Cooking Ingredients and Meals: Half-Year Update H1 2023

June 2023

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.

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This report comes in PPT.

Key findings

Strongly fluctuating prices for ingredients cause great uncertainty

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.

Edible oils will face more challenges

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.

Rapidly increasing energy costs reduce forecast growth for frozen meals

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 lose their pandemic push

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.

Several major players are likely to continue increasing prices in 2023

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.

About this briefing
Scope
Key findings
Level of stickiness of inflation and uncertain global situation determine forecast
The UK continues to face challenges with supply in first half of 2023
Updated data for India includes rise of almost 800,000 tonnes
The many layers of global inflation
Industry impact: High price volatility among key commodities in 2022 and 2023
Inflationary pressure continues to bear down hard on cooking ingredients and meals
Problems in olive oil production expected to push up retail prices
Meal kits expected to face more challenges
Higher energy costs put pressure on frozen meals in Western Europe
Extraordinary price increases in Japan, aggressive forms of pricing strategies in China
Big players in the market all increase prices in retail
Kraft Heinz continues making profits due to strongly increasing its product prices
Nestlé realigns its frozen pizza portfolio in turbulent times
Companies will have to deal with demand and increasing costs in different ways
Conclusion: Final considerations
Global baseline outlook: Improved growth in an increasingly multi-speed global economy
Global inflation moderates only gradually, as price pressures show signs of persistence
Real GDP annual growth forecasts and revisions from last quarter
Data and reporting timeline: Cooking Ingredients and Meals
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