Friday, 18 March 2022

Head Of JLP Says UK Is Facing Double-Digit Inflation

The Chairman of the John Lewis Partnership (JLP) has joined the growing number of business executives and politicians warning that the UK is heading towards double-digit inflation as the war in Ukraine adds to cost pressures already being felt across numerous industries.

UK inflation is already at a 30-year high of 5.5% and is expected to rise to almost 8% next month as energy bills soar.

Speaking on the BBC’s Radio 4 Today programme, Sharon White said: “Everything you can see in terms of energy prices from the impact of the Ukraine war suggests that we might well end up with double-digit inflation. My big worry is that it ends out being more enduring than anyone expects. So I think inflation is the big macroeconomic washout.”

NamNews Implications:
  • ‘UK is heading towards double-digit inflation…’
  • And this from an ex-government economist (Sharon White).
  • NB. Keep in mind that ‘double-digit’ starts at 10%…
  • Meanwhile, bankers are suggesting that, as high inflation will be temporary, workers will be tolerant on the impact on their living standards…
  • In your dreams…
  • And BTW, for those that feel that weakened Unions are in no position to negotiate…
  • …we could find that inflation already in the pipeline could breed effective resistance on the shop floor.
  • ...especially if inflation hits 10%!!
#'HyperInflation' #pipeline #bankers #energy

Monday, 14 March 2022

Fertiliser Crisis Could Lead To Food Shortages And More Price Rises

Farmers in the UK are facing the prospect of fertiliser rationing because of the war in Ukraine, which could lead to shortages of some foods in supermarkets and further inflationary pressure.

Russia is the world’s biggest exporter of fertiliser that is essential for growing crops and grass for cattle. Last week the EU imposed sanctions on three large producers, Eurochem, PhosAgro and Uralchem.

According to The Times newspaper, some fertiliser merchants have temporarily closed their order books because of a lack of supply while others are rationing the amount that farmers can buy. The UK imports around 60% of its fertiliser.

NamNews Implications:
  • Understatement of 2022?
  • The cost of fertiliser has also quadrupled in the past year from about £250 a tonne to nearer to £1,000 due to rising gas prices.
  • (and that before the Ukraine crisis…)
  • Moreover, the squeeze on fertiliser supplies is expected to limit the scope for substitution of lost Ukraine wheat production by other countries.
  • Time to try some what-ifs based on 10% and 15% inflation…
#HyperInflation #ShortSupply

Friday, 11 March 2022

JLP 'never knowingly underinflated' Raises Inflation Concerns

After hailing the success of its recovery programme yesterday, the head of the John Lewis Partnership added to warnings from across the retail and manufacturing sectors that Russia’s invasion of Ukraine will lead to a further jump in inflation.

Chairman Sharon White said that the conflict meant inflation would be “more persistent” and at a higher rate than previously expected.

She highlighted that the group was facing “significant persistent pressures” on costs, adding: “As far as we can, we’re trying to absorb the cost pressures … not all of these pressures are absorbable.”

Both the group’s Waitrose and John Lewis chains have been forced to increase prices on certain items in recent weeks, with prices at the supermarket chain rising by between 3% to 4% compared with 2% last year.

White said: “We’re expecting inflation to be more permanent, more persistent, and certainly at a higher level than when we were all gathered for half-year results [in September].

NamNews Implications:
  • '…invasion of Ukraine will lead to a FURTHER jump in inflation’
  • The key word is ‘further’ …
  • …in that most of the current inflation predictions (everywhere) are based on pre-Ukraine trends.
  • i.e. ‘prices at the supermarket chain rising by between 3% to 4%’ are ‘historical, pre-Ukraine.
  • We are now in uncharted territory, again (following Covid Lockdowns…)
  • Given the risk that JLP will be 'never-knowingly-underinflated' suppliers need to take the initiative.
  • Waitrose suppliers need more precision re inflation…
  • …and should explore ‘what-ifs ‘ starting at 10%…
  • …before opening discussions with the customer.
  • In other words, the supplier has to take the lead this time…
#UkraineInflation #NormalInflation #NAM-Initiative

Sunday, 6 March 2022

Grocery Price Inflation Accelerates; Discounters Gaining Share

Latest industry data confirms that prices in the grocery sector are continuing to rise, with further upward pressure likely to come from the conflict in Ukraine. With the market still contracting from last year’s pandemic-driven highs, Aldi and Lidl were the only physical retailers seeing growth and gaining share on the main multiples, apart from Tesco.

Take-home grocery figures from Kantar show that overall supermarket sales fell by 3.7% during the 12 weeks to 20 February in comparison with last year when the winter lockdown meant people were eating more meals and snacks at home.

However, sales remain 8.4% higher than the same period before the pandemic in 2020.

NamNews Implications:
  • With the global Covid fears/uncertainties now replaced by Ukraine worries, consumers are spending cautiously...
  • ...despite increasing their work-driven on-the-go consumption.
  • Time for suppliers to justify why they are not optimising their potential business with the discounters?
  • Especially given that Tesco and Ocado are the only other retailers growing at the expense of the rest…

#OnTheGoConsumption #FearUncertainty #Inflation

Wednesday, 2 March 2022

Sainsbury’s Closing Cafes As It Overhauls Eat-In And Takeaway Food Offer

Sainsbury’s is set to close 200 of its in-store cafes and some of its hot food counters as part of an overhaul that will see it roll out its new Restaurant Hub food hall format.

The retailer stated that it wants to transform its eat-in, takeaway and home delivery food and drink offer to give customers a better experience. Sainsbury’s has been trialling The Restaurant Hub concept at its Selly Oak store in Birmingham in conjunction with the Boparan Restaurant Group (BRG). It features a range of restaurant brands, including Caffè Carluccio’s, Gourmet Burger Kitchen, Ed’s Diner, and Slim Chickens.

The two companies are planning to open 30 more The Restaurant Hubs in the next year, with the intention to accelerate the roll-out if the format proves popular.

Sainsbury’s will also open another 30 Starbucks coffee shops in its supermarkets in the next twelve months, bringing the total number to 60. Working with BRG and Starbucks, Sainsbury’s plans to overhaul its offer in 250 supermarkets over the next three years

NamNews Implications:
  • Lockdown and Takeaways says it all…
  • But one of many fundamental shake-outs arising.
  • Benefits for those businesses that can recognise the change, and act decisively…
  • How about you?
[Just one of 12 news items in today's NamNews bulletin]

#LockdownDamage #HospitalityChange

Monday, 28 February 2022

Tesco’s Price Matching Scheme Now Following Aldi’s Price Rises

Amid soaring food prices, Tesco’s ‘Aldi Price Match’ scheme has gone into reverse.

The scheme had originally been conceived as a way of Tesco improving its competitiveness by cutting prices on everyday products to match Aldi to halt shoppers switching to the discounters.

According to trade publication The Grocer, Tesco is now raising the price of matching lines to keep up with increases at Aldi.

The report noted that Tesco’s determination not to let the pressure off the discounter despite cost inflation, meant Aldi was raising prices on some price-matched lines ahead of an identical increase by the supermarket giant. This has meant that Aldi was briefly more expensive than Tesco on some lines involved in the scheme.

NamNews Implications:
  • All depends on shopper perception.
  • The real bargain-hunters will capitalise on some of the Tesco price-lagging…
  • But in general, most shoppers will simply ‘see’ the Aldi Price Match initiative in action…

Wednesday, 23 February 2022

GSK Unveils New Name For Consumer Healthcare Spin-Off

GlaxoSmithKline (GSK) has revealed that its Consumer Healthcare business will be called Haleon following its planned spinoff and stock market listing this summer.

The name, pronounced “Hay-Lee-On”, was inspired by the merging of the words ‘Hale’, which is an old English word that means ‘in good health’ and Leon, which is associated with the word ‘strength’.

The demerger of the Consumer Healthcare business is planned to take place by mid-2022, creating a standalone entity with sales of around £10bn from brands such as Sensodyne, Voltaren, Panadol and Centrum.

Once separated from GSK’s pharmaceuticals and vaccines operations, the new company will be led by the unit’s current Chief Executive Brian McNamara and recently appointed Chairman Designate Sir Dave Lewis, the former boss of Tesco. Haleon will be headquartered at a new campus in Weybridge, which is expected to open at the end of 2024 and will include an R&D centre and a shopper science lab.

NamNews Implications:
  • Combination of new name and ‘separate’ existence, ‘independent’ of group…
  • …means more focus on consumer optimisation.
  • Time for rivals to reassess relative competitive appeal…

Thursday, 17 February 2022

Price Rises Drive Growth At Nestlé, With More To Come

The world’s largest food manufacturer has posted its strongest growth in developed markets in a decade as it benefitted from price rises and robust demand for coffee, pet food, and vegan products.

Over the year to 31 December, Nestlé’s sales rose 7.5% on an organic basis to CHF87.1bn (€83.2bn), of which 2% came from price increases to offset “significant cost inflation”. This trend accelerated in the final quarter of the year, with prices up 3.1%.

The group stated that growth was also supported by continued momentum in retail sales, a steady recovery of out-of-home channels, and market share gains.

Nestlé’s coffee business was the single largest contributor to growth in 2021. Sales of Starbucks-branded products jumped 17.1% to CHF3.1bn, whilst the Nespresso division reported growth of 8.8% to CHF6.4bn

NamNews Implications:
  • Nestlé is big enough in most markets to be able to ensure appropriate price rises across its brand and retail portfolios.
  • “Significant cost inflation” has been factored into its price increases…
  • …in a “super volatile environment”.
  • Rivals need to reassess relative competitive appeal, by category, retailer and geography…
  • ..Now
#ShelfPriceInflation #CostPriceInflation #Negotiation #Power