Food wholesalers warn of impending price rises - here's why!
Almost two years from the first confirmed case of Covid-19 in the UK, many industries are still battling the economic fallout. As a result of the aftershocks of the pandemic, the UK food supply chain faces dire operational challenges that are only likely to worsen as we head towards Christmas and New Year. Not surprisingly, our principal food wholesale partners are telling us that rising inflation, soaring commodity prices and distribution issues are adversely impacting many market areas, and prices will inevitably increase.
Increased demand and distribution issues
The latest edition of the CGA Prestige Foodservice Price Index found that increasing volumes from hospitality, combined with the return of schools, has driven a further surge in supply chain volumes, leading to a sharp rise in product shortages. And, as already covered in previous blog articles, the supply chain has faced a chronic shortage of HGV drivers and manufacturing/production staff, resulting in insufficient stocks in critical areas, with post-Brexit difficulties in the importation of goods adding to the scarcity of some products. The labour crisis also brings additional costs as companies compete with their peers to recruit personnel in vital areas and manage a scheduled wage rise.
Global food inflation
These issues are compounded by spiking food prices, with crucial food manufacturing ingredients increasing between 35% and 45% over 12 months. For example, between October 2020 and September 2021, corn prices rose by 40%, soybean by 35% and wheat by 45%.
Such a sharp rise in costs means that even big-brand global processors cannot absorb the increases through improved efficiencies. And, this means that UK food wholesalers are now dealing with the double blow of increased producer prices, plus the numerous operational pressures already mentioned above.
These factors all play a role in increasing the cost of serving their customers. Unfortunately, despite holding off passing these rises on to them, food wholesalers are no longer able to continue to do this. Therefore, if your supplier hasn’t already contacted you about an imminent price increase, they no doubt will do over the next couple of weeks.
How we can help
We appreciate that any additional overhead increases will be of a concern, especially if you are a business already dealing with cancelled Christmas bookings and uncertainty around future trading. However, please be assured that our expert team of procurement professionals have completed a stringent due diligence process to ensure any price adjustment requests stand up to scrutiny before being agreed. Our analysis involves checking various price indices, benchmarking against competitor requests, and overviewing what's happening in the market to ensure increases are kept to a minimum – often lower than those imposed on the rest of their customer base.
We are also here to support you in investigating ways that will help minimise the impact of any price increase, whether it's reducing the number of split cases in your basket or through fewer weekly deliveries. We can also look at product swaps, menu reengineering, or alternative supplier sourcing in some extreme cases. Although during this period of extreme volatility, our initial recommendation would be to work with your existing supplier to find amicable solutions rather than just immediately looking elsewhere.
If your food wholesaler has already contacted you about a price adjustment and you are worried about any impending price increase, speak to your Beacon Procurement Services Manager or get in touch with our Customer Support team via Live Chat. We're here to support you in maximising your profits by lowering your overheads and driving efficiencies. So, talk to us now. Our advice is entirely free of charge, which means you have nothing to lose even if your costs are already tightly controlled.