Processors face down cost and price pressure

By Rod Addy contact

- Last updated on GMT

Related tags: Price

83% of participants claimed retailers were pressurising them on prices
83% of participants claimed retailers were pressurising them on prices
Raw material costs and pressure to keep prices in stores low was causing concern for the vast majority of food and drink firms responding to Food Manufacture’s exclusive industry survey.

A total of 83% of businesses responding to the survey said pricing pressure from retailers was threatening the quality of own-label products through excessive value engineering.

Almost three quarters (74%) said that same pressure was threatening to cut into resources devoted to new product development (NPD) and innovation and 79% said excessive promotions were threatening to commoditise branded products.

'Intense pricing pressure'

One representative from the beverages sector said: “Rising commodity costs and intense pricing pressure from retailers is limiting the innovation that own-label companies can bring to the table.”

A huge proportion of respondents, 88%, predicted that raw material prices would cause increasing headaches for them in the coming year, versus 85% in a similar 2012 survey.

Undaunted

However, the survey’s participants remained undaunted by these weighty anxieties, with almost three quarters (73%) claiming they were more positive about the future of their company than they were a year ago.

And 62% said they still planned to invest more in NPD this year than they did last year.

Full results of the Food Manufacture annual survey are published in this month’s (July’s) copy of the magazine.

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