Labour and Materials Shortages Drive up Foodservice Price Inflation Issue 80
Widespread supply problems and increased demand from the hospitality sector combined to push up prices by 1.2% in August, the new edition of the CGA Prestige Foodservice Price Index reveals. The exclusive report highlights the damaging impacts of acute shortages of labour, and of HGV drivers, pickers and manufacturing and production staff in particular. UK job vacancies hit a record high in third quarter of 2021, and foodservice has been the hardest hit sector, with nearly six vacancies for every 100 employees at the moment. The labour crisis has led to insufficient manufactured stocks, with problems compounded by post-Brexit difficulties in the imports of goods. Shortages of packaging materials and harvest issues in some parts of the world have further contributed to supply chain problems across the foodservice sector. August also brought the first full month of restriction-free trading for UK hospitality businesses since March 2020. The sustained return of customers to restaurants, pubs, bars and other premises has increased demand for many food and drink items, and further fuelled price inflation.
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Price rises were significantly higher than the 1.2% in some key categories of the Foodservice Price Index with soft drinks rising 8.0%, and breads & cereals up 6.1%. As staff, logistics and import costs continue to rise, the Index predicts continued inflation over the remainder of 2021 and well into 2022, with the rate of rises likely to increase sharply in the short term. Shaun Allen, CEO of Prestige Purchasing, said: “With Christmas approaching fast it is essential that operators are well in control of their supply chains in advance of what will be a bumpy period for both cost and availability of product. Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year.” Andy Hodgson, client manager at CGA, said: “Hospitality is making a robust recovery from the COVID crisis, but these inflation figures threaten to stall the momentum that businesses have achieved. While consumer demand remains strong, the likelihood of steeper inflation puts already vulnerable businesses under renewed pressure, and reinforces the case for sustained support from government on tax, labour, supply chain and many more issues.”
Drinks Sales Just 1% off Pre-COVID Levels for Third Week in a Row CGA’s latest Drinks Recovery Tracker shows average drinks sales by value in the seven days to Saturday (9 October) were up by 1% on the same week in 2019. It is the third successive week in which sales have been just 1% either side of 2019’s averages, and they haven’t been more than 5% off since the start of September. Last week was the first time since ‘freedom day’ on 19 July that drinks sales in England, Scotland and Wales were all up on the same week in 2019. Growth was boosted by another bumper week of spirits sales, which were up by 24% on two years ago—thanks in large part to surging sales of cocktails. The category more than made up for modest drops in sales in other segments like soft drinks (down 2%), beer (down 4%), cider (down 4%) and wine (down 11%). Daily sales were close to 2019’s figures throughout the week, peaking on Sunday 3 October (up 8%) and Saturday 9 October (up 5%)—the latter
partly due to big football and boxing events that day. The Tracker figures are another sign of solid sales momentum in the On Premise as the run-up to the festive season nears. They have been achieved despite major operational issues and the after-shocks of Covid, which have led to the closure of nearly 1,000 more licensed premises in the last two months alone. “Hauling drinks sales back to pre-COVID levels within a few months of restrictions easing shows the enormous resilience of Britain’s On Premise,” says Jonathan Jones, CGA’s managing director, UK and Ireland. “However, while trading appears to be close to standard for the time of year, the realities on the ground are far from normal. Pubs, bars and restaurants face a triple whammy of rising costs, staff shortages and disruption to supply, and they remain deserving of targeted support to sustain their impressive rebuilding.