policy uncertainty, but tariffs appear manageable as a constraint.
Organizations accelerate in-house compliance expertise
A key indicator of operational maturity in 2026 is manufacturers’ compliance management. According to the report, 33% have a dedicated compliance manager, 36% indicate that compliance is a shared internal responsibility, and only 8% rely on consultants. When including those who use compliance-focused software, 88% now manage compliance internally or with technology. Growth in this area marks progress from 2025, when compliance ownership was more fragmented. However, optimization is still limited. Only 11% of manufacturers describe their compliance processes as streamlined and automated.
For food and beverage manufacturers navigating state, federal, and global regulations, compliance is both a challenge and an opportunity. Maintaining regulatory compliance requires implementation of standards, processes, and oversight. Automation and integration offer clear paths to reducing risk and improving efficiency in 2026.
Software adoption is high, integration still lags
According to the 2026 report, software adoption remains steady year-over-year. Seventy-eight percent of manufacturers use inventory or production software, though satisfaction is mixed. Sixty percent rate their systems as adequate, 26% as excellent, and 14% as outdated or inefficient.
When delving into systems in use, spreadsheets remain the most common tool, at 32%, followed by ERP systems at 31%. More than half of respondents report only partial system integration, leading to continued reliance on manual forecasting and disconnected workflows. Manual forecasting remains common in the food and beverage sector: 45% use manual methods, and another 45% use software-based forecasting. Despite some progress, reliance on spreadsheets and disconnected systems limits real-time visibility and scalability.
AI adoption is cautious in food and beverage manufacturing
While talk about artificial intelligence is at an all-time high, in practice, AI remains an emerging tool rather than a mainstream solution. Sixty-five percent of food and beverage manufacturers do not use AI, 34% use it partially, and only 1% report full adoption. Security and data sensitivity are major barriers, especially in regulated environments where proprietary formulations and traceability data must be protected. Manufacturers are taking a careful approach, prioritizing foundational digital maturity before adopting advanced automation or AI-powered optimization.
Disciplined confidence drives optimism for the year ahead
Despite tighter spending and ongoing challenges, confidence remains strong. More broadly, 51% describe themselves as cautiously optimistic, while 29% remain very optimistic.
This shift is revealing. The food and beverage manufacturers most likely to outperform in 2026 will not be those pursuing every new technology or expanding without limits. Instead, they will be those who deliberately invest in control, visibility, and compliance, and address foundational issues before scaling further.
Matthew Brown is the Founder and CEO of Wherefour Inc., a modern traceability and production management platform specializing in process manufacturing. An entrepreneur since age 15, he has built multiple technology companies serving growing brands. He holds a B.S. in business from the University of Colorado and an MBA from the University of Denver.
