NZ Market Watch
Growing concerns on price increases
Due to the ongoing impacts of the global pandemic, we are seeing unprecedented cost movement in the Foodservice industry in New Zealand. The factors that are contributing include: increases in the cost of global shipping of ingredients, packaging and finished goods, and a reduction in shipping routes to New Zealand ports. As a country we are facing an ongoing price inflated market, with cost price increases being advised into our business at record volumes. This is further exacerbated by the increase in logistical costs for New Zealand international and domestic supply chains. Our suppliers are also seeing cost increases in their overheads such as labour, utilities, and fuel costs.
Impacts on local & international supply
The lasting effects of COVID has significantly impacted our local market and while our focus is to absorb what we can, it is an industry-wide challenge.
As demand increases on orders and services across the country, shipping costs and delays may become increasingly more visible.
The cost to import a 40-foot container into New Zealand is roughly four times the level of pre-Covid 2019. This substantial increase has played a significant role in price increases across the wider Foodservice market.
With the delays and closures of ports around the globe, goods are not only more expensive, but they also take more time to get to your kitchen, cupboard, or to your customer’s plate.
Some goods might not be available for import as the country of origin may place restrictions of their own. Sourcing local suppliers for time sensitive goods and finding local alternatives are an option to reduce or minimise delays.
What this means to businesses
Bakeries, Cafés, and Fast Food
Cooking oil is not being prioritised on the ships coming into New Zealand, resulting in a much lower volume than expected. Argentina, Canada, China, India, Pakistan, and Singapore are facing production shortages which is having an impact on the global oil market.
Indonesia is banning their palm oil exports, and alternatives such as soy oil, sunflower and rapeseed are expected to be impacted. The effect this will have on the international market could see further restrictions in the edible oil range.
The events in Ukraine will have an impact on sunflower exports, although they will continue to produce it.
In the commodities space, wheat crops and rice fields are struggling due to poor weather which is currently impacting the supply of flour and rice into the production mills.
Accommodation, Bars & Clubs, Hotels, and Restaurants
International wines could see import challenges due to labour shortages, reduced harvest production, and increased freight costs, with European wineries affected more than other regions.
Strong beef export demand out of China and Australia has dictated that our prices have remained firm for some time since the start of the year. Pricing on M2 Bull and P2 Steer have remained steady. China’s lockdowns are still a concern for exporters, and we are seeing a downward pressure on P2 cow slaughter and prices. More downside is expected on cow prices heading into the winter months.
Poultry is currently under industry wide labour shortages. In addition, there is a significant cost increase due to feed, freight, fuel, and utilities. These unprecedented increases in feed costs are adding significant strain to the base cost of the chicken industry.
Ukraine’s developing situation has clogged up ports in Europe with exponential shipping delays, and few container rejections at the border has kept the imported pork prices and demand high, with added shipping and freight costs, meaning a higher shelf price to the end user.
The lamb industry’s extreme labour shortages remain a key issue, with kill data showing major declines in North Island lamb production.
With strong export demand and the inability to get heavier stock killed is tempering the demand for lambs, which has meant that prices remain firm for both lamb and mutton.
Seafood price increases are impacted due to labour and freight costs, and raw material shortages, combined with potential shipping delays for crumbed fish fillets due to recent lockdowns in China.
During winter, fresh fish supply will be limited due to weather conditions and fishing quota restrictions that fishermen face through September and October. Notably tarakihi and gurnard quota figures have been reduced over the past two years.
Aged Care, Caterers, Government, Schools, and SME’s
The NZ Government has legislated, that takeaways and single-use marketplace can no longer use “polystyrene takeaway containers” from 1 October 2022 as they are not recyclable. In our local market, polystyrene is the cheapest takeaway packaging however there are many alternatives, including sugarcane, kraft board and polypropylene plastic (recyclable) containers.
Face masks are still available at a lower cost than 12 months ago, now that all are sea freighted instead of urgent airfreight which tripled the cost at the beginning of the pandemic. Further to this, due to reduced demand on mask producing factories, manufacturing cost has also reduced, and we have already seen this flow though to our customers. For single-use gloves, we have also seen significant price reductions back to pre-pandemic levels for vinyl gloves and we expect to see further reductions in the cost of nitrile gloves flow though over the next few months.
Fruit and vegetables will be impacted more with the change of seasons either occurring later or earlier than expected. Moisture content and hours of sunlight will play a key factor as well. Over the past three months fruit and vegetable prices have seen an increase between 15-18% compared to last year. Main products that factored into the increases were broccoli, iceberg lettuce, cabbage, and tomatoes.
How we can help
To reduce the impacts on your business and your customers, our Merchandise Team is focused on re-negotiating the range and supply of goods into Gilmours to minimise the inflationary impact and to ensure consistency and surety of supply.
Sign up to our produce and butchery weekly deals to help your businesses bottom line, follow us on Facebook and Instagram for inspiration, talk with your Account Manager for menu planning or speak to us now on 0800 270 414.