Is currency exposure eroding your profits?
In a sector where average net profit margins are just 11.7%, even small external pressures can have a significant commercial impact.
According to The FX Factor, a new report from Lumon, UK food and drink businesses lost an average of 3.33% of net profits to currency volatility last year. For the 45% of businesses operating on margins below 10%, currency fluctuations reduced profitability by around a third.
Currency exposure rarely presents as a single visible shock. Instead, it flows through supplier pricing, export revenues and cashflow timing. Over time, these small shifts accumulate into a structural drag on margin performance that is difficult to isolate and manage.
Growth is expanding currency exposure faster than most businesses realise
Growth remains the dominant priority for food and drink businesses, with 99% planning to increase sales in 2026, according to Lumon’s FX Factor report.
Every new overseas supplier, export agreement or cross border transaction introduces additional currency touchpoints. As organisations scale, FX exposure grows in complexity, not just in size.
The result is not just higher exposure, but higher unpredictability at the point where businesses are scaling fastest.
Currency volatility is not just a profitability issue
The FX Factor shows that many food and drink businesses are holding higher cash reserves as a buffer against FX uncertainty. Finance leaders also report that exchange rate volatility is reducing available capital for investment and slowing growth initiatives.
Cashflow forecasting is becoming more challenging, particularly where supplier payments and customer receipts are denominated in different currencies and exposed to timing gaps.
As a result, FX exposure is now influencing decisions across pricing strategy, procurement, investment planning and working capital management.
The gap between awareness and structured action
One of the most significant findings from the report is not lack of awareness, but lack of structured response.
Most finance leaders recognise that currency volatility affects profitability and cashflow. However, relatively few have embedded FX risk into a formalised, proactive management framework.
Instead, exposure is often addressed reactively, typically after adverse movement has already impacted results.
This creates a structural imbalance. Currency risk is treated differently from other core commercial risks, despite having a direct and recurring impact on margin performance.
What this means for food and drink businesses
Currency risk is no longer a finance consideration. It is a structural factor influencing profitability, cashflow stability and investment capacity.
As international exposure increases, FX becomes less about individual transactions and more about overall business resilience.
The critical question is not whether currency risk exists. It is whether it is being actively managed with the same discipline as other core drivers of commercial performance.
Download the FX Factor report
The FX Factor: Reducing the Risk and Ramping Up the Rewards for the Food and Drink Industry explores how businesses are navigating growth, profitability and currency risk in an increasingly complex trading environment.
Drawing on insights from 100 senior finance and business leaders across the sector, the report highlights where currency volatility is having the greatest impact, how businesses are responding and what separates proactive organisations from those leaving profits exposed.
Download the report to see where FX risk could already be costing your business.
