Inflationary pressure, supply chain issues and the cost of living crisis have put pressure on retail prices, making it challenging for companies to cover costs and retain consumer loyalty.
This report comes in PPT.
Prices for many commodities will remain highly volatile in the first half of 2023. In particular, prices for agricultural commodities, such as grain, rose sharply during 2022. Although global prices were no longer at this level at the beginning of 2023, other ingredients, such as sugar, have become much more expensive, which put pressure on manufacturers.
Prices of various edible oils have also risen. In addition, various extreme weather events will lead to severe droughts in 2023, especially in the Mediterranean region, with olive harvests expected to be severely affected. The edible oils category will therefore not stabilise in 2023.
In addition to the sharply rising costs of various foodstuffs, energy prices are a key factor in inflation in many countries. In Europe, in particular, the price of electricity has risen sharply, causing higher costs for cold chain for frozen meals. Therefore, prices for such products were revised upwards more than chilled meals in the May 2023 update.
Meal kits are increasingly experiencing headwinds. During the pandemic, companies like HelloFresh grew strongly, but the current cost of living crisis has not only led to increasing costs but also more consumers questioning luxury formats. In addition, online supermarkets have become a serious competitor, consequently volume sales for meal kits have been downgraded.
The big players of the industry have positioned differently when it comes to their pricing strategy for 2023. While Kraft Heinz, which is especially strong in North America, believes that most of its price increases have already happened, Nestlé and Unilever see the need to raise prices of their products further.
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