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Price Watch May 2018

Market Movers…

Year on Year Price Movements


+36% YOY



+25% YOY


-11% YOY

Meat & Poultry Senior Category Manager: Emma Williamson Category Buyer: Steve Reynolds Pork – The price of pork has been steadily decreasing over the last few months as supply matches demand. However, news over the last few weeks of potential trade sanctions between the US and China has prompted some uncertainty with China unveiling duties on US food imports including pork. This is likely to drive European price increases, with Chinese businesses most likely to look to the EU to fill any shortages. Experts are hoping that high levels of domestic supply in China will be enough to limit any shortterm impact although we are keeping a close eye on proceedings. In the short-term, pork remains a favourable protein for menus and a longer-term picture should be available as US and China discussions progress. Lamb – It’s pretty bleak times for the lamb market with price increases of almost 36% year on year. This has been driven by a number of different factors, primarily the fall in the value of the Pound which has meant our exports have become increasingly more expensive. Whilst normal supply and demand fundamentals would dictate an increase in production, this just hasn’t materialised. Experts report this is because farmers are nervous about investing in their flocks due to the uncertainty around Brexit and trade agreements. On a positive note, this has meant New Zealand has regained its pricing competitiveness when compared directly against UK lamb. If your menu allows, consider switching to New Zealand produce for an immediate cost saving – try VMC: 107159 for New Zealand lamb leg steaks or VMC: 102088 for New Zealand lamb stir fry strips.

Beef – Early indications suggest the UK market will get tighter on beef in the near future which will almost certainly increase the pressure on UK prime cattle pricing. Beef pricing is looking higher than in previous years with imports down and exports up. In fact, in January the UK reported an 11% increase in exports year on year, whilst Dutch exports showed a 74% increase. Increased exports will put pressure on pricing as the UK is only 60% selfsufficient when it comes to beef supply; so we have no option but to look elsewhere to meet demand. Interestingly, the UK imports less premium cuts than other EU countries which means pricing is more favourable compared with other cuts. For the most cost effective solutions consider using products like chuck and mince when developing menus.

Key Takeaways •

In the short-term, pork remains a favourable protein for menus

If your menu allows, consider switching to New Zealand lamb for an immediate cost saving

For the most cost effective purchasing of beef, consider products like chuck and mince

Dairy Category Manager: Emily Armitage Milk - We are now well into the spring months and with the sun shining, for now at least, milk production is looking strong. April saw the majority of milk processors announcing reductions in farm gate pricing which saw the average farm gate price fall by approximately -4% MOM bringing the total reduction down to -11% since January 2018. We link our pricing directly to movements in farm gate pricing which makes it easy to track and ensures competitive pricing for our clients. Our next quarterly pricing review in June will see these reductions reflected in the pricing from our two core partners, Yewtree and West Country Milk. Butter - On the flip side butter prices rose quickly through April and have increased MOM by 10%. Although there were expectations that more production of milk would keep prices low, this has not come to fruition partly due to the snowy weather earlier in the year. Thankfully, our core butter pricing is fixed until September with our supply partner, Lakeland Dairies, so Foodbuy will not be affected by the recent market movements.

Key Takeaway: •

We link our pricing directly to movements in farm gate pricing which makes it easy to track and ensures

competitive pricing for our clients. Our next quarterly pricing review in June will see these reductions reflected in the pricing from our two core partners, Yewtree and West Country Milk.

Source: ADHB Dairy

Fresh Fish & Seafood Category Manager: Jasmin Gunkar Category Buyer: Tom Davies Salmon - The salmon market is volatile at present and we’re continuing to see high prices. We recommend you switch to alternatives like the chalk stream trout or rainbow trout. Haddock and cod - We are at the back end of spawning season on both of these species which means the optimum time in terms of size and quality is likely to be at the beginning of June. We anticipate prices for fresh haddock and cod in the short term to be firm. The quality of fish should improve towards the end of May. We recommend using coley as a battered fish alternative or in a fish pie. Hake is also a great alternative but this species does come at a premium. Consider switching into one of our frozen haddock lines (VMC 117570, 117571 & 117572). If you do opt for frozen please be sure to order one fillet size larger than usual so it does not impact your serving size. For instance, if you are using a 140-170g fresh fillet we would recommend switching into a frozen 170-200g fillet as once defrosted the glaze takes away circa 15-20% of the total weight. Savings of up to 46% are available on frozen! Tuna - Tuna’s sustainability rating ranges between MCS 3 & 4 depending on variety. As a more sustainable solution we recommend switching into MCS certified mackerel which provides a great source of omega 3. Tiger and king prawns – These varieties are rated MCS 3. If you prawns are an essential ingredient we suggest switching to a cold water prawn alternative. Another sustainable option to consider adding to your menu is UK rope grown mussels, we appreciate it is not a like for like product but it is MCS 1 rated!

The top five! Sustainable seafood is a key priority for our business and we are passionate about supporting responsible fishing. So, we’ve compiled our top five selling fish and seafood species and provided more sustainable alternatives. To become more sustainable, please consider using these in your menus: Top Selling Species

Sustainable Alternative Species

Average Difference in Price

Salmon (MCS 3)

   

Rainbow trout whole - MCS 2 Rainbow trout fillet- MSC 2 Chalk stream trout whole- MCS 2 Chalk stream trout portion- MCS 2

All of these alternatives are cheaper than salmon

Cod (MCS 3) Haddock (MCS 3)

  

Hake whole- MCS 2 Hake fillet- MCS 2 Coley fillet- MCS 1

Hake is usually a little more expensive but coley is cheaper

Tuna (MCS 4)

 

Mackerel whole- MCS 2 Mackerel fillet- MCS 2

Mackerel is cheaper than tuna

  

Royal Greenland- MCS 1 North Atlantic - MCS 2 UK rope grown mussels - MCS 1

Prawns (King & Tiger MCS 3)

(Different species, but a great alternative)

Royal Greenland is usually more expensive, North Atlantic are similar price and UK rope grown mussels are cheaper

Bakery Category Manager: Tanya Baker Category Buyer: Nathan Williams

The price of a loaf of bread is influenced by the cost of a number of different ingredients like; butter, sugar, wheat and flour which makes it

Key Takeaway: •

For our core bread supply we have just negotiated new terms that will see us move to a Brakes Frozen own-brand product from Friday, 1 June 2018. By moving to a frozen alternative we will be able to mitigate the majority of inflation. It’s also worth noting, the frozen lines will give us an improvement of shelf life of an additional two days from defrost.

interesting for our teams when it comes to negotiating the best possible bread deals with suppliers. For instance: • Butter: Prices are beginning to return to the high levels experienced in early 2017. You can find more information about butter prices on page 4 of this report • Sugar: The price of sugar is down year on year by 11% • Wheat: Prices increased 24% last year before becoming fairly stable for the past 12 months. However, there is rising demand for wheat to be used as animal feed and to make other food items, so we expect this to be on the increase very soon • Flour: In March 2018 flour prices increased by 23% year on year driven predominantly by poor flour harvests last September which is still impacting supply

Fruit & Vegetables Senior Category Manager: Emma Williamson Category Buyer: Richard Sharpe The fruit & vegetable category has been experiencing tough times due to local and international weather patterns.

In the UK, farmers are still playing catch up following the Easter snow with crops at least two weeks behind their usual growing patterns. It’s usual to expect farmers to be harvesting crops from the end of April but this is more likely to be mid-May this year. The delay in fresh UK produce means there is a supply gap as the Spanish harvest, where we get our summer produce, ended prematurely due to bad weather. To mitigate this, we switched to buying predominantly British and Dutch produce. The recent run of good weather should hopefully help farmers catch up and also get root vegetables like potatoes in the ground before future yields are compromised. Further afield, there has been bad weather in Peru, South Africa and Kenya where a range of produce comes from throughout the year. For example, avocados which we get from Peru and South Africa are not ripening at the expected speed causing shortages, while heavy flooding in Kenya has caused major issues for the supply of tender stem broccoli, sugar snap beans and passion fruit. Introducing Fresh Direct On Wednesday, 2 May we switched all our fresh fruit & vegetable produce to our new supply partner Fresh Direct. Fresh Direct purchase more than six times the volume we need which means we are confident they will be able to support us to supply our clients with high quality produce at the right price. We have direct access to their suppliers and growers which will enable us to maintain some of our existing relationships whilst also building longer term partnerships in smaller sub categories like lettuce. We will still get our produce via the Brakes’ Corby depot and all units will still get their deliveries via Brakes. Meet some of Fresh Directs’ Suppliers:

Key Takeaways

• Wellpak UK - We have worked with Wellpak for almost 10 years now and they are a trusted supplier who will continue to supply us under the new deal with Fresh Direct. We will also continue to work with the likes of QPI, QV and Poskitts, all of whom we have long term relationships with.

What’s in season? British asparagus (VMC: 116370) is in season for just a few weeks during May and June.

It’s also the best time for rhubarb (VMC: 455037)!

• Bryan Salads - Our new lettuce supplier, they are based in West Lancashire and are growers and packers who produce the majority of their crop from within a one mile radius of their processing site. Everything is cut and stacked by hand, both out in the field and in large temperature controlled greenhouses.

Savoury Head of Category: Neil Chapman Category Manager: Nicole Hardwick

Key Takeaway: •

It’s ’s World Meat Free Day on Monday, 11 June and with the number

of consumers who class themselves as flexitarians growing at five times the

Did you know, it’s World Meat Free Day on Monday, 11 June? There are many reasons why taking part in World Meat Free Day is a great thing to do. For example, if just 10 million of the world’s 7 billion people decided to abstain from meat for just this one day, we would reduce our water usage by 13 million tonnes, the equivalent of 5,000 Olympic swimming pools, and save up to 5,700 acres of land, the equivalent of 89,000 tennis courts. That’s not all – it would also mean we could reduce our saturated fat intake and consume less calories.

rate of the total British population,

And with the number of consumers who class themselves as flexitarians growing at five times the rate of the total British population, World Meat Free Day is a great opportunity to

World Meat Free Day is a great

delight your consumers and grow sales.

opportunity to delight your consumers and grow sales.

Meeting vegetarian demand Our long-standing partnership with Quorn means we have access to great products in the meat free space. Quorn are also on hand to help support a number of meat free initiatives, including meat free days. The world’s farming of animals generates more greenhouse gas emissions each year than all of the cars, lorries, trains and planes put together… so swapping to one meat free meal per week is good for you, the planet and your consumers.

Activity Calendar Here’s our upcoming sourcing activity across a number of key product categories, as well as our contracted fixed pricing dates.









May 18

June 18



July 18

Aug 18


Sep 18 *Some categories are subject to movement

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Price Watch - May 2018 (CG)  

Inside Price Watch you’ll find the latest pricing and market updates from the experts in our category development teams.

Price Watch - May 2018 (CG)  

Inside Price Watch you’ll find the latest pricing and market updates from the experts in our category development teams.