Europe slips to third place as CEO confidence hit

European food and drink CEOs are sounding the alarm over the region’s declining business environment, with a new survey revealing that Europe has now fallen behind both North America and Asia as a preferred destination for investment.

According to the FoodDrinkEurope State of the Industry 2026 report, only 13% of companies reported improved business conditions over the past year — a sharp decline that highlights a deepening sense of pessimism across the sector. This sentiment is most acute among SMEs, where 61% of leaders express low confidence in their ability to grow over the next 12 months.

For many executives, the daily operational reality is being strangled by administrative complexity. CEOs report that “regulatory fatigue” is stifling innovation, with 60% stating they do not believe the EU can balance competitiveness with its sustainability goals. Key operational hurdles identified include:

• Excessive compliance costs: rising taxes and the administrative burden of quality documentation are reducing operating flexibility.
• Supply chain volatility: geopolitical conflicts (cited by 43%) and input cost inflation (52%) continue to destabilise production schedules and margins.
• Unfair trading practices: 62% of respondents report an increase in unfair practices, such as unjustified threats to cease orders, further squeezing manufacturers.

The most striking market shift is Europe’s demotion in the global investment ranking. For the first time, Asia has overtaken Europe for the number two spot, leaving Europe in third place behind North America.

This “investment exodus” is driven by the perception that other regions offer more attractive frameworks for innovation. While 82% of firms are attempting to reformulate products for healthier diets, they warn that the high cost of these clean label transitions — combined with weakened consumer purchasing power — is making sustainable growth nearly impossible without targeted policy support.

“Our latest CEO survey points to weakening confidence in Europe’s business environment, with growing indications that investment and innovation are being redirected elsewhere,” warns Dirk Jacobs, director general of FoodDrinkEurope. “The need for a comprehensive Action Plan for the Food and Drink Industry is now undeniable”.

“There are too many regulations, too much administrative burden, too many quality documents to fill out for customers,” noted one SME respondent in the report, reflecting a sentiment that regulatory complexity is now a primary barrier to entry and expansion.