Free digital copy
Get Speciality Food magazine delivered to your inbox FREEGet your free copy
We take you back through five stories over the past few months that explain the cost-of-living crisis and how it is affecting indies.
War in Ukraine
In February this year, Russia launched an offensive attack on Ukraine, causing a wave of uncertainty across the globe. Both Russia and Ukraine are dubbed the ‘breadbasket of Europe’ so the war had a significant impact on imports from the Eastern European countries. The war has led to shortages of wheat and vegetable oils, impacting sectors including bakery items, snacks, and jarred goods.
The crisis demonstrated that British reliance on imported products can sometimes be a risky business, and by supporting local producers, independents can not only offer a stable foundation for their local food ecosystem but potentially avoid the impact of international fallout in the process.
Find out more about how the financial crash started here.
A dairy crisis in the UK
With Brexit wreaking havoc on European supply chains and fuel prices sky-high as a result of the war in Ukraine, farmers and retailers then had to manage a growing dairy crisis.
Paul Tompkins, the vice-chair of the National Union of Farmers dairy board, warned price increases were being driven by the spiralling price of feed, fuel and fertiliser and that higher shop prices for dairy products are likely to stay for the foreseeable future.
With fuel prices now reaching up to £2 per litre, these costs are only going to increase, meaning heightened dairy prices won’t be going anywhere soon. In fact, some producers are considering leaving the industry as these prices continue to soar.
Read more about the dairy crisis here.
Retailers call for cut to business rates
In May, businesses were calling on the then chancellor Rishi Sunak to initiate a cut to business rates to ‘level the playing field between online and bricks-and-mortar retailers’.
Cutting business tax would be one less thing to worry about, according to Mark Kacary, managing director of Norfolk Deli. “It might not pay for a whole member of staff, but it might allow businesses to invest that money on their business to improve their services, to enhance the customer experience, and to support other small local businesses.”
In order to balance out the financial gain from cutting business taxes, the big retailers proposed the cost to the government of removing business taxes could be recuperated by an online sales tax. However, indies questioned how this would work in practice. The British Independent Retail Association (Bira) suggested imposing a £2million sales threshold as it would therefore only apply to bigger retailers who can absorb this tax rather than independent businesses with much smaller profit margins.
For more information on cuts to business taxes, click here.
Consumers could be pushed towards indie retail
With food inflation potentially set to reach 15% over the summer, consumer shopping habits have changed significantly in the past few months. Experts believe the current crisis will push shoppers to embrace localism as they become more conscious about where and how they shop.
One perceived behavioural change is making smaller but more frequent shopping trips. As Andrew Goodacre, CEO of Bira explained, “There is no doubt that people will think about their car journeys and use of fuel. With this in mind there is a stronger possibility of people shopping more locally – probably doing a little shopping, but more often.”
Another habit retailers will see over the coming months is a reduction in eating out. However, while they aren’t splashing the cash in restaurants, shoppers still want high-quality food, so they will be looking to indie retailers to provide meals or cooking kits that replicate the feeling of eating out.
Find out how else consumers are turning to localism in the crisis here.
Pausing biofuel production
With food inflation at the highest value in 20 years, it is important that the government finds a way to bring down costs and increase food security in the UK, and outgoing prime minister Boris Johnson has proposed a cut to biofuel production as the solution.
According to Boris, the process of growing grains for biofuel is contributing to increased prices of food as the world struggles to adapt without its biggest exporters of wheat, Russia and Ukraine.
In fact, the think tank Green Alliance has said that pausing biofuel production in the UK would free up food for 3.5 million people, reducing food prices in turn as more crops are available for human consumption.
Read about the case for cutting biofuels here.