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Price drops give foodservice operators opportunities in 2020, suggests Foodservice Price Index

20 Jan 2020
Prices across the foodservice sector dropped to their lowest point for seven months in November 2019, according to the Foodservice Price Index from CGA and Prestige Purchasing.

Overall prices are at the lowest since April 2019 and the report forecasts further decreases in the next few months giving foodservice operators the opportunity to reduce their costs and improve margins.

A greater certainty over Brexit should help businesses focus more closely on footfall and sales during a traditionally challenging period for the sector.

Phil McGuinness, chief operating officer at Prestige Purchasing, said: “The slowing of inflation should provide some reassurance to purchasers for the year ahead.

“With 2020 looking likely to bring falls in multiple categories, along with certainty around Brexit bringing 12 months of stability, we are likely to see further reductions within the Index, which can be used to maximise margin or drive sales.”

Good growing conditions for seasonal vegetables such as onions and potatoes have resulted in the vegetable category of the Index falling both month-on-month and year-on-year.

In contrast the fruit category has recorded large prices increases, with previous overproduction in Spanish citrus crops leading to low tree energy in 2019 and yields for farmers that were down 60 to 80%- forcing prices upwards and leaving the category with year-on-year inflation of 16.2% in November.

Fiona Speakman, client director food and retail at CGA, added: “After an extended period of turbulence in foodservice prices, the signs of stability revealed in the latest Index are a relief.

“It’s particularly pleasing to see an easing of inflation in the vegetable category, but rising fruit prices and the imminence of Brexit are reminders of the need to stay vigilant on trends and purchasing strategies in 2020.”

Prestige Purchasing and CGA, using foodservice data drawn from 7.8 million transactions per month, jointly produce the Foodservice Price Index.