When stock grows faster than sales, the cause is usually four old decisions
Updated: Oct 28
Sales are flat. Stock is up 15%. It is tempting to blame prices, and many do. The figures do not support them. ONS figures show food and non-alcoholic drink prices rose 1.3% in the year to September 2026, against headline CPI of 3.5%. Most of the rise in a food business's stock is therefore something more solid: more cases, more pallets, more weeks of cover.
Take an illustrative £2 million of stock. If 15% of it is too much, that is £300,000 of cash sitting on the racking. At an illustrative 8% cost of borrowing, it costs £24,000 a year in interest alone. That is before storage, handling and the product that quietly goes out of date.
Price explains little of this year's rise
Input costs have certainly climbed. The Food and Drink Federation reported in March 2026 that production costs across UK food and drink manufacturing rose by an average of 4.4% in 2025. For smaller firms the rise was up to 5.3%. So each pallet in the shed is worth a little more than it was. But a 4% rise in unit cost does not explain a 15% rise in stock value. The rest is volume. And volume comes from decisions.
Nobody decides to hold more stock. In my experience it builds up from a small number of reasons, usually several at once. Each one looked sensible on the day.
Four old decisions, each adding weeks of cover
The first is the minimum order quantity nobody has revisited. A supplier's minimum made sense when volumes were higher or the range was smaller. Now it means buying twelve weeks of an ingredient, or of a printed film you use slowly. Each one is small. Together they add up.
The second is safety stock set after a bad week. After a stock-out, someone raises the reorder point. It rarely comes back down. Over a few years the buffers come to reflect every past problem rather than today's supply risk. They become a record of old alarms.
The third is range growth without range removal. New lines are added; old ones are not taken out. Slow lines still hold their own packaging, ingredients and finished stock. They take more than their share of the chiller and the warehouse.
The fourth is buying on price. Volume deals and forward buys can be good decisions. They are less good when the saving on the invoice is smaller than the cost of holding the stock. That cost is rarely worked out.
In food, slow stock becomes waste
Excess stock in food does not merely tie up cash. It runs out of life. WRAP's key facts, updated in July 2025, estimate that UK food manufacturing wasted 706,000 tonnes of edible food in 2021, worth about £0.85 billion. That sat within around 1.4 million tonnes of total manufacturing food waste. Not all of it is a matter of stock management. But when cover runs long, some things go in the skip first. Short-dated ingredients are among them. So is packaging that changes with a recipe or a customer's artwork.
Every stock decision looked sensible on the day it was made. That is why nobody revisits them.
A forward buy pays only if the discount beats the holding cost
One simple test settles most arguments about buying on price. Compare the discount with the cost of holding the extra stock for as long as it sits. That holding cost has three parts. There is the cost of the money. There is the cost of the space and handling. And there is the risk of waste or obsolescence.
An illustrative example. A supplier offers 5% off for taking six months of an ingredient at once. Money at 8% a year costs about 4% over six months on the stock held, though less on average as it is used. Add 1% for extra storage and handling. Add 2% for the risk that some of it goes out of date, or is left over after a recipe change. The total holding cost is close to the discount. The deal is roughly break-even at best. A 10% discount would be worth taking. A 3% discount would not.
Rank lines by cash held and weeks of cover
The cash is rarely spread evenly. It sits in a minority of lines, and a four-step review will find it.
Export every stock line with its value held and its average weekly usage over the last thirteen weeks.
Divide stock by weekly usage to get weeks of cover for each line.
Sort by value held and mark the lines with the most value and the longest cover.
For each marked line, write down why you hold that much: a minimum order, a buffer, a forward buy, or a slow line nobody has delisted.
The answers point straight to which of the four decisions is driving the stock. Most can be changed without putting supply at risk. A supplier can be asked to split deliveries. A reorder point can be brought back into line with current lead times. A slow line can be given a last-order date. Taking two weeks of cover off the lines that hold most of the value usually releases more cash than a month spent chasing small savings across the whole range.
What to do first
Compare this year's stock growth with sales growth and with ONS food price inflation, so you know how much is volume.
Run the weeks-of-cover ranking on your top fifty lines by value.
Review every reorder point raised in the last two years against current lead times and actual stock-outs.
Apply the holding-cost test to the next forward buy or volume deal before signing it.
Agree a rule that every new line launched names an existing line to review for removal.
Sources
Figures are taken from the sources listed and were correct at the time of writing. Where rules are described, check the latest official guidance and take qualified advice before acting.
Comments