FOB News
#BetterWithBread Campaign: The pop up ‘Toast or Hands Cafe’ our latest PR activity is kicking off soon: https://www.fob.uk.com/toast-hands-cafe-opens-shoreditch-remind-us-life-betterwithbread/
Please put the link on your own social media channels to spread the word.
FOB 75th Anniversary Dinner – 27th September in London: Last few tickets remaining for this event. Please book your ticket before they are all gone! https://www.fob.uk.com/event/fob-75th-anniversary-dinner-27th-september-2017/
Economic News
CBI Industrial Trends Survey: Manufacturers report strong output growth .Production among UK manufacturers grew at the fastest pace since January 1995 in the three months to July, according to the latest quarterly CBI Industrial Trends Survey. The survey of 397 manufacturers also found that employee headcount increased at the fastest rate for three years and that hiring intentions for the coming quarter also improved. Optimism rose marginally in the three months to July, while export optimism for the year ahead rose at a slower, but still healthy pace.
Growth in total orders moderated in line with expectations, but remained robust. Domestic orders expanded at a strong pace, similar to the rate in the previous quarter, and growth in export orders also remained brisk, despite slowing somewhat.
Output growth is expected to continue to grow strongly in the quarter ahead and manufacturers are upbeat about prospects for overall demand. Domestic orders are expected to continue growing strongly, while expectations for growth in export orders improved to a four-decade high. Alongside robust expectations for demand, firms accumulated raw materials at the fastest pace since April 1977 and stocks of work-in-progress expanded at a record rate.
Against this backdrop, investment intentions improved across the board, particularly for training and retraining where planned growth in spending for the year ahead is the highest in over two years.
Meanwhile, input cost pressures cooled in the quarter to July and are expected to soften further in the near-term, while factory gate price inflation is also expected to be more subdued.
Key findings:
- 18% of firms said they were more optimistic about the general business situation than three months ago and 13% were less optimistic, giving a balance of +5%. Optimism about export prospects for the year ahead grew (+13%) at a solid pace
- 43% of firms said the volume of output over the past three months was up and 12% said it was down, giving a balance of +31%, the highest since January 1995 (+33%)
- 35% of businesses reported an increase in total orders, and 21% a decrease, giving a balance of +14%
- Domestic orders (+19%), expanded at a broadly similar pace to the previous quarter, with export orders growth remaining strong, despite slowing (+17%)
- 32% of manufacturers said employee numbers were up, and 13% said they were down, giving a rounded balance of +18% – the highest since July 2014 (+26%)
- Average unit costs grew at a more subdued pace (+20%). Growth in average domestic prices (+21%) and average export prices (+24%) was broadly unchanged
- Stock building of raw materials (+20%) was the strongest since April 1977 (+22%), whilst stocks of work-in-progress rose (+16%).
Key findings – looking ahead:
- Expectations for domestic order growth (+16%) are the most upbeat since April 2015 (+18%), whereas expected growth in export orders (+28%) is the highest in four decades (+37%)
- Expectations for output growth (+28%) are the highest since April 2014
- Unit costs growth (+5%) are expected to moderate further over the next quarter and domestic price inflation (+9%) is anticipated to be more subdued
- Investment in training and retraining in the year ahead is expected to increase at the strongest pace (+28%) since January 2015
Kantar Worldpanet: Inflation stable one year on from EU referendum: The latest grocery market share figures from Kantar Worldpanel, published today for the 12 weeks ending 16 July 2017, show market growth has exceeded 3% for the fourth consecutive period – the first time since November 2013. Supermarket sales increased by 3.9% compared to the same period last year.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Robust market growth this year has been boosted by higher grocery inflation, but consumers will be pleased to hear that price rises are no longer accelerating. Like-for-like inflation now stands at 3.2%, the same rate of increase as this time last month. One year on from the EU referendum – which had a marked impact on the price of imported groceries – hard-pressed shoppers could soon start to feel upward pricing pressures ease.
“June’s hot spell was good news for UK grocers, with sales particularly buoyant around the hottest June day for 40 years. Ice cream sales were up 34% in June alone, while sales of suncare products increased by 40% year on year as Brits enjoyed the unexpected sunshine. Over the 12 week period, celebratory shoppers spent an additional £158 million on alcohol. Fruit and vegetable sales also spiked – up 7% – as shoppers parted with an extra £170 million to help offset the summer indulgence.”
The success story continues for own label, with sales up 6.7% year on year: supermarkets’ own brand lines now account for just over 51% of spending – a record high. Fraser McKevitt continues: “While private label’s strong performance is partly down to consumers’ undying love for a bargain, it’s actually the pricier premium own label lines which are leading the way: up 13.9% compared with this time last year. In contrast brands are seeing considerably slower growth, up by just 0.9% year on year.”
Lidl was once again Britain’s fastest growing supermarket, increasing sales by 19.4% – its strongest growth since October 2014. Its market share has in turn risen to a record high of 5.1%. Close behind, Aldi’s sales grew by 17.9%, increasing its share of the market by 0.8 percentage points to 7.0%.
Elsewhere competition was tight as Tesco, Sainsbury’s and Morrisons saw sales increases of 2.3%, 2.2% and 2.1% respectively. The fastest-growing of the big four retailers, Tesco continued to perform well in its larger stores and also saw momentum buoyed by a particularly strong performance online. Fraser McKevitt comments: “Tesco clearly sees its online business as a crucial component of its ongoing recovery, evidenced by its move into nationwide same day grocery delivery ahead of the competition. It remains to be seen if this investment will pay off – while it has the largest share of online sales Tesco overall is still losing market share, down 0.5 percentage points to 27.8% over the past 12 weeks.
“Sainsbury’s benefited similarly from strong online custom, while its smaller Local convenience stores also contributed to the retailer’s 2.2% sales increase. After leading the move towards fewer multibuy promotions in 2016, Sainsbury’s is now aiming to further simplify its pricing by reducing price cut deals. This approach means that only 36% of the grocer’s products are currently sold on promotion, compared to an average of 42% across its big four rivals.”
Meanwhile Morrisons saw sales up 2.1% year on year, with the success of its ‘The Best’ range helping to increase premium own label sales by 13%. Growing for the fourth consecutive period, Asda attracted an additional 398,000 new shoppers to increase sales by 1.0% year on year. The retailer’s ‘Farm Stores’ meat and produce lines, which launched in April 2017, are now finding their way into just over a quarter of Asda’s baskets, generating sales of over £58 million.
Iceland’s market share remained static year on year at 2.1%, with sales increasing by 5.7%, while Waitrose and Co-op saw sales growth of 2.8% and 0.4% respectively. Online specialist Ocado grew sales by 11.7%, holding its overall market share stable at 1.3%.
An update on inflation
Grocery inflation now stands at +3.2%* for the 12 week period ending 16 July 2017. Prices have been rising since the 12 weeks to 1 January 2017, following a period of grocery price deflation which ran for 30 consecutive periods from September 2014 to December 2016. Rising prices in markets such as butter, fish and cola have been partially offset by falling prices in categories including fruit squash and cooked poultry.
*This figure is based on over 75,000 identical products compared year-on-year in the proportions purchased by shoppers and therefore represents the most authoritative figure currently available. It is a ‘pure’ inflation measure in that shopping behaviour is held constant between the two comparison periods – shoppers are likely to achieve a lower personal inflation rate if they trade down or seek out more offers.
Shrinkflation: As many as 2,529 products have shrunk in size over the past five years, but are being sold for the same price, official figures show.
The Office for National Statistics (ONS) said it was not just chocolate bars that have been subject to so-called “shrinkflation”.
It said toilet rolls, coffee and fruit juice were also being sold in smaller packet sizes.
At the same time the ONS said 614 products had got larger between 2012 and 2017.
The ONS said the phenomenon of shrinkflation had not had an impact on the overall inflation figures. However, in the category of sugar, jam, syrups chocolate and confectionery, the rate of inflation when adjusted for shrinking products was significantly higher.
Since 2012, the inflation rate for products such as chocolate was actually 1.22 percentage points higher, when the smaller size was taken into account. https://www.ons.gov.uk/economy/inflationandpriceindices/articles/theimpactofshrinkflationoncpihuk/january2012tojune2017
Other News:
Acrylamide: Member States representatives voted in favour of European Commission’s proposal to reduce the presence of acrylamide in food. The text agreed today will now be sent to the Council and the European Parliament. The two institutions will have three months to examine it before final adoption by the Commission. Full details are given in the press release which can be seen on the link below. The press release suggests the regulation will be introduced by the spring of 2018. http://europa.eu/rapid/press-release_IP-17-2028_en.htm?locale=en
FSA: Regulating our Future Programme Plan Published: The FSA has published a plan entitled ‘Regulating Our Future – Why food regulation needs to change and how we are going to do it’. It explains the direction that the FSA intends to take to create a modern, risk-based, proportionate, robust and resilient system for delivering regulatory assurance in England, Wales and Northern Ireland by 2020. The FSA has also noted that where appropriate it aims to ensure harmonisation of outcomes across the FSA’s reforms and the Regulatory Strategy in Scotland. Its plan is based on the work being undertaken through the FSA’s ‘Regulating our Future Programme’ in which FDF is engaged. https://www.food.gov.uk/news-updates/news/2017/16363/fsa-publishes-plans-future-regulation
Tesco: is launching a same-day delivery service across the UK to compete with online retail giant Amazon. The UK’s biggest supermarket chain already allows customers in London and the South East to order groceries for same-day delivery. Now it says it will extend the service across most of the rest of the UK by the end of August. Customers who order online by 1pm will be able to receive their groceries sometime after 7pm on the same day. Shoppers in London and the South East will be able to access the same-day service seven days a week. Elsewhere it will be available from Monday to Saturday. The firm says the extended service will give it the “biggest reach of any retailer in the UK, stretching from the Shetland Islands in Scotland to Cornwall in south-west England”. It says it will cover more than 99% of UK households, as opposed to 99% of the UK. Tesco recently extended its same-day click and collect service to 300 UK locations. Last month it also launched Tesco Now, a one-hour delivery service for central London customers.
Amazon: in conjunction with Morrisons – allows some of its prime customers to receive a food delivery within one hour of ordering it. At the moment Amazon’s service is only available in parts of London and Hertfordshire, but it too is planning on rolling out the service nationwide.
HSE’s Workplace Healthy Lungs Summit 2017 is being held on 22nd November 2017 at the QEII Centre, London. Lung disease remains a serious problem in the workplace contributing to an estimated 12,000 deaths a year and thousands more with life limiting conditions. This Summit will describe what HSE is doing about it, what you can do about it, and what science and evidence can tell us.
Who should attend:
- Employers
- Health and safety professionals, occupational health advisors and consultants
- Trade and sector bodies, unions, manufacturers of respiratory risk solutions and services
- Key industry sectors – construction, manufacturing (including stone-working, ceramics, and bakeries) and quarries
- Academics and professionals working on workplace lung disease
To book a place and for more information go to: www.hsl.gov.uk/healthy-lungs E: HealthyLungs@hsl.gsi.gov.uk
BEIS publishes review of Groceries Code Adjudicator: The Department for Business, Energy and Industrial Strategy published its delayed statutory review into the Groceries Code Adjudicator’s (GCA) performance however we still await news on possible extension of its remit. The report finds that the GCA is an exemplary modern regulator with a strong international reputation, but highlights the continued reluctance of suppliers to raise issues with the GCA.
Volunteers for the Institute for Apprenticeships Panel needed: As you may know, the Institute for Apprenticeships has put a call out for panel members to approve apprenticeship standards and assessment plans. Fifteen subject panels have been set up and as is often the case with FDM, food job roles have been split amongst at least four of the routeways; hospitality, engineering, science and logistics. The National Skills Academy for Food and Drink is leading this work for our industry and is looking for representatives to step forward to become Route Panel Members. The role will be required for up to two days a month for a two year fixed-term appointment. For more information visit Centre for Public Appointments. The deadline for applications closes at noon on 4 August 2017.