FDBusiness.com

Supply issues are driving up the wholesale prices of Christmas dinner essentials, leaving UK operators and consumers facing higher costs over the festive period. The exclusive monthly Foodservice Price Index from CGA and Prestige has tracked steady price rises in key food and drink items for several years now – and problems  with production this year have accelerated inflation in the turkey market in particular.

Many UK and European producers reported falling profits in 2018, and French firms, who supply a large proportion of the hatching eggs used by UK breeders, say high temperatures in the summer have led to eggs being lost at a much higher rate than usual. Alongside decisions by some producers to switch from turkey to chicken sheds, it has led to substantial reductions in supply – and, as a result, higher prices.

Major challenges in the pork industry are expected to push up the cost of Christmas ham, too. The outbreak of African Swine Fever sweeping Asia and parts of Europe is forecast to result in the culling of a quarter of all pigs worldwide, and the pressure on supply means whole-pig prices rose by more than 10% between March and October.

Vegetable supply has meanwhile been hit by wet weather and floods in recent weeks, affecting final harvests of potatoes and other seasonal vegetables including cauliflower and cabbage. With the UK self-sufficient in fresh potatoes, this is likely to cause sentiment of lower output and therefore could drive prices up in the lead-up to the peak Christmas season. Brussels sprouts harvests are being similarly affected.

To avoid the stresses of the big festive food shop and cooking, a growing proportion of people are heading out for their Christmas dinners. Separate research for CGA’s Christmas Report shows that 70% of consumers visit a restaurant over December, with nearly as many (64%) using pubs and one in five (23%) visiting bars. The report, which is available now from CGA, highlights the need for operators to make the most of the month by engaging guests with a compelling Christmas offer that secures their loyalty into 2020.

CGA Client Director Food and Retail Fiona Speakman says: “Our Index has shown a pretty relentless rise in food and drink inflation for the last three years, and with such pressure on businesses throughout the foodservice supply chain, it is inevitable that cost increases reach consumers too. While some competition between retailers may help to soften the inflation, many people will find their Christmas shopping trollies put a big dent in their festive spending.”

Shaun Allen, CEO of Prestige Purchasing, adds: “This is an expensive time of year for consumers, so the increasing costs on a number of traditional Christmas dinner items will be extremely unwelcome and will put pressure on margins for both operators and retailers in order to keep the costs down for customers over the festive period. With turkey and ham prices on the rise, demand for alternative meats such as beef could see a surge this Christmas.”

The exclusive Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using foodservice data drawn from 7.8 million transactions per month. It contains myriad insights and information pertinent to the foodservice sector and is essential reading for anyone seeking to keep ahead of price trends and understand why they occur. More information on specific categories is available on a subscription basis. https://www.prestige-purchasing.com/services/foodservice-price-index-fpi