Cost of Potato Crisps Set to Rise
Pepsico Walkers, the biggest supplier of potato crisps in the UK market has sent a warning to all of its UK customers that the cost of potato crisps is set to rise.
Due to the sustained abnormal hot weather conditions over the past few months, they are experiencing some issues with the yield from their potato crop. The hot weather impact has reduced absolute yields and has also produced smaller potatoes, which are slowing down production runs, in turn making them more costly.
So far, they have only harvested about 15% of the crop and based on the yield they estimate that nationally there will be a significant shortfall in potato volumes from this year’s harvest, which in turn will result in substantial increases in raw material costs.
Pepsico Walker’s priority is now to protect supplies and sustain controlled volume growth. In order to do this they will have to buy additional potatoes at spot prices and they are forecasting significant increases in higher costs per tonne going in to the 2019/2020 crop season. A key part of their supply “protection” plan is to reduce promotional activity and to increase price points thus dampening down consumer demand. Therefore retailers can expect to see wholesaler prices increasing and less deals on offer.
While we don’t want to hear about price increases, I think this proactive move is to be applauded, as stock availability is prime ahead of price. And we don’t want another CO2 debacle on our hands.
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