Waitrose Warns of Price Hikes due to Washout Summer

Posted on 9 January, 2013 by Kirsten Kennedy

But Retailer Enjoyed a Successful Christmas

 Towards the end of last year, supermarkets and industry experts in the food and drinks sector warned that 2013 may yield several substantial price rises due to weather issues during the summer months affecting international harvests.

In fact, the price of items such as fruit, vegetables and wheat products have already increased – yet managing director of Waitrose, Mark Price, claims that the food price inflation already experienced this year can only get worse in coming months.

The heavy rainfall in the UK last summer, the second wettest the country has experienced since records began in 1910, prevented many farmers from planting crops to be harvested this year. This has greatly compounded the issue of potential food shortages in popular everyday items.

Poor weather at home and abroad is blamed for impending price rises

Furthermore, several countries the UK relies heavily upon for imports have suffered their own challenges which have lessened the available produce and bumped up prices substantially. The USA, for example, saw huge areas of farmland baked dry by drought conditions which hit corn production heavily, while our neighbours in northern Europe found their fruit crops drowned by similar rainfall levels as those in the UK.

Of course, the fact that grain production has dropped considerably means that even the price of meat will increase over the next several months. Farmers are being forced to pay ever higher amounts for animal feed, leading many to renouncing livestock farming altogether in favour of crops.

Mr Price has warned consumers that increasing shopping budgets to account for price hikes may be prudent in the months ahead.

He said; “We are seeing input food inflation of around 3 per cent to 3.5 per cent, but we expect it to go up to as much as five per cent.

“In some commodities, the increases will be massive – it’s bread, vegetables, all produce.

“The apple crop was down 20 to 30 per cent so apple prices have to go up. You have only seen the tip of the iceberg.”

Fortunately for the upmarket supermarket chain, its sales over the Christmas period were very encouraging. While the John Lewis partnership owned company has a market share in the UK of only 4.5 per cent, compared to the 30.7 per cent held by rival Tesco, increasing numbers of customers of the “Big Four” are absconding to Waitrose for its quality and ethical approach to retailing.

The chain reported a 5.4 per cent increase in like for like sales between the 18th and 31st of December, improving upon an increase in like for like sales of 4.3 per cent in the weeks preceding Christmas Eve. This pushed the total sales for the Christmas season past the £300 million mark for the first time, giving all partners employed by the company something to really celebrate over the festive season.

Industry experts now believe that Waitrose’s growth in both property and market share will now surge ahead of that of its closest rivals and largest chains in the UK – Tesco, Asda, Sainsbury’s and Morrisons. The company currently operates 288 commercial properties in the UK, 18 of which were opened in 2012.

Mr Price spoke of his delight at Waitrose’s successful season, saying; “Our sales for the festive period as a whole have been record-breaking but the 12 trading days leading up to New Year’s Eve were exceptional as customers got ready for family entertaining and parties.

“The combination of our inspiring celebratory food and drink together with great value and offers proved to be a winning combination.”

While Waitrose celebrates its success over the holiday season, millions of consumers will be anxiously checking their budgets to try to make room for yet another rise in the price of essentials. Families will simply have to hope that this summer’s crops will prove more fruitful than last so both supermarkets and consumers will have something to celebrate by the time next Christmas comes around.

Do you think the price rises will affect the profits of the UK’s biggest supermarkets, or will consumers still be forced to buy all items on their shopping list but at a higher price? Should brands such as Waitrose and Tesco now be focusing on ways to lower their prices for their customers, or is making a profit to see them through turbulent economic times the most important aspect for businesses in these difficult financial times?




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