A new report highlights “potentially long-lasting” impacts of the andemic on the foodservice sector.
The pandemic is set to create significant instability in pricing in the months ahead, the CGA Prestige Foodservice Price Index predicts.
The Index revealed that it has seen a continued downward trend that began last July, and reached a year-on-year deflation rate of 2.9% in March.
Multiple impacts and pressures from the pandemic fully emerged in April, with the Federation of Wholesale Distribution indicating an 80% drop in members’ sales and fresh produce supplier Reynolds reporting a 95% drop in business almost overnight.
Whilst a fall in demand might usually result in a universal fall in prices, CGA and Prestige Purchasing said lockdown measures in many countries have started to affect food production output and the availability of exports, which may drive prices upwards instead.
They noted that UK farmers have already faced a shortage of pickers from the European Union following the country’s Brexit vote, which helped to push year-on-year inflation in the Fruit category above 10% last July—but now face an even larger deficit of up to 40,000 pickers ahead of 2020’s peak harvest period.
“The COVID-19 pandemic is now having a marked effect on supply chains and food pricing. The wholesale suppliers that service our sector have had much the same experience as operators, with demand falling off a cliff in mid-March. As a result, it will be challenging for foodservice operators to reinstate the same supply chain as was present just eight weeks ago when they closed. Price fluctuations are to be expected, and collaboration with suppliers will be key over this difficult time,” Prestige Purchasing CEO Shaun Allen said.
“Restaurants, pubs, bars and cafes are facing especially challenging futures. Even if the sector begins to reopen in July, site openings will be phased and gradual. A prolonged spell of price upheaval will only add to the pressure. All foodservice businesses will need to stay vigilant and agile in their purchasing and operations in the months ahead,” CGA Client Director Food and Retail Fiona Speakman added.
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