The CGA Prestige Foodservice Price Index recorded a 21.6% year-on-year increase as its non-alcoholic beverage categories in June 2019 – taking the overall measure to its highest index point to date.
Inflation in the mineral water, soft drinks and juice category has increased since September 2018 and shows no signs of slowing.
This follows a shift in drinking habits that has seen adult soft drinks becoming one of the nation’s fastest growing beverage categories with one fifth of adults choosing not to drink booze and its sales up 15.4% in five years.
New lines with refined flavour profiles and innovative packaging has led to premiumisation in this category and subsequent high levels of inflation.
Brexit’s catastrophic effect
However, some food categories of the index recorded small rises in inflation in June 2019. Contrary to traditional seasonal drop, fruit was one of the few categories to see month-on-month inflation.
There have been continued issues to recruit fruit packers in the UK, which has resulted in lower yields, pushing wholesalers to import more from European countries, including Italy and Spain and, as a result of the pound performing poorly against the Euro, has led to price inflation.
Prestige Purchasing CEO Shaun Allen said: “Foodservice price inflation over the next few months is likely to be affected by Brexit and fears are mounting that a no-deal departure from the EU could have a catastrophic effect on UK food supply.
“Meat could be an especially volatile category with the National Farmers’ Union recently declaring it could result in the mass slaughter of lambs, as the UK cannot consume the amount it produces.”
Meat wasn’t the only category to be hit by the issues of a no-deal Brexit as recently Environmental Secretary Michael Gove warned the National Farmers’ Union the food sector might never recover from no-deal even if a deal was struck in the future.
Meat has been disrupted by an epidemic of African swine flu in China, which wiped out an estimated 15% of the world’s pig population in less than four weeks.
The index reported Asia was turning to imports to fill the drop in pork supply, meaning availability and prices in the UK are likely to be impacted, with a knock-on effect on other meats pushing local UK prices up as supply becomes stretched.
Allen added: “There have been severe challenges in the procurement landscape for some time with issues in dairy, salmon, meat and many more categories over the past couple of years.
“This uncertain environment is not likely to change over the coming months as further insecurity in supply from Europe and the strength of the pound adds to the volatility.”
CGA client director of food Fiona Speakman outlined how the research had indicated a steady premiumisation in drinks over the past few years and the latest edition of the Foodservice Price Index indicates the trend’s significant impact on prices.
She added: “More modest increases in some food categories will be welcomed by some operators but with the overall index hitting a new record high and so much uncertainty around Brexit, businesses will be braced for more turbulence in the months ahead.”