Price increases and fewer restrictions may put pressure on fine food sector
Retailers in the fine food sector are facing pressure to increase their prices at a time when their customers have less money and an increasing range of places to spend it.
Data published by the British Retail Consortium showed that food inflation hit its highest rate for more than eight years in January as supply issues started to bite.
Businesses and householders across the UK are braced for a cost-of-living crisis this spring as taxes, energy and fuel prices and many other bills soar.
Jennie Allen, owner of West London-based deli group Bayley & Sage, said around a third of her suppliers had mooted price increases recently.
“The highest suggested was 10% – they got told no,” she said. “The average is more like 4 – 5 %.
“People are saying they haven’t put their prices up for two years and they are also hedging their bets against a future of higher labour, distribution and raw-ingredient costs.”
Bayley & Sage will accept a level of increased cost in certain cases while arguing that this should be mitigated by higher volumes and a shifted exchange rate, Allen said.
After two years of keeping its prices stable, the retailer will have to push them up in some areas but Allen is more concerned about increased competition for custom as restrictions fade away after the pandemic.
“People might change their shopping habits but lifestyle will affect us more than prices. We see customers eating out more and going on holidays.”
Andy Swinscoe, co-owner of the Courtyard Dairy, said the Lancashire business had been hit with a “flurry” of price increases in recent months.
“We have seen a lot of our suppliers’ prices go up,” he said. “Pretty much every cheese we have has gone up in cost over the past six months.”
The Courtyard Dairy tries to make logistical efficiencies and juggle its costs but ultimately it seeks to maintain its cash margin on a product, so prices for end consumers are rising.
“Our market is quite diverse,” said Swinscoe. “The local community is more price conscious than our tourist trade.
“For those to who we are a one-off treat, I think it will become more challenging if prices keep rising.”
The changing nature of the pandemic also put pressure on demand for fine cheese, Swinscoe added.
“A year ago people were very restricted in where they could spend their disposable income. Now we are competing with people eating out or going to the cinema.”