The year ahead
As attendees discuss 2022 at the FWD conference, we canvas the sector to find out what to expect in the next 12 months
NEIL TURTON, MANAGING DIRECTOR, SUGRO
“Next year will be tough, there is no doubt about that. The perfect storm of labour shortages, disrupted flow of raw materials and the deterioration of established supply chains still has a long way to run, sadly – and well into 2022.
The cost of labour relative to overall business costs will rise and there is likely to be inflationary pressure right across wholesale.
In recent months, our challenge as a buying group has been as much about securing stock as obtaining the best price and margin.
I suspect this will be a theme for a while yet. These factors do affect everyone else, of course, and the challenge we have as Sugro, and as an industry, will be to make sure we fight our corner so that stock priority is not just about the major supermarkets, as can so often be an unfortunate default.
High cost pressures on product and labour also mean that we have to be more efficient in how we operate, how we market products and our own cost structures. The success of Sugro or our wholesale industry will be determined by how we rise to these challenges – and others like HFSS.
In a lot of ways, it’s an exciting time and never dull. There are some real opportunities too – staycations will continue to flourish and the convenience and hospitality markets are poised to recover as delayed spend from consumers hits the market and (hopefully) Covid concerns fade in customers’ minds.
At Sugro, we’re confident sales will continue to grow for us and our approach of working with SME wholesalers on collective and individual success plans will work. Like everyone else, we need to face the tough questions and find working with SME wholesalers answers, but that’s what we are here to do.”
KATE BANCROFT, GROUP MARKETING MANAGER, COUNTRY RANGE
“With the effects of the pandemic still wreaking havoc across much of the foodservice sector, it can be difficult to predict what will happen in the next month let alone year. However, one key issue facing hospitality is still staff shortages. A shortage of haulage drivers is an immediate concern as hospitality begins to fully reopen, but it’s also the damage that has been done to the reputation of a career in foodservice.
With many catering staff placed on furlough or, worse, made redundant when the pandemic struck, a career in hospitality doesn’t look as glamorous as it once did, which is why we’re passionate about supporting the next generation and encouraging more people into the industry through our Student Chef Challenge.
In terms of hospitality operators, it’s defnitely been a tough couple of years and they will need plenty of support to get back operating at full capacity. Our member advice, sector guides and menu ideas can be vital in helping draw back the crowds, but operators also need to be proactive in their offerings.
The use of delivery/subscription boxes has been a real success out of the pandemic and we believe this will only continue and grow stronger. Operators who can, need to be aware of this and, if possible, build into their offering.
With some people still wary about visiting foodservice outlets, we think people are going to need a reason to leave home, so creating an experience/adding value will become even more important to encourage them to do so.
Another trend that has been around for a few years and is showing no signs of going away is plant-based food. We believe demand is only going to get stronger as more consumers choose a flexitarian diet and as more plant-based products enter the market and become easier for consumers to source.”
JOHN KINNEY, MANAGING DIRECTOR, UNITAS
“The wholesale channel continues to be a challenging environment, with increased minimum wages, new legislation, Covid lockdowns, staffing problems and supply issues through driver and raw material shortages and the knock-on efect of Brexit.
Yet despite all of these issues, independent wholesalers have shown tremendous resilience over the past two years to adapt their business models to work through these issues.
We’ve seen a resurgence of shopping locally due to Covid and an appreciation of the convenience channel from consumers. We have seen many retailers now reinvesting in their shops to try and maintain this growth they have experienced for the long term. This gives me great confidence in the future of the wholesale channel.
The role of the group is to continue to support our members with strong trading terms, excellent promotional programmes, latest category insights and core range support. Support services to reduce costs in their businesses remain vital to help our members grow sales and reduce their operating costs.
Being the biggest independent buying group allows us to negotiate competitive trading terms and promotions across all sectors, retail and OOH. Creating a cost-effective membership infrastructure that recognises the independence of our members, providing them with the flexibility to engage and the freedom to express their local point of difference and to execute their personal business strategies within the framework of the group is vital to long-term success for our members, our suppliers and the group as a whole.”
JUSTIN SLAWSON, JOINT MANAGING DIRECTOR, MEVALCO
“We have learned fast how to adapt our services and business in the wake of Brexit and Covid. Being a small business, we can react fast with agility, which has stood us in good stead.
As the hospitality sector has unlocked, we’re trading at our highest level ever. The coming 12 months remain critical in staying close to customers, finding out how their business models have changed and adapting our service accordingly.
The market has certainly tightened in terms of supply and product availability, alongside driver shortages, in getting those products to where they need to be. Those wholesalers that can deliver on their promise will win. Here at Mevalco, we’ve invested in new vans and new people and are ideally placed to capitalise in the coming months on the fast-growing demand for our products.
We always stay close to engage with our bank, our backers and our vehicle leasing company every step of the way. They are an integral part of our team and they may well be able to help, where help is needed. We are great advocates of collaborative working and sharing of best practice.
In the coming 12 months, we expect to see continuing challenges around imports due to Brexit. We are working to understand where the main expenditure will fall. We believe there will be additional costs in Spain and in the UK, per shipment. While on large orders, these increases can potentially be offset, on smaller quantities price increases are inevitable to the customer.
We have a concern that some of our smaller suppliers won’t have the know-how to be able to deal with the new paperwork and so we may not be able to import from them going forward. It’s too early to tell categorically at the moment, but the months ahead will give us the full impact of Brexit. Next year may be a bumpy road.”
DAWOOD PERVEZ, MANAGING DIRECTOR, BESTWAY WHOLESALE
“I see the year ahead as one of potential change with further consolidation in the market as the impact of the past 18 months starts to bite harder.
The disruption currently being evidenced in the supply chain due to labour shortages looks set to continue and there will, undoubtedly, be crunch times when seasonal demand creates pinch points alongside these labour shortages.
And don’t forget, we’ve yet to see the full impact of wage inflation. This wage infation, together with pressure on supply and demand – and Brexit – is already coming into play. I’d expect it to put more pressure on the economy. Not least, coming from a place of deflation, it will cause additional stress.
This could well impact on consumer demand as price inflation hits the average basket value, in which case we can expect to see more emphasis on value spend and customers will, inevitably, look for different ways to shop to get them the best value. Inflation is also likely to impact on eating out – potentially even more so than the convenience channel.
We’d expect to see that regulations and legislations will change consumer behaviour and demand, for example, HFSS, which is a critical factor alongside Covid. And if we look at the commercial side and business rates in particular, we’d like to see a change of policy coming through to allow easier mobilisation to help businesses.”Bestway Wholesale Brexit convenience Country Range Covid Dawood Pervez Foodservice Government HGV drivers hospitality inflation John Kinney Justin Slawson Kate Bancroft Mevalco Neil Turton plant-based products pricing Staffing Sugro Unitas