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Morning Briefing for pub, restaurant and food wervice operators

Wed 18th Aug 2021 - Foodservice price inflation steady but supply problems hit sector reopening
Foodservice price inflation steady but supply problems hit sector reopening: Food and drink supply markets have been hit by widespread distribution problems and a spike in demand following the return of out-of-home eating and drinking, according to the latest edition of the CGA Prestige Foodservice Price Index. In particular, the south of England was affected by supply issues in June as sector businesses began reopening, with a shortage of labour, particularly HGV drivers, as well as insufficient manufactured stocks and Brexit-related challenges with imported goods cited. Many suppliers put mitigation strategies in place, including the refusal of some orders to cap demand and improvements to wages and conditions to attract new employees. The situation stabilised in July but demand is likely to peak again in early September when schools and businesses increase order levels. The Foodservice Price Index revealed food inflation stood at 1.6% in June, having levelled off at a time of year when it typically falls. Non-alcoholic beverage prices increased month-on-month but remained below 2020 levels. The remaining months of 2021 are likely to see further increases in the level of food inflation as sector demand returns towards pre-pandemic normality, and extra supply costs and wage inflation feed into price increases. Prestige Purchasing chief executive Shaun Allen said: “June brought an unwelcome realisation to operators and suppliers that availability of labour will be a challenge for the foreseeable future. The difficulties with HGV drivers has been particularly impactful, and operators should consult carefully with suppliers to ensure supply chains are as lean and efficient as possible.” CGA client director James Ashurst added: “It has been a long journey back for the foodservice sector, and the recent disruption to supply has come at the worst possible time. Labour shortages and price inflation are unwelcome challenges as consumer demand continues to increase, and fragile businesses must hope conditions start to ease in the next few months.” 
CGA Purchasing is a Propel BeatTheVirus campaign member

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