Whatever the outcome of the General Election, the hospitality sector urgently needs a period of market stability to help operators deal with the impact of food and drink inflation, warns buying specialist Lynx Purchasing.
With the Summer 2017 edition of the Lynx Purchasing Market Forecast showing a slight decline in the rate at which prices are rising, Lynx managing director Rachel Dobson says: “Whoever is in Government after June 8, they will be getting down to almost two years of detailed Brexit negotiations.
“While it’s inevitable that there will be political debate about the outcome on both sides of the channel, we can only hope that the markets continue to take a more pragmatic view. The impact of the fall in the value of sterling after the Brexit vote has now been more-or-less priced in by suppliers, so there is potentially a period of greater stability ahead if the markets focus on the long-term picture rather than constantly react to speculation.”
The Market Forecast shows that the ‘Lynxometer’, a basket of food and drink bought regularly by Lynx Purchasing customers, increased by 6% over the 12 months to June 2017, down from 9% in March. Dobson adds: “Prices are still rising, but not as fast, which is some respite for operators.”
Among the specific product areas featured in the latest Market Forecast are:
- Meat: UP 5% year-on-year. Higher global demand is a major challenge, with more Irish beef, New Zealand lamb and EU pork going to regions such as China and the Middle East. UK producers are also exporting more as a result of the fall in the value of sterling. The continued popularity of gourmet burger and steakhouse style menus is also driving strong demand in foodservice for the trimmings used to make burgers and other dishes, pushing up prices.
- Dairy: UP 9% year-on-year. Availability of cream, used for making butter and cheese, has been low for some time, placing some upwards pressure on price. With better returns from butter than cheese, there could be challenges with cheese supplies later in the year if production stays low for any long period.
- Fruit & veg: UP 6% year-on-year. Market prices of potatoes have been high following a poor UK crop last season; the quality and volumes of potatoes in storage has run very low, with imported crops needed to make up the shortfall. Better news, after the much-publicised problems with Spanish crops, is the arrival of the British leafy salad season, followed by peppers, tomatoes and cucumbers, as well a summer soft fruits including strawberries and raspberries.
Dobson adds: “The long-term impact of Brexit on the hospitality sector will be decided by the nature of the deal in a range of areas, including faming and fisheries policy, import tariffs, and the availability of migrant labour. Whatever is decided, it will be several years before anything changes, and operators will have plenty of notice to plan. What’s needed is market stability in the interim.”