Pound's plunge pushes up cost of frozen food

Frozen fruit and vegetable producers will have to pass cost increases on to retailers as their power to buy in imports is hit by sterling’s falling value, according to Ardo UK.

Ardo is a specialist in the frozen fruit and vegetable sector with bases in eight countries. Stephen Waugh, md of the UK division, said large quantities of its frozen products were imported. “We’re all battling the currency issue. If you’re clever you can book your currency rate far in advance and have a pretty good idea of what you’re going to sell,” he said.

“At the beginning of January, there were 1.33 euros to the pound. At the last count it was 1.02. The increase in cost has become more exaggerated,” he added. “You can fix prices for a while or try to cut costs, but eventually you are going to have to push through price increases.”

The situation had been complicated by the recent drive by supermarkets to discount frozen food lines, partly to compete with hard discount chains such as Aldi and Lidl, said Waugh. But the pace of this was showing signs of slowing down, he added.

Big firms were processing sufficient volumes to be able to move from five- to seven-day working weeks to counter increased costs with increased production and sales, said Waugh. However, small to medium-sized businesses such as Ardo UK didn’t have that luxury, he said. “We would like to go to seven days per week, but we wouldn’t like to be chasing customers we haven’t got.”

The firm’s £15M investment in a new packing hall, cold store and offices would push up packaging from 50,000t to 80,000t annually, he said, while cold storage capacity would grow from 16,000 to 21,000 pallets. The project started in October 2008 and is expected to be completed by the end of this year.