Lock in food and drink prices, warns purchasing specialist

Lynx Purchasing salmon

Bars and other caterers are being urged by buying specialist Lynx Purchasing to lock in suppliers’ prices on food and drink to avoid uncertainty over the fall in sterling.

With sterling having fallen sharply in the wake of the EU referendum in June, uncertainty over both pricing and availability is expected to be a factor in the supply chain throughout the rest of the year and into 2017.

The warning note comes as Lynx Purchasing publishes the autumn/winter 2016 edition of its regular Market Forecast for the catering and hospitality sector.

Rachel Dobson, Lynx Purchasing manager director, said: “We’re now clearer on the timetable for Brexit, but not the detail of what it will mean in terms of our trading relationship with Europe and the rest of the world.

“It’s understandable that suppliers are building plenty of caution and caveats into their forecasts, and with a wide range of products seeing changes in price, caterers will need to keep a close eye on their costs over the coming months.

“When it comes to produce for Christmas menus, our best advice this year is that it’s never too early to start talking to suppliers. Orders that are locked in early provide certainty for everyone, and it looks unlikely that there’ll be too many last minute bargains on offer come December.”

The Market Forecast looks at availability and pricing across a variety of products. With the UK importing a significant number of fresh turkeys from the EU, especially for Christmas, this will be affected by the exchange rate although there is a good supply of birds which could help to keep prices competitive.

Turkey for added-value products, such as stuffed or flavoured joints, comes mainly from South America and is traded in dollars, so while availability is good, higher prices than last year are inevitable.

With many dairy farmers having exited the market, prices are now moving up. While the price of milk often hits the headlines, for caterers the prospect of a sharp increase in the cost of butter, cream and cheese should also be a concern.

Salmon is always a Christmas favourite on menus. However, with problems in Chile caused by an algal bloom that has killed millions of farmed fish, and a fall in production in Norway, the supply of fresh, frozen and smoked salmon is unlikely to improve by the end of the year.

A hugely popular product for Christmas starters, prawns are in short supply after a sharp drop in the availability of warm water prawns. Severe weather conditions in Asia earlier this year have affected the volume of supplies from India, Bangladesh and Vietnam, inevitably pushing up prices.

The UK inflation figures for August showed a sharp 12.8% uplift in the price of oils and fats. With all oil initially traded in Chicago, the cost has been affected by the weaker exchange rates, and both rapeseed and sunflower prices have jumped dramatically following the Brexit vote. With unpredictable weather patterns also playing a big part, the price of cooking oil is expected to remain high into 2017.

Spain supplies much of the UK’s leafy salads during autumn and winter, but there are suggestions that some Spanish growers will be looking to reduce their exposure to the UK market this season. This is as much to do with the UK’s retail price wars as with concern over Brexit and the lower value of sterling, with the low prices paid by supermarkets deterring growers.

Rachel added: “Our advice to caterers is to be cautiously optimistic. There are clearly challenges ahead, but as ever there will also be opportunities, especially if operators can build enough flexibility into menus to make the most of produce when availability, quality and value are best.”

The Lynx Purchasing Market Forecast combines official inflation data with exclusive insight from across the range of suppliers Lynx works with. A free copy of the autumn/winter 2016 edition can be downloaded as a PDF by clicking here.

Lynx Purchasing works with more than 2,200 hospitality and catering operators to match them with the best suppliers and get the best possible prices on food and drink, as well as a whole range of essential products and services.

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