Where’s Bruce Willis when you need him? Because the pasta sector could use a hero as it faces a lit- any of woes worthy of a disaster movie. After skyrocketing demand in 2020, sales have now fallen across many brands. Meanwhile, a burgeoning supply crisis threatens to send prices surging and leave gaps on shelves. What's next for wholesale pasta suppliers?
Prices for durum wheat – the key ingredient in most of the pasta consumed across the world – have surged in recent months amid dwindling supply from Europe and North America. The scale of the rises is astonishing: European high-protein durum prices rose nearly 30% from €590.50 per tonne on 5 August to €760.50 by 2 September.
As if that wasn’t enough to deal with, September saw Canada, another exporter crucial to global supply, revise its forecasted harvest for the year down to 3.4 million tonnes – roughly 40% lower than the aver- age over the past five years.
As a result, farmers are defaulting on contracts. Observers such as Eurostar Commodities predict shortages on super- market shelves alongside price increases. And that’s without factoring in wider supply issues such as the lack of hauliers and rising transport costs.
“Every day feels a little bit more like a version of Armageddon,” says Phil Durham, commercial director of the Atlante brand. “[The supply chain] is challenged all the way through – whether that’s booking sea freight or getting space to unload. Then when it is unloaded you get into the driver challenges in the UK, getting them to pick up the containers, getting them into warehouses and then getting them to the retailers.
“We are planning every day how to optimise this, avoiding cost but balancing it with resilience in the chain. But it is difficult to do because each day something new happens – like the fuel crisis – which adds more stress.”
What are the UK’s pasta suppliers and retailers going to do? Is our pasta market about to boil over? Or can the simmering tensions be contained?
It’s a grim picture for a sector that has been crucial to Brits’ diets since the start of the pandemic. “If you rewind to this time last year, we entered into a demand shock,” says Durham. “During Covid everyone stopped going out, started eating in and spaghetti bolognese was the go-to.”
Although the initial bulk buying phase was tricky, “producers were able to react in the medium term because they had suppliers of the wheat. Now we are about to enter into a supply shock.”
One major issue is that so much of the UK’s pasta is made abroad, says Michele Conway, sales director at Pasta Food, which manufactures its products at its own facility in Great Yarmouth. This makes it extra vulnerable to supply chain issues such as the ongoing shortage of hauliers. “If it’s dried pasta on shelf, hardly any of that will be made in the UK, aside from a few small brands,” she says. “It will be so exposed [to pricing issues].
“A key benefit we have is a fully integrated mill and full control over the process. Because we’re in the UK and we’ve got a long established supply chain we’ve been really lucky.”
That doesn’t entirely solve the issue of price rises. “Bear in mind that in Italy, even in a good year, they don’t produce enough for their own consumption,” Conway says. “So who will those countries prioritise over their own supply? You’re going to be at the mercy of the price and availability.”
Off the boil
At the same time, the return to offices and a normal way of life has dampened demand, resulting in a 2.2% decline in pasta value sales [Kantar, 52 w/e 5 September 2021].
“As shoppers have returned to their busy schedules outside of the home, they are look- ing for those quick and convenient options,” says Kantar analyst Isabella Baker. “The pasta category has been impacted, as we know this category is frequently a part of a recipe or a scratch cooking.”
The impact is particularly pronounced in dry pasta, with dry spaghetti, fusilli and macaroni all facing double-digit declines of 10.2%, 14.9% and 10.6% respectively – a combined loss of £24.2m [Kantar].
This has led to major drops for some of the sector’s biggest dry players. Napolina, the UK’s biggest pasta brand, saw sales plummet by more than a third (36.8%) to £25m, on volumes down 37.3%. That’s a £14.5m loss [Nielsen 52 w/e 28 August 2021].
The list of casualties goes on: De Cecco is down 13.7% to £13.1m, with volumes shrinking by 9.4%. Fellow dry pasta supplier Marshalls saw 20.1% of its value wiped away, dropping to £3.6m [Nielsen]. Own-label dry pastas weren’t immune either: value sales of dry spaghetti, fusilli and lasagne fell 3.6%, 13.8% and 14.9% respectively [Kantar].
There’s one important caveat to these drops. For many brands, it is simply a move closer to normality after the highs of 2020.
Andy Hargraves, group director for Italian products at Napolina owner Princes, says the brand is “naturally down against the demand spike of 2020”. Its performance in 2020 was “ahead of our usual share of trade” because Princes carried stock in the UK, meaning it was able to “react quickly and supply additional volume into our customers”.
“The level of scratch cooking is still higher than it was,” says Durham. “People have brought pasta into their worlds more and it has stuck.”
Barilla marketing manager for export mar- kets Alberto Costella sees the same trend. “During the past year our relationship with pasta has evolved and it’s no longer seen as a staple food but more of a gastronomic expe- rience, featuring new recipes and flavours.”
And while dried pastas lost value, posher chilled and fresh pastas soared as shoppers became more eager to try a wider range of dishes. Fresh filled pastas, for instance, grew 10.2%, adding £10.6m to their value and hit- ting £115.5m. Fresh cut pasta and noodle sales, meanwhile, were up 1.8% (£700k) and 8.4% (£3.1m) respectively [Kantar].
“There is a lot of innovation going on in fresh and chilled pasta and a lot of that is around plant-based,” says Conway. “It definitely feels like there are more buyers coming into the sector.”
Which means the forecast for pasta in the long term may not be as bleak as it seems. Conway argues prices rises, though they sound dramatic right now, don’t necessarily mean the end of the world.
“There’s going to be some tough conversations around price but consumers are not going to stop buying pasta. It is still a good value product and a staple on family tables.
“The price will be the price. At the end of the day it’s a crop and it needs to be reflected. Even if it doubles, it would still be a cheap product. And hopefully next year it will come back and calm the market down.”
This article originally appeared in The Grocer.
