Food and DrinkNews

Falling Prices Give Operators Opportunities In 2020

Prices across the foodservice sector dropped to their lowest point for seven months in November 2019, the latest edition of the Foodservice Price Index from CGA and Prestige reveals.

The Index has fallen by four points since August, pushing overall prices to their lowest since April 2019. The new report forecasts more falls in the next few months, providing operators with a welcome opportunity to reduce their costs and improve margins or cut menu prices to incentivise trade. A greater level of certainty around Brexit should further help businesses to focus more closely on footfall and sales during a traditionally challenging period for the sector.

Operators need to carefully monitor contrasting trends in the key foodservice categories of Vegetables and Fruit, the Index suggests. Good growing conditions for seasonal vegetables such as onions and potatoes have resulted in the Vegetable category of the Index falling both month-on-month and year-on-year. But the Fruit category has recorded large price increases, with previous overproduction in Spanish citrus crops leading to low tree energy in 2019 and yields for farmers that were down 60 to 80%—forcing prices upwards and leaving the category with year-on-year inflation of 16.2% in November.

Prestige Purchasing COO Phil McGuinness said: “The slowing of inflation should provide some reassurance to purchasers for the year ahead. With 2020 looking likely to bring falls in multiple categories, along with certainty around Brexit bringing 12 months of stability, we are likely to see further reductions within the Index, which can be used to maximise margin or drive sales.”

CGA Client Director Food and Retail Fiona Speakman said: “After an extended period of turbulence in foodservice prices, the signs of stability revealed in the latest Index are a relief. It’s particularly pleasing to see an easing of inflation in the Vegetable category, but rising Fruit prices and the imminence of Brexit are reminders of the need to stay vigilant on trends and purchasing strategies in 2020.”