Risk of gaps on UK supermarket shelves if small firms collapse, food sector warns

theguardian.com:

Supermarkets could face gaps on shelves if small businesses go bust this winter as a result of soaring costs, the UK’s leading food industry group has warned.

“It’s going to be a really difficult winter,” Karen Betts, the chief executive of the Food and Drink Federation, told MPs on the business, energy and industrial strategy (BEIS) committee, pointing to the rise in food and drink inflation to 12.7%.

“Our industry feels caught in the eye of a pretty powerful storm at the moment,” she said. “We know we have a huge responsibility to keep prices affordable, but all of our manufacturing companies are experiencing exponential rises in their inputs, whether that’s the cost of ingredients, the cost of energy, the cost of raw materials, the cost of transport, the cost of labour.

“Companies are doing everything they can to cut costs. You’ll see advertising and marketing budgets slashed. You’ll see in some cases product lines being rationalised, but there are limits to all of that. Companies have to remain viable, so some costs are being passed on. Different businesses will be impacted in different ways and some businesses may not make it through.”

She said businesses were finding it impossible to fix their energy prices at an affordable price, and that most companies were switching to a daily rate because they were being offered “exponential” rates for a fix, with more volatility as a result.

Some energy intensive sectors, such as flour millers, coffee roasters and bakeries, have been affected more than others by the very high energy prices.

The committee’s chair, the Labour MP Darren Jones, asked whether supermarkets would be left with shortages of some food or drink items if companies went bust because of high energy bills.

Betts