GTI report reveals new food price pressures

PanARMENIAN.Net - Food producers, that until now have been absorbing higher costs, are set to increase their prices, according to the latest findings of Grant Thornton's Food and Beverage International Business Report.

The report highlights that in many developed nations, household budgets are being squeezed by high unemployment, flat earnings growth and high inflation. Powerful supermarkets, trying to appeal to cash-strapped consumers, are exerting pressure on producers to keep prices low whilst maintaining their own margins. And with agricultural prices increasing 45% between June 2010 and February 2011 (World Bank), food and beverage (F&B) producers have struggled to maintain their profit margins. Unable to continue absorbing rising costs, 41% of F&B businesses now expect to increase their prices over the next 12 months, compared to only 12% a year ago.

Jim Menzies, global food and beverage industry leader at Grant Thornton, said: “Most producers in this sector will be battling to protect margins. Focusing on cost savings and productivity gains must be a priority. ”