August 2023 Industry News and Market Report
Average Customer Savings
Period July 22 to August 23
9.2%
Butchery
12%
Fish & Seafood
11.5%
Fruit & Vegetables
18%
Dry Stores & Frozen
Market Report
Hospitality food prices rise again, whilst supermarket prices ease:
Inflation increased again to 22.6% year-on-year in June, just below the previous peak of 22.9% reached in December 2022. Compared to supermarkets where prices increased during the month of June just 0.4%, Foodservice Price Index climbed over five times as fast, at 2.2%.
his large difference is caused by a complex mix of factors. Retail food markets are more consolidated than hospitality (the top ten supermarkets own 75% market share) and are able to exploit their scale with sophisticated contracting and controlled distribution. In addition, the UK Government has threatened supermarkets with price caps if inflation does not fall. Conversely, hospitality buys primarily through multiple wholesalers – which dissipates scale, creates diverse ranging, and has less contractual price protection. Upstream cost improvements can also take longer to feed through and are subject to continued volatility such as the recent failure of the UK grain corridor arrangements. Finally, suppliers, squeezed by rising costs and smaller margins, will be seeking some respite, as their inbound costs ease.
In June, the cost of global food commodities continued the downward trend, averaging 23.4 percent below the peak it reached in March 2022. Producer conditions in the UK continue to be tougher however, with farming input costs such as energy, feed and fertiliser remaining high, near-full employment levels tightening the labour market, climate vulnerability on imported foods, rising interest rates, and additional costs of post-Brexit trade, all continuing to feed through into prices.
Eggs
Egg prices up by 50% year on year as availability improves. “There are a number of pressures facing the egg industry including high costs of energy and animal feed, which have been exacerbated by the war in Ukraine,” said Andrew Opie, director of food & sustainability for the British Retail Consortium. “But, despite these challenges, retailers are working with suppliers to offer egg farmers a sustainable price while ensuring affordability for consumers.” “Egg consumption is generally lower during the summer, and we are also starting to see an increase in hen numbers as egg producer confidence grows,” said Mark Williams, British Egg Industry Council CEO. “This will all be helping with availability, although it may be some time before the flock size returns to capacity.”
Milk & Oil prices starting to fall
The prices of food staples such as oil and milk are finally "edging down", even though shopping bills remain high, new data suggests. Research firm Kantar said shoppers paid on average £1.50 for four pints of milk in July, down from £1.69 in March. The average cost of a litre of sunflower oil, meanwhile, is now £2.19, which is 22p less than in the spring. It comes despite separate research from consumer group Which? that found the price of some branded goods on supermarket shelves has more than doubled in the last 12 months.
Wheat Prices
Wheat prices have risen as Russia threatens ports. Russia’s decision to withdraw from a UN-brokered grain export deal with Ukraine and its increased attacks on the country’s agricultural infrastructure have ignited concerns about potential disruptions in global food markets. As a result, wheat prices have surged, renewing worries about food inflation worldwide. Russia’s strategic move to end the grain corridor agreement and intensify attacks on grain silos and port infrastructure along the Black Sea coast and the Danube River, which forms Ukraine’s border with NATO member Romania, has raised alarms. These actions appear aimed at crippling Ukraine’s agricultural industry and impacting global food supply chains. Kyiv says as much as 60,000 tons of grain were destroyed in the recent attacks.
However, despite these tensions, market experts anticipate that wheat prices may not escalate as sharply as they did in the previous year. This projection provides some relief to stakeholders in the wheat industry, hinting at a potential semblance of stability. Nevertheless, the situation remains complex due to climate-related uncertainties in northern Europe, which may significantly affect future crop development and influence wheat pricing dynamics.
Orange Juice:
An increase in orange juice cost prices is looming with prices surging to record highs after multiple hurricanes and disease decimating crops in the US and Brazil.
Fruit & Vegetables
What’s in season for August?
• Strawberries
• Blackberries
• Raspberries
• English Cherries
• Peaches, Nectarines and Apricots
• Runner beans
• Broad beans
• Fresh Peas
• Fine Beans
• Beetroots
• Broccoli
English plums are just arriving on the market. As are Melons. The UK apple season will start at the very end of August/beginning of September – something to look forward to.
After a tough period with major potato problems, we are pleased to see improvements on last month with availability on all varieties. Blemishes are still occurring, however.
Salad leaves have been affected by the mixed wet and warm weather conditions which can cause reduced shelf life and bruising on outer leaves. We recommend buying little and often to keep stock turnover going.
Hotelier
in Swindon
“Having over 20 suppliers was making ordering produce so much harder and more expensive that it needed to be. Connect explained how they could help us consolidate our supplier portfolio without making any compromises. Its such a simple process”
John P.
Coffee Shop Owner
in Oxfordshire
“Despite using the same card merchant for almost 10 years, connect were adamant they could save me money, and they were right! But its more than that, the merchant they recommended is far more capable and reactive to problems than my previous provider”
Marcus W.
“Our suppliers were ok, but we always struggled to get deliveries on the days and times that we needed. Being in central London, we can only accept deliveries at certain times very early in the morning, CP were able to find suppliers that specialised in timed food deliveries. Would recommend to anyone!”
Jane R.
Care Home Facilities Manager
in Slough
“I started purchasing my care consumables through Connect Purchasing in December last year and they were able to save me over 15%, I’m constantly checking prices of other companies and still Connect purchasing are cheaper.”
Vicky L.
Publican
in Banbury
“Connect talked me through the process and completed a thorough review of our products and helped me save over £1000 in the first month, this has really helped especially with wage costs going through the roof”
Graham M.
