Inflation drop welcomed by industry, though cocoa and confectionery product prices remain impacted
LEEDS, UK - 5 SEPTEMBER 2015. Thorntons Chocolate Shop. People walking past and into the Thorntons Chocolate shop on a busy shopping day in Leeds.
Today’s news that UK inflation within the food and drink sector has fallen to 1.5% is something that the industry, including retailers and wholesalers, is clearly welcoming amid a time of ongoing operating challenges within supply chains in terms of broader operating costs, including sustained spikes in the price of ingredient sourcing.
However, as we have noted before, while some analysts have claimed that supermarkets have to some degree attempted to shield consumers from significant price rises, it is also true that said prices are in fact continuing to increase, which is especially challenging for many market segments including within confectionery and snacks.
With cocoa prices remaining notably high (at around $8,000 a tonne on Futures markets in the US and London (from a peak earlier this Spring of around $12,000), manufacturers have felt the pressure, along with deficits in sugar supplies within that have also had an impact on the wider sector.
This is especially the case with seasonal items including Christmas and Easter, which saw major spikes in product prices – alongside the dual factor of ‘shrinkflation’ in which customers continue to be charged the same or, in fact more, for a smaller product.
Moreover, this has happened notably within the chocolate category, with many manufacturers seeking to downsize their respective ranges largely on cost grounds, but also attempting to actively describe this as a measure that has stemmed from policy relating to calorie intake management.
While it’s fair to say that some consumers are more conscious overall of their dietary intake, I personally can’t think of many people who are likely to pick up a chocolate bar or pack of sweets, or bakery items and the very first thought they have is to check the level of calories in it – the point being these are occasional treats rather than food staples.
So, while it may be good news that inflation is dipping, this has realistically not filtered down significantly into retail prices within a number of segments including confectionery, bakery and snacks prices, which have remained comparatively steep.
With many global economies still facing their own respective economic tests, it will be interesting to see whether marginal improvements that are being seen in the state of Britain’s financial fortunes, and those of other European nations, translate into a period of sustained growth that is necessary to inspire consumer confidence.
Neill Barston, editor, Confectionery Production
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