With uncertainty still surrounding the details of Brexit, including both the supply chain implications and the availability of labour, the newly-published Autumn 2018 edition of the Lynx Purchasing Market Forecast urges businesses to implement measures to protect their profits as best they can.
“The big picture may seem daunting, but there are still steps that every operator can take to ‘Brexit-proof’ their business, to an extent at least,” says Rachel Dobson, managing director of Lynx Purchasing. “While we can’t change the big picture on Brexit, there are plenty of small measures operators can implement that can add up to a big difference on the bottom line.
“We’re already working with many of our customers to help put the measures in place needed to help them to trade through what will clearly be a challenging market for some time to come.”
Advice to operators included on the new Market Forecast includes:
Protect the supply chain and product availability, by wherever possible using suppliers who source from either within the UK, or from outside the EU. Where it’s not possible to source British products, explore non-European substitutes;
Develop recipes that don’t rely on specific products from a named supplier or a particular destination or country, and design menus that can be changed quickly and cost-effectively;
Build flexibility into the system, so that chefs and managers can quickly respond to changes in supply, availability and prices;
Stay informed about what’s happening. Look behind the ‘doom and gloom’ headlines to the updates from supply chain specialists and trade associations, and ask suppliers to provide up-to-date regular market information. Good intelligence will help to maintain margins in the face of all the uncertainty, and to keep the business competitive and profitable.
The Market Forecast draws on exclusive data from a range of suppliers working with Lynx Purchasing to look at hospitality buying trends. As caterers plan Christmas menus, there are a number of product areas spotlighted in the Autumn Market Forecast. These include:
Poultry: Turkey prices are expected to be volatile this year, reflecting the wider poultry market. Problems in Brazil, a major supplier to the global poultry trade, expected increases in feed costs and trade arrangements, and high demand in Europe, will all have an impact on poultry prices in the run-up to the festive period.
Beef: Also popular on festive menus, beef prices have moved steadily upwards this year after the cold winter followed by the hot, dry summer hit feed prices. Lower demand for forequarter cuts should make them better value than topsides and silversides, while steak prices will remain firm.
Potatoes: Potato planting was delayed by the spring freeze, and hopes that the crop would recover were given another knock as the long, hot dry summer continued. Both potatoes and potato products are expected to see higher prices this autumn and winter.
Fish: Salmon is another festive staple, and while North Sea salmon prices are down from their highest point this year, they are still well above 2017 levels. Forecasts for Norwegian salmon this year are relatively low due to very cold water temperatures limiting growth.
Dairy: Dairy inflation saw UK butter prices increase by 50% in the first half of the year, and while prices have stabilised to an extent, they are still higher than many operators will have budgeted for. Cream and full fat milk have also seen prices increase due to the higher fat content. Eggs are also expected to continue to increase in price as producers pass on higher feed costs.
Dobson adds, “The Market Forecast includes plenty of ideas for operators to overcome pricing challenges; for example by substituting alternatives to butter in recipes, using menu descriptions such as ‘served with seasonal veg’ to maintain flexibility, and being ready to switch supplier contracts to get the best prices on commodities such as cooking oil.”