Food and drink prices are rising at the fastest rate since 1977, hitting a 16.9% inflation rate in December. So, what is to blame?
Energy prices are a large overhead for food manufacturers, and the wholesale price of gas and electricity has increased significantly over the last 24 months, which can largely be attributed to the war in Ukraine. The war has also reduced the supply of cooking oil and wheat, further pushing up prices for manufacturers.
The major supermarkets have all reaffirmed their commitment to halving the food system’s environmental impact by 2030, which is a further trickle-down cost and impact on manufacturers, who are faced not only with the energy crisis but also the increasing pressure of decarbonizing their operations.
In addition to this, the UK is near to full employment with more than 600,000 people leaving the workforce since the beginning of the Covid pandemic. This labour shortage is also increasing operating costs.
Given that most food manufacturers make less than 10% profit, there is not much scope to absorb these increases, and they either face making a loss or needing to pass on the additional costs. They need to raise their prices in order to remain afloat and also invest in energy cost reduction measures.
This is where On-Site Energy can play a vital role for food and drink manufacturers, by helping to implement energy savings projects that will reduce energy costs and improve sustainability credentials, but without the burden of capex falling on the manufacturer.
If you are an energy intensive manufacturer looking to take control of your energy costs and act on your sustainability objectives, please get in contact with our Sales Director, David Jamieson, at dj@on-site.energy or 0151 271 0037.
