Page 11 - Essentially Catering Issue 85
P. 11

Essentially Catering Magazine - January 2019

        Industry News

        Brexit causing                                        Allegra report

        instability in                                        looks at

        food markets                                          European coffee

        The Annual Report of the CGA Prestige Foodservice Price   shop market
        Index, published recently shows that while food and drink
        inflation for foodservice operators has reduced during
        2018, many food markets remain highly unstable in the
        period leading up to Brexit.                          Costa Coffee is Europe’s largest branded
          The Fish & Seafood category for example has risen   chain, holding 8.7% market share with
        over 25% in the past year, driven by lower catch quotas   2923 stores across 12 markets,
        and strong demand for cod and haddock and Oils & Fats   the majority of which are in the
        have leapt over 30% as higher butter prices have filtered   UK, according to Project
        through. Sugar is the only market to see consistent falls in   Café Europe 2019,
        price driven by higher global production in a market with   World Coffee Portal’s
        flat demand. On the full basket of goods average, inflation in   comprehensive report
        2018 currently stands at 3.3%.                        on the diverse European
                                                              coffee shop market.
                                                                The second largest
                                                              operator, Starbucks, has
                                                              just over 2600 stores, but is
                                                              present in twice the number
                                                              of European countries than the
                                                              market leader. McCafé is the third-
                                                              largest branded coffee chain, with
                                                              2376 outlets across 17 national markets,
                                                              representing 7% market share. Together these chains
                                                              comprise nearly a quarter of the total European branded
                                                              coffee shop market.
        No-deal Brexit
                                                              Brexit impasse brews trouble for UK
        A no-deal departure from the EU creates a particularly
        unstable position on food prices due to the likelihood of up to   The UK remains Europe’s most developed coffee shop
        20% fall in the value of Sterling, shortages of fresh product   market, with a burgeoning crop of 5th Wave operators
        for an unpredictable period, and the possibility of new trade   driving innovation and influence across the continent.
        tariffs with the EU.                                  Ongoing uncertainty regarding the UK’s future relationship
          David Read, Chairman of Prestige Purchasing, explained:   with Europe continues to frustrate planning and investment,
        “In the event of no-deal the outcomes are not in our own   with labour shortages, rising costs and diminishing
        hands as a nation. For example, if the French were to erect   consumer confidence causing serious concern among coffee
        a Customs post in Calais in April this would likely cause   businesses.
        severe disruption to freight traffic going in both directions.   Location, quality and atmosphere are key
        And while the imposition of trade tariffs on imported goods
        might be ignored by our government, WTO rules would   The majority of industry leaders surveyed by Allegra cite
        oblige the EU to impose tariffs on our food exports, which   good location as having the greatest impact on coffee shop
        would severely curtail export demand in some categories.”   performance, with coffee quality and store atmosphere
          Further pressure on Food & Drink pricing comes at a time   ranking second and third place. Over a third of industry
        of hardship for many companies in the sector, with Living   leaders surveyed indicated high rents and property costs as
        Wage increases, higher Business Rates, and slowing demand   the major challenges to their business, making these the top
        placing extreme pressure on margins.                  concerns among European businesses in 2018.

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