Food and Drink Market Update - Feb 25

The Consumer Prices Index (CPI) rose by 2.5% in the 12 months to December 2024, down from 2.6% in November, highlighting that we are still in an inflationary market year-on-year.

Food and non-alcoholic beverage prices rose by 2% in the year to December, unchanged from November. The Foodservice Price Index in November fell slightly to 2.0% from 2.2% in October.

The Retail Price Index (RPI) is now 3.5% vs 3.4% last month up 1% while the Producer Price Index (PPI) is now at 1.9%, up 0.1% from November.

Market movers:

FISH & SEAFOOD

Salmon prices have been rising since late last year, driven by high Christmas demand and adverse weather conditions. Cold weather exacerbates the situation by slowing salmon growth and causing winter sores, further reducing the availability of high-quality fish. Prices typically peak around April before starting to decline.

Top Tip #1: For now, continue to buy ChalkStream Trout as a British and sustainable alternative.

The Whitefish market, particularly Haddock and Cod, is under significant pressure due to quota reductions - haddock quotas are down 20%, with a total allowable catch of approximately 330,000 metric tons. Supply challenges are likely to persist. A viable alternative is Alaska Pollock, a sustainable whitefish option that provides cost advantage and enhances sustainability, with an improved MCS rating of 1 compared to the 3-rated haddock.

Top Tip #2: The Skrei Cod season, which runs from January to April, is an opportunity to feature high-quality, sustainably sourced cod on menus. It’s a standout option for this time of year and a great way to promote sustainability

MEAT

Beef: Prices continue to increase as carcass balancing is proving to be a challenge. Across the board, demand is outstripping availability and we are experiencing price increases across every cut. In particular demand for trims (VLs) have been and continue to increase weekly. These trims are used mainly for mince & burger with 90 vl trim a big volume driver already showing increase of 20 %.

Pork: Recent reports confirmed a detection of Foot & Mouth Disease (FMD) in a Water Buffalo herd in Germany. While this is a serious and highly contagious disease, particularly for pigs, containment measures are already in place - European authorities have introduced precautionary import bans and restrictions. These developments could add pressure on supply via other European pork producers, including the UK, potentially tightening supply and impacting prices over the coming months.

Lamb: We have seen a shortage of availability for the last 12 months and coming to the end of the UK season, we again are seeing prices increase.
The outlook for the next 12 month on Lamb availability is tight and with no expected increase in availability or reduction in prices. Early-season lamb prices in both Australia and New Zealand are significantly higher than last year. The outlook for Australian and New Zealand lamb markets in 2025 is cautiously optimistic.

POULTRY

There are growing concerns about poultry availability on prices going forward due to the outlook on bird flu due to multiple outbreaks. Last time we had a major outbreak prices rose dramatically topping out around a 44% cost increase on Poultry. At present we are starting to see price increases and availability is tight.

FRUIT & VEG

Shipping Delays: Storms and poor weather conditions over the festive period increased shipping delays. These delays are expected until the end of January as ports catch up following congestion. Lines impacted include Limes, Easy Peelers, Melons and Grapes, however most of the produce has now arrived, so we are not expecting any significant availability issues. Other affected consignments include Pineapples and Bananas; banana ripeners have less time to ripen stock which is leading to some under-colour for green tip codes where fruit is stubborn.

Potatoes: Supply remains steady with no major availability issues. There are likely to be some challenges on Salad Potatoes and Large Bakers due to the lack of carryover stock creating shortages and limited growing time. We anticipate seeing this in the market until around March/April.

Brassicas: Cooler temperatures in Spain and freezing conditions in the UK are challenging for growers as it slows the crop growth. This can result in availability challenges. Spring Greens is currently the main area of concern which could face challenges in the next few weeks due to these weather conditions.

Winter Salads: Despite an early setback, winter salads remain stable with products arriving from Spain and Morrocco in steady volumes. Prices remain firm although quality has been first-rate. The end of the month will see very early signs of the transition to Dutch and Belgian products with small pockets of Cucumber starting to come through. In reality, the season will not begin until Easter although early grower reports for the up-and-coming season have been positive.

Peppers: Supply is very tight for Spanish origin but contracted volumes are currently being met. Early frosts have damaged the first flowers in Dutch crops meaning volumes will be lower this year at seasonal change over so we may see a shortages or gaps around March/April.

Top Tip: Carrots, Cauliflower and Butternut Squash are good alternatives to Potatoes. Focus on seasonal produce, such as Root Vegetables, as opposed to Spring Greens such as Lettuce.

COCOA

Ghana, the world's second-largest Cocoa producer, received below-average rainfall in December, posing a threat to the cocoa crop. As a result, Ghana lowered its 2024/25 cocoa production forecast to around 617,500 metric tons, due to the recent lack of rain and the recent dry Harmattan winds. Although this is an improvement over the low 2023/24 output, it remains below the 5-year average. Similarly, dry weather impacted cocoa pods in the Ivory Coast.

These two countries represent 50% of global cocoa exports, and recent weather challenges are believed to have contributed to the price rally in December, following already record-high prices earlier in 2024.

UK KEY MARKET MOVERS (CPI)

The Consumer Prices Index (CPI) is a key measure of inflation in the UK. Movements in CPI give a high-level overview of the key categories experiencing inflation. Below is a monthly snapshot of the top food commodity price inflation movements impacting the UK. The data is from Office for National Statistics (ONS).

FINAL WORD

Equinoxe continue to proactively mitigate availability issues and supply risk, putting solutions in place to reduce impact, such as product switches and recipe re-engineering.

When analysing the affects that inflation has on your businesses purchasing, it's important to understand that inflation affects not only the price of goods, but also the quality and availability. This is something that the Equinoxe procurement experts can assess in detail, to ensure our customers are always achieving the best outcomes in all areas.

To find out more about ways in which we can help save your business time and money please contact your Account Manager or call us on 01277 364655