The maker of Birds Eye frozen fish fingers has joined the supplier of Walkers crisps in following the lead of Typhoo brand tea and Marmite toast spread producers in asking supermarket operators in Britain for double-digit price increases. The request comes as production costs have risen significantly for manufacturers in the UK forced to pay more for imports priced in euros and dollars.
“Increasing prices is not a decision we take lightly, and the last time it was necessary to raise prices was in 2012,” said Wayne Hudson, managing director of Birds Eye’s UK and Ireland operations. “We have been in open and collaborative conversations with the retailers for some time now to address the situation and minimize any impact on our customers. We are working hard to try and absorb these costs as much as possible,”
The British pound has fallen 18% in value against the US dollar since a slim majority of UK voters opted in June to withdraw from the European Union. Birds Eye, a unit of Feltham, England-based Nomad Foods, is seeking a 12% price hike to offset higher costs of dollar-denominated imports of frozen fish blocks and other raw materials essential in producing its range of seafood offerings.
According to a report in the Guardian newspaper, Birds Eye may have to downsize packs of some products to make up for cost increases unless retailers permit the requested price rise. The number of fish fingers in a box, for example, could be reduced from 12 to 10, or from 20 to 18.
Discussion of the inevitability of higher prices in Britain as a result of the Brexit vote and subsequent devaluation of sterling was rife among frozen food exporters to the United Kingdom during the recent SIAL exhibition in Paris.
“UK consumers are starting to realize that they are quite dependent on value-added food products as well as commodities from suppliers in Europe and elsewhere in the world,” an executive from a Belgian company told FrozenFoodsBiz.com. “Buyers will definitely have to pay more for imports. This is certainly the case with vegetables, as the harvests of a number of key crops have come up short due to extreme weather conditions.”
Meanwhile, after a standoff that ran for several weeks, Morrisons recently raised the price of Unilever’s Marmite toast spread by 12.5% to £2.64 ($3.22 per 250-gram jar). The Guardian reported that the price increase at the UK’s fourth-largest grocery store chain came just a few weeks after market leader Tesco yanked Marmite and other Unilever brands, including Ben & Jerry’s ice cream, from its shelves rather than pass on the supplier’s higher price request to consumers.
The Tesco-Unilever spat is now over. While details of the resolution were not made public, a Tesco spokesman commented: “We always put our customers first, and we are pleased this has been resolved to our satisfaction.”
“Tesco recognizes that Unilever’s costs have gone up, but they wanted to argue a little bit. The government doesn’t really want to publicize the negative impact of Brexit. Now Tesco can say: ‘Look how we fought for you’,” commented Bruno Monteyne of Bernstein Research.
Market analysts believe that food prices in Britain, which had pretty much been kept in check due to retail price wars spurred by discount retailers over past few years, are now likely to climb until the value of sterling relative to the euro and dollar stabilizes or regains strength.
“Brexit has been a trigger that started this and it is likely that other companies, which are reporting in euros, including the likes of Nestlé and Ferrero, will follow suit,” said Pinar Hosafci, a senior food analyst at Euromonitor International.
