From the Daily Telegraph
Supermarket
sandwich prices to jump
Sainsbury's and M&S supplier
warns bigger wage bill will drive up costs
Supermarket sandwiches are to become more
expensive as a looming rise in minimum wage puts up the cost of making
them.
Greencore, the UK’s biggest sandwich maker, said on
Thursday it would need to increase its prices when the National Living Wage
increases by £1 an hour in April.
The company produces 779 million sandwiches a year
and supplies most of the major supermarkets, including Sainsbury’s, Marks &
Spencer and Co-op.
Greencore chief executive Dalton Philips said:
“We’re hugely supportive [of wages rising], because if you can get wages moving
again, that’s going to ultimately put more money in people’s pockets. But the
reality is, on our wage bill,
it is a material increase.”
The National Living Wage will rise to £11.44 from
April in the biggest cash increase since the minimum wage was created in 1998.
Mr Philips said the increase will add around £30m to Greencore’s costs.
He said: “Obviously you do everything you can to
mitigate it by operational efficiencies and all the good work that all
companies try. But at the end of the day, it’s £30m, and you can’t mitigate it
all. And some of that does seep into price rises.”
Greencore employs around 13,600 people across 16
factories in the UK. As well as making hundreds of millions of sandwiches, it
makes around 25 million packs of sushi and 132 million chilled ready meals
every year.
Supermarkets ultimately set the price of the goods
they sell. However, a rise in what Greencore charges may well be passed on to
shoppers.
The likely increase threatens to reverse the
recent slide in food inflation. Grocery inflation dropped from 7.7pc to 6.7pc
last month, according to the British Retail Consortium.
Industry bosses have warned that they face
significant increases in costs in the months ahead that threaten to push up
prices. As well as the rise in minimum wage, business rates are also set to
climb and new border checks will add to costs.
Helen Dickinson, chief executive of the BRC, said
earlier this month: “Government should think twice before imposing new costs on
retail businesses that would not only hold back vital investment in local
communities, but also push up prices for struggling households.”
Mr Philips said despite the cost-of-living crisis,
shoppers were increasingly opting for pricier, premium sandwiches.
