Our thinking

Climate change hits food prices

24 October, 2025

If you’re in the UK, you’ll have noticed that spring and summer this year have been hotter and drier than usual, particularly if you were one of the 8.5 million people living in areas with a hosepipe ban. 

It may therefore come as a surprise to know that, in a recent survey of 18 of the UK’s largest food and drink manufacturers, 60% said they have no contingency plan in place to handle water shortages. Meanwhile, the same proportion of businesses have also seen costs increasing due to water supply constraints or rules on effluent. It seems that in some parts of the industry, operational constraints are not yet being met by planning and action.  

We’re seeing real impacts of climate change in other sectors too, and these are reaching consumers. Latest figures show that food inflation, running at 5.1% in the year to August, has been driven by five products that have all been affected by climate change. Variable rainfall hindered dairy and beef pastures in the UK, droughts and flooding damaged cocoa crops in West Africa, while droughts impacted coffee yields in Brazil and Vietnam. Collectively, butter, milk, beef, chocolate and coffee contributed to 40% of food price inflation. 

As well as passing costs on to consumers, companies have been innovating to keep costs down: witness this week’s headline that McVities has changed the composition of Penguin and Club bars in response to rising cocoa prices to such an extent they can no longer be classed as chocolate bars. 

With climate change expected to significantly change the frequency of both heavy rain and drought, both in the UK and globally, there’s a clear need to better prepare our food system. Climate change has already come for our Penguin bars, and it won’t be stopping there. 

By Patrick Bapty