Plummeting pound puts processors under pressure
The weakening pound is piling more pressure on already stretched UK food and drink dairy processors, top bosses have warned.
Senior executives claim that because intrinsic ingredients prices have, in many cases, peaked, or are nearing their peak, some could gain the mistaken impression that costs in that area were falling. In fact, they were rising in real terms because of the plummeting value of sterling.
James Lambert, chief executive of R&R Ice Cream, said: “The biggest issue for food companies next year is going to be food inflation because of the weakening of the pound.”Carl Ravenhall, md of dairy firm Kerrygold, told Food Manufacture: “It has been a tough 12 months. The industry was facing rapidly increasing raw material costs and recovering this from the customer base is very challenging. The sterling situation is definitely having an adverse effect.”
He said he did not expect dairy prices to continue to rise, but added: “The rate at which they are going to fall is going to be much slower than many are expecting.”
However, he stressed that rising electricity costs remained an even greater concern. “Passing costs on to customers is difficult when you’re already talking about the cost of raw materials. Electricity costs are proving very difficult to recover from our customers.”
The situation would not improve as more of the UK’s energy requirements were sourced from overseas, said Ravenhall. “We’re still going to get electricity and gas, but at what price?”
