Beverage inflation pushes Foodservice Price Index to new record high
Food price inflation is levelling off in the month leading up to Brexit.
Inflation in non-alcoholic beverage categories has risen since September 2018 and shows no signs of slowing down, driving the CGA Prestige Foodservice Price Index to a new record high, the companies announced.
The index recorded a 21.6% year-on-year increase in its non-alcoholic beverage categories (mineral water, soft drinks & juice) in June 2019. The data follows a swing in drinking habits that has seen adult soft drinks become one of the UK’s fastest growing beverage categories, with one in five adults choosing to not drink alcohol and its sales up 15.4% in five years.
CGA and Prestige explain that an “explosion of new lines with refined flavour profiles and innovative packaging” has led to premiumisation in the category and subsequent high levels of inflation.
By contrast, some food categories of the Index recorded slight increases in inflation in June 2019. Contrary to the traditional seasonal drop, fruits were one of the few food categories to see month-on-month inflation. Continued issues in recruiting fruit pickers in the UK, the companies explain, have resulted in lower yields, forcing wholesalers to import more from European countries, including Italy and Spain. With the pound performing poorly against the Euro, this led to price inflation.
“Foodservice price inflation over the next few months is likely to be affected by Brexit, and fears are mounting that a no-deal departure from the European Union could have a catastrophic effect on UK food supply,” Prestige Purchasing CEO Shaun Allen said. “Meat could be an especially volatile category, with the National Farmers’ Union recently declaring that it could result in the mass slaughter of lambs, as the UK cannot consume the amount it produces.”
CGA and Prestige noted that the meat category is not the only one that will be hit by the issues of no-deal Brexit, with Environment Secretary Michael Gove recently warning the National Farmers Union that the food sector may never recover from a no-deal Brexit ven if a deal was struck in the future.
In addition, the meat category is also being disrupted by an African swine fever epidemic in China that has wiped out an estimated 15% of the world’s pig population in less than four weeks. With Asia turning to imports to fill the drop in pork supply, availability and price in the UK are “likely” to be impacted, with an effect on other meats pushing local UK prices up as supply becomes stretched.
“There have been severe challenges in the procurement landscape for some time, with issues in dairy, salmon, meat, and many more categories over the past couple of years. This uncertain environment is not likely to change over the coming months, as further insecurity in supply from Europe and the strength of the pound adds to the volatility,” Prestige Purchasing CEO Shaun Allen said.
