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, the new edition of the CGA Prestige Foodservice Price Index reveals.
June saw particular supply issues in the south of England, after the return of restaurants, pubs, bars and other venues, amplified by warm weather. Problems were compounded by a shortage of labour, particularly HGV drivers, as well as insufficient manufactured stocks and Brexit-related challenges with imported goods.
As June progressed, 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 has stabilized in July, but demand is likely to peak again in early September when schools and businesses increase order levels.
The Foodservice Price Index reveals that 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 remain below the levels of 2020. 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.
Shaun Allen, CEO of Prestige Purchasing, said: “June brought an unwelcome realisation to operators and suppliers alike 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 that supply chains are as lean and efficient as possible.”
James Ashurst, client director at CGA, said:
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 that conditions start to ease in the next few months.”
The exclusive Foodservice Price Index is jointly produced by Prestige Purchasing and CGA, using foodservice data drawn from 7.8m 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.