price rises - Neighbourhood Retailer

Greggs shows resilience with quarterly sales rise

Linda Stewart — Tue, 04 Oct 2022 09:03:17 +0000

Baker and fast food chain Greggs says it traded well in its latest quarter, showing its resilience against the backdrop of a worsening cost of living squeeze.

Confidence levels among Britain’s consumers sank to a record low last month as they struggle with the accelerating cost of living.

However, Greggs, known for its sausage rolls, steak bakes, vegan snacks and sweet treats, said its total sales rose 14.6% over the 13 weeks to October 1 year-on-year, with like-for-like sales in company managed shops up 9.7%.

“Greggs continues to trade well in an environment where cost pressures are significant,” it said.

It kept its guidance for full-year cost inflation of about 9% and said it expected the full year outcome to be in line with its previous expectations.

Greggs said in March it did not expect material profit growth in the current year on the £145.6m made in 2021 due to the higher cost of raw materials, energy and staff.

Meanwhile, the Greggs boss said today that the company this week had introduced a further round of price rises, including for the sausage rolls it is famous for, as it battles rising costs.

“We have put a small number of rises across products as of yesterday, we’ve worked hard to mitigate that,” chief executive Roisin Currie said.

She said a Greggs sausage roll was £1.05 at the start of the year, but had moved to £1.10 in May and is now £1.15.

Price rises on other products were 5 pence to 10 pence.

Currie said she hoped it would be the final round of price increases this year but could not guarantee it.

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Food costs push price rises to new 40-year high

Linda Stewart — Wed, 17 Aug 2022 13:36:49 +0000

Soaring food costs have pushed UK inflation into double digits for the first time since 1982, with prices continuing to rise at their fastest rate for more than 40 years.

Inflation hit 10.1% in the 12 months to July, up from 9.4% in June, the Office for National Statistics (ONS) said.

Soaring living costs are eating into household budgets, with prices rising faster than wages.

The Bank of England has said inflation could peak at more than 13% this year.

Energy, petrol and diesel costs are also contributing to inflation. But food and non-alcoholic drinks were the largest contributor to rising prices in July, according to the ONS.

The price of bread, cereals, milk, cheese and eggs rose the fastest, while the cost of vegetables, meat and chocolate were also higher.

Prices also rose for other staples, such as toilet rolls, pet food and toothbrushes.

The increase was above all economists’ forecasts in a Reuters poll for inflation to rise to 9.8% in July, and will do nothing to ease the Bank of England’s concerns that price pressures may become entrenched.

Despite warning that a recession was likely, the BoE earlier this month raised its key interest rate by 0.5% to 1.75% – its first half-point rise since 1995.

It forecast inflation would peak at 13.3% in October, when regulated household energy prices are next due to rise.

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Kraft Heinz pulls products from retailer Tesco in UK pricing row

Linda Stewart — Thu, 30 Jun 2022 09:56:09 +0000

US food giant Kraft Heinz has stopped supplying some products to supermarket group Tesco, which resisted charging its customers higher prices for them at a time of surging inflation.

Tesco apologised for the absence of popular Kraft Heinz products, such as baked beans and tomato ketchup, from its shelves in the UK.

“We will not pass on unjustifiable price increases to our customers,” it said.

Tesco said its customers had plenty of both branded and own label alternatives to choose from and hoped to have the issue resolved soon.

Kraft Heinz said it was battling to provide good value products in a market hit by rising commodity and production costs.

A spokesperson said it was working closely with Tesco to resolve the situation as quickly as possible.

“We are confident of a positive resolution,” they said.

The row highlights the issue of whether manufacturers, retailers or consumers should bear the most pain of soaring cost inflation.

Kraft Heinz said that with commodity and production costs rising, it was seeking ways to provide value for customers “through price, size and packs” without compromising on quality.

Prices are rising after the war in Ukraine restricted supplies of sunflower oil and boosted wheat and animal feed prices – pushing up the cost of meat, dairy and bakery products.

Soaring energy and fuel prices, as well as increased labour and transport costs, have added to the mix.

Tesco said that with household budgets under increasing pressure, it had a responsibility to ensure customers get the best possible value.

In the UK, wages are struggling to keep pace with inflation that reached an over 40-year high of 9.1% in May and is heading for double digits. Some forecasters expect food inflation to hit 15% this summer and 20% early next year.

Earlier this year Ahold Delhaize’s Albert Heijn chain – the largest Dutch supermarket – removed Nestle products, including Maggi, KitKat and Nescafe from its stores because Nestle increased prices.

This month, French food giant and the world’s biggest yoghurt maker Danone said was cutting the variety of products its sells, with soaring prices forcing it to rethink how it sells its products.

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Budget pasta prices jump 50% as food staples rise

Linda Stewart — Mon, 30 May 2022 09:58:38 +0000

The price of some budget food lines have risen by more than 15%, according to new data, with pasta showing the steepest jump over a year.

The lowest cost version of pasta rose by 50% in the year to April, said the Office for National Statistics.

Household staples such as minced beef, bread and rice also recorded large increases.

But the average price rise of 30 budget food items at supermarkets was 6.7%, below the rate of inflation.

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Kraft Heinz warns of food price rises

Linda Stewart — Mon, 11 Oct 2021 14:09:55 +0000

Consumers will have to get used to higher food prices, the boss of Kraft Heinz has warned.

Speaking to the BBC, CEO Miguel Patricio said the international food giant, which makes tomato sauce and baked beans, was putting up prices in several countries, “across the board”.

The cost of ingredients such as cereals and oils has pushed global food prices to a 10-year high, according to the UN Food and Agriculture Organisation.

Kraft Heinz has increased prices on more than half its products in the US, its home market, and Mr Patricio said this was happening elsewhere too, citing a lack of truck drivers in the UK.

“We are raising prices, where necessary, around the world,” he said.

During the pandemic, many countries saw production of raw materials, ranging from crops to vegetable oils, fall due to Covid measures.

As restrictions have ended, the supply of these products has not been able to keep up with returning demand, leading to higher prices, with the additional impact of wages and energy prices.

“Specifically in the UK, with the lack of truck drivers. In [the] US logistic costs also increased substantially, and there’s a shortage of labour in certain areas of the economy,” Mr Patricio said.

Rising population

He warned that consumers will need to get used to higher food prices given that the world’s population is rising whilst the amount of land on which to grow food is not.

But not all cost increases should be passed on to consumers, Mr Patricio cautioned, saying businesses would have to absorb some of the rise in costs.

“I think it’s up to us, and to the industry, and to the other companies to try to minimise these price increases,” he said.

However, big food producers like Kraft Heinz, Nestle and PepsiCo “will most likely have to pass that cost on to consumers” according to Kona Haque, head of research at agricultural commodities firm ED&F Man.

“Whether it’s corn, sugar, coffee, soybeans, palm oil, you na

me it, all of these basic food commodities have been rising,” she said.

“Poor harvests in Brazil, which is one of the world’s biggest agricultural exporters, drought in Russia, reduced planting in the US and stockpiling in China have combined with more expensive fertiliser, energy and shipping costs to push prices up.”

Transport costs

PepsiCo has also wanted that it is also facing rising costs on everything from transport to raw ingredients, and said that further price rises were likely at the start of next year.

Mr Patricio admitted the pandemic boosted sales for some Kraft-Heinz brands,because people were cooking at home more than before.

Customers in the UK bought more Heinz Baked Beans, while customers in the US bought more Kraft Mac & Cheese.

The company is also undergoing an extensive restructuring under Mr Patricio, who also says it is spending significant sums on developing new packaging to meet its aims on reducing plastic waste.

Most of the 650 million bottles of ketchup the firm sells every year are plastic, but Mr Patricio said the firm was “encouraging” customers to buy glass bottles even though they are less convenient “because you have to tap on the bottom”.

“We are working hard, not only on the plastic bottles, but everywhere in our footprint that has plastic,” he said.

However following a shortage of single serving sachets during the pandemic, as consumers bought more takeaways from restaurants, Kraft Heinz has invested in expanding production by 30%.

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