Scotland’s food and drink sector has a turnover of almost £11 billion and is seeking to expand in the near future.
Rising business confidence, product innovation and investment in automation are reasons for the growth prospects.
A report by accountancy and business advisory firm BDO LLP said the industry in Scotland is worth £10.922bn and employs 45,620 people.
Food manufacturing has a turnover of £5,304 million by 33,030 employees, and beverages £5,618m by 12,590 employees.
The report, in association with the Institution of Mechanical Engineers, found that 79% of those surveyed are positive about the industry.
No less than 86% of the firms are expecting revenue growth of up to 20% in the next year.
Pricing pressures, the volatility of raw materials’ costs and skills shortages are major challenges for manufacturers.
Product innovation, improved management and increased investment are counteracting the difficulties.
The sector has become more efficient in dealing with market pressures, with 70% of surveyed firms arranging fixed price agreements with energy suppliers.
Nearly two-thirds of firms surveyed said new product development would be a major source of growth, with 60% and 43% saying access to new UK markets and export markets respectively will be important for their strategies.
Organic growth is the priority as only 15% expect growth to come from mergers and acquisitions.
Martin Gill, head of BDO LLP in Scotland, said: “Pressures on pricing and margins remain hugely challenging, but the overall sentiment of the sector is positive.
“It’s been a tough few years for food and drink companies, but it appears they are strongly focusing on future growth.”
He added: “It is well known that the manufacturing sector plays a critical role in rebalancing the Scottish economy and driving long-term sustainable growth.”
It was essential that the sector receives all of the Scottish and UK Government support possible, he believed, because of its importance for the Scottish economy.
Mr Gill highlighted the proposed tax on sugar as likely to have an adverse impact on food and drink manufacturers.
He urged the Chancellor to approach the issue with caution and to support the food and drink sector in next month’s Budget.
The Scotch Whisky Association wants another 2% cut in duty after last year’s cut boosted spirits revenue by £96m.