Confidence at all time low: Soaring costs force half of food manufacturers to cut investment
Rising input costs have forced almost 50 per cent of food and drink manufacturers to cut investment, a new report reveals today.
The Food and Drink Federation (FDF)’s research outlines that 40-year-high inflation is forcing companies to scale back plans for growth, with rising costs increasing by an average of 21 per cent this year.
With a similar rise in input costs expected next year, firms are reportedly looking to contain soaring prices for consumers through efficiency and a reduction in their ranges, but the costs rising is also taking its toll on profits.
The report suggests industry’s confidence at its lowest level since FDF began these surveys in Q1 2018.
This comes after the Insolvency Service announced there were more insolvencies in the first eight months of 2022 than the whole of 2019 combined, as many retailers shut up shop due to narrowing margins.
The research outlined the rising energy prices, which accounts for 22 per cent of business costs on average, was up 12 per cent on last year, as confidence levels hit an all time low.
Karen Betts, the FDF’s chief executive said the industry was struggling, “with soaring energy and ingredient prices putting incredible pressures on businesses, which are at the same time making every effort to keep the price of everyday food and drink affordable”.
Calling for more help from the government, which has offered an energy support package, Beets said “companies need reassurance that government understands the issues they are facing and will act to help our sector shore up its resilience.”
Calling for investment in green energy and reducing costs from “burdensome regulation”, she urged Jeremy Hunt, the Chancellor of the Exchequer, to support “hard-pressed households” by backing the food and drink sector, and getting a grip on inflation.
On 17 November, Jeremy Hunt is set to announce a string of cuts and tax rises fill a reported £50bn fiscal black hole.
For the third quarter of the year, the FDF’s state of industry report outlines key products and staples which have risen in price on the shelves of supermarkets.
Food and drink inflation, according to the ONS, was cited as being worst off among dairy products, with low-fat milk at 42 per cent, butter alternatives 30 per cent, and whole milk also at 30 per cent.
Cereals, oils, butter and jam were all between 29 and 28 per cent.