UK food industry braces for price increase

July 3, 2017

Brexit – A word which is synonymous to huge drops in the value of the pound. Since the United Kingdom decided to leave the European Union, there has been nothing short of a downward trend for the pound, which has affected other sectors such as labour, not to mention the food industry.

To give you a perspective of the extent at which Brexit has affected food costs, big entities such as Typhoo and Unilever have been hit hard, prompting an ongoing battle to raise food prices in order to neutralise the effects caused by the 18 percent value drop of the Pound against the dollar. Walkers Crisps are among the many brands which are requesting supermarkets to increase the food prices by up to a whopping 12 percent.

Owners of Marimte, Unilever, are also among those brands which want the food prices increased in order to counteract the effects of the Brexit vote which has seen the poor performance of the Pound against the Euro – a staggering drop of 14.5 percent. In the case of Birds Eye, owned by Nomad Foods, is requesting food costs to be increased since it has suffered a huge blow since the vote – Its raw materials are priced in dollars.

In a statement, Birds Eye Managing Director to the United Kingdom and Ireland, Wayne Hudson said; “Increasing costs is not a decision we take lightly, and the last time it was necessary to raise costs was in 2012.”

He added; “As such, we have been in open and collaborative conversations with the retailers for some time now and are working closely with them to minimise any impact on our customers.”

Wayne said, in an effort to reassure shoppers that the company would endeavour to absorb a significant percentage of the raw material inflation, a move that would see the food prices for the company go down.

Shifting gears to another company in the food market which has been hit hard by the Brexit vote is Leicester-based Walkers, which is under the PepsiCo, which owns several other overseas companies in the food industry such as Doritos Chips, Tropicana Orange Juice, etc. Walkers were seeking an increase in food prices of about 5-10 percent. This would mean a bag of crisps would go for 55p, a rise of about 5p to its initial cost.

Sources from several supermarkets say that these two companies, Walkers and Birds Eye, initiated talks soon after Unilever had commenced talks with grocers in an effort to reduce costs of raw materials.

If such a trend in the food industry is something to go by, then it is safe to say that we can expect food prices on our supermarkets to go up as seen by Morrisons – a supermarket chain which hiked the price of a toast-topper by a staggering 12.5%.