UK grocers could face gaps on shelves in small businesses go bust this winter as a result of the rising costs, the Food and Drink Federation has warned.
According to the CEO of food industry group, Karen Betts, “it is a worrying time” as food and drink inflation hits 12.7%, she told MPs on the business, energy and industrial strategy (BEIS) committee.
“Our industry feels caught in the eye of a pretty powerful storm at the moment,” Betts said.
“We know we have a huge responsibility to keep prices affordable, but all of our manufacturing companies are experiencing exponential rises.”
Betts added: “If the worst were to happen and some companies couldn’t make ends meet, we could see a tightening of supply in certain products that we find in shops.”
The Covid-19 pandemic and the war in Ukraine have put huge strain on the food and drink supply chain, and now the high energy costs are further squeezing companies that are energy intensive or are reliant on coal and CO2, Betts continued.
“Whilst some work has been done by the government and by companies to introduce more resilience into the system, it is still pretty precarious and that will feed into price rises.
She went on to say that businesses have been cutting costs and introducing energy efficiencies wherever they can to keep food available, but urged the UK government to step in with more support for households in paying their energy bills too.
She said: “Our industry is struggling to absorb the level of regulation that’s coming at us on things like plastics and packaging – where we know we have got to get to good outcomes and we know we’ve got to get there quickly
“We need a review of what the priorities are here, more support for these investments that need to be made in the green transition, and more listening to industry on how progress can be made in a more efficient and streamlined way than it’s currently envisaged by government.”