Price Index (FPI)Monthly Snapshot - April 2018

CGA Prestige Foodservice

Your source for accurate data, analysis and insights into today’s food prices.

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To receive the full volumetric data, detailed category and subcategory performance and a more in-depth analysis, please contacthello@cgastrategy.co.uk or michael.luke@prestige-purchasing.com to purchase.To receive the full volumetric data, detailed category and subcategory performance and a more in-depth analysis, please contactfood@cga.co.uk or michael.luke@prestige-purchasing.com to purchase.

CGA-Prestige FPI Report - April 2018

Oils & Fats is the category to watch this month after a significant

year on year movement of 28.3%, the largest change seen in any

category since the launch of the Foodservice Price Index. Current

reports from the Food and Agricultural Organisation attribute this

to a 6-year low in soybean production by one of the largest soybean

exporters in the world, Argentina, driven by sustained dry weather. The

deficit is forecast to be so severe as to drive a year on year reduction in

global soybean output. This seems all the more dramatic in our Index

because of the prioritisation of exports to China and the US,as both are

closer and currently more valuable markets. There is promising news

that this is simply a momentary jump, as elsewhere in South America

Brazil is expecting a bumper soybean crop, with over 70% of this year’s

harvest completed. A drop in Sino-US soybean trade driven by tariffs

could also ease tightness in the market.

Fruit is also suffering from the poor weather seen in February and

March across much of Europe that ended up killing or spoiling many crops

that would otherwise soon be appearing on shelves. Currently year on

year inflation stands at 9.4%, reflecting reduced volumes of everything

from oranges to apples to peaches. Strawberries, which at this time

of year mainly come from the Andalucia region of Spain, have been

hindered by the severe rains seen from Storm Emma that hit the Iberian

Peninsula around the beginning of March. Crops are now coming onto

the market, but prices are notably inflated compared to last year—though

this should ease as more favourable weather has appeared since mid-

March. With rainfall affecting crops in the US and Brazil as well as Spain,

orange prices reached their highest point for 5 years.

In contrast to those categories, the Jams, Sugars and Syrups category has fallen yet further as global supply only continues to

increase. As previously reported, Brazilian processors have been

converting large quantities of cane into ethanol rather than sugar, to

keep the price buoyant. This has been scuppered by India and Pakistan

seeing unmanageably high output in some cane growing regions, to the

point of resorting to distress sales and export subsidies so that farmers

and mills are actually able to sell their massive stockpiles. The EU has

also seen further improvement on sugar beet yields, with England

experiencing “near perfect” conditions for beet growing over the past

months and producing record breaking volumes.

After our in-depth look at Soft Drinks over the past few months, as

the index continues to move upwards and display well above average

inflation, we have reached the last month of pricing before application

of the levy begins. We are keen to see whether these unusually large

increases in the index will ease once the tax takes effect, especially as

this category usually only sees year on year changes in line with CPI due

to the low impact of ingredient pricing on product cost.

In the Dairy category we have seen action from Muller to offset

the infamous volatility of the category by offering secured price dairy

contracts as part of the new deal with Lidl. The current offer is 28ppl on

up to 50% of milk output for up to 3 years, alongside the existing system

of futures contracts available through the company. This is below the

spot prices seen in March and even below the 5-year average for milk

prices, but the security may be tempting enough for farmers.

The Foodservice Price Index (FPI) is up by 1.8% year on year in March 2018

The index has moved notably upwards this month, returning to more normal levels following the low seen in data for February. The Oils & Fats

category has seen massive inflation due to poor soybean output from Argentina and increased biofuel usage. Fruit is also tracking high following poor

weather, but inflation in Sugar has fallen as supply from both sugar cane and European beet keeps increasing without corresponding demand.

CGA Prestige Foodservice Price Index (FPI) - Monthly Snapshot

Food & Non-Alcoholic Beverages - FPI vs CPI

Executive Summary

106.7106.0

109.2110.0

108.4

110.8

108.8107.8

106.2 106.7

104.4

103.0

108.6

99.3 99.5 99.6 99.4 99.2 99.4100.2 100.6

101.1101.8 101.7 101.9

102.3

96.0

100.0

104.0

108.0

112.0

Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18

CPI FPI

+1.8%

Prestige Purchasing are a leading expert in Value Chain. We provide knowledge, insight, and practical support to hospitality and foodservice businesses. We improve profitability by improving the way in which our clients source and manage what they sell. Our services are tailored to allow us to assist businesses of any scale in the sector. Offering a bespoke consultancy based model we offer services contextualised in the statements below for our clients. Supply OptimisationFor growing businesses that have not yet established a mature supply chain function we provide outsourced services that deliver profit improvement through the application of best in class techniques, using our team of experienced and capable buyers.

Procurement TransformationFor established businesses that have yet to establish “strategic procurement” and wish to introduce national, regional or global supply arrangements, often establishing their own team to develop and maintain them. Procurement Support ServicesA portfolio of services to support fully established procurement and supply chain teams in their mission to add value to their organisation. Services include Insight, Training, Analytics and Benchmarking. Our services are 100% Transparent FIXED fee based and deliver between 2 and 7 times return on investment all backed up with financial guarantees. We do not aggregate volume with other operators and build each project or service bespoke for each of our clients’ needs delivering the maximum benefit to our clients bottom line.

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CGA is the data and research consultancy of choice for the out-of-home food and drinks market, specialising in market measurement, consumer research and location planning.

What sets CGA apart is its unique ability to access the three key types of data (supply, demand and consumer) and then triangulate this data to provide the most complete and accurate picture of anyone in the out-of-home sector.

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