Lack of supply and high costs are on the Christmas forecast, says Lynx Purchasing

As Lynx Purchasing published the autumn/winter 2022 edition of its regular Market Forecast, hospitality businesses planning for Christmas face the challenge of forecasting the impact of fragile consumer confidence, while managing their food and drink spend as costs continue to surge.

Rachel Dobson, Lynx Purchasing managing director, said: "From the turkey dinner right through to the cheeseboard, the price of many seasonal products is high as the peak trading season approaches. Core menu items such as dairy, tinned tomatoes and cooking oil, which are part of a wide range of recipes, are seeing continued increases and price volatility.

"It will take a strict focus on sensible, planned buying to protect margins and profits during one of the most challenging trading periods the sector has known."

She added: "The sector has welcomed news of government support for businesses on energy costs, with the promise of a further review of the scale of help needed to come, but in the meantime, the reality is that consumers are seriously feeling the pinch and will think carefully about discretionary spend this year.

"The earlier operators can plan menus and update suppliers on their expected ordering levels for the peak Christmas and new year trading period, the better. That's going to be a challenge, because although we know many consumers will be cutting back on spending, it's not clear just how much that will affect hospitality spend this Christmas."

Poultry

The continuing impact of avian flu means that all poultry suppliers face addit-ional challenges to meet demand, over and above the impact of generally increased costs. Turkey, which sees an annual spike in demand, is likely to be particularly impacted in terms of price.

Meat

Feed costs have risen significantly in 2022, due both to the disruption to grain supplies caused by the Russian invasion of Ukraine, and the overall increase in costs. There have been reductions in beef and pork production in particular, as producers balance increased costs against the returns. Prices for the most popular meat cuts are likely to be high.

Potatoes

This summer's drought across much of Europe raised serious concerns about the size and quality of the 2022 potato harvest, and growers are reporting that the weather has had a significant impact on both the quality and quantity of the new season's crop. As well as fresh potatoes, this will see price increases for frozen and chilled products, such as chips and roast potatoes.

Vegetables

The hot weather also had an impact on root vegetables, as well as on cauliflower, cabbages and broccoli. With both quality and quality affected, prices can be expected to increase as demand rises towards Christmas. There are material shortages of canned tomatoes, and suppliers are seeing some previously agreed contracts cancelled. Availability will be a key issue, and where there are supplies, operators should expect significant price increases.

Dairy

Dairy producers have struggled to fully pass on the significant increase in costs, and as a result many have cut back on production.

This has seen prices for milk, butter and cheese, as well as cream used for food manufacture, rise sharply this year, although the market is starting to stabilise. Egg supply is also impacted by avian flu.

Cooking oil

The price of cooking oil remained a challenge as the war in Ukraine continues, despite agreement to release some supplies. Sunflower oil is used for frying as well as in the production of a broad range of essential food products.

Dobson added: "The impact of high inflation, along with increased labour, energy and transport costs and lower consumer confidence, are all part of the big picture that hospitality and catering operators have no choice but to endure in the run-up to the peak Christmas trading season, and into 2023. However, with a focus on disciplined buying, costs can be controlled.

"This year, it will be more important than ever to plan a range of menus at different price points. Not every group of customers will be confident to book a full Christmas dinner with all the trimmings, so by offering choices, such as a two-course Christmas special or a buffet, operators will be able to appeal to a range of customer budgets.

"Keeping suppliers in the picture and letting them know in good time about reduced order levels is a better strategy than placing last-minute orders for stock that may not be available."

Buying advice

• Buy the most cost-effective pack size, whether a box, case, or tin.
• Check orders carefully and report incorrect or damaged goods to the supplier, and make sure your account is credited.
• Avoid delivery charges by meeting minimum order amounts.
• Be organised, plan ahead and order in good time. -Avoid last-minute "lazy" or disorganised purchasing, so you order from the right supplier.

Lynx Purchasing

Lynx Purchasing works with more than 2,200 accounts in the hospitality and catering sector, on a no-membership and no-contract basis that offers like-for-like products at lower prices and often better quality than operators could obtain by negotiating alone.

As purchasing professionals, Lynx works with leading suppliers in the hospitality and catering industry. These include specialist fresh food suppliers, wines & spirits, catering equipment providers, utilities, and specialist service providers such as telecom, business rates consultancy and waste management.

A free copy of the Market Forecast can be downloaded from the website at www.lynxpurchasing.co.uk. Keep up to date with Lynx Purchasing through LinkedIn. For more information call 01325 710143 or email hello@lynxpurchasing.co.uk