UK Pasta market predictions

Ambient pasta producers and retailers were hurt badly in 2021 and 2022 by a combination of factors (see analysis below) and the speed with which they hit. A challenging time lies ahead, predicts Atlante, a cross-category global sourcing company that supplies ambient pasta to UK supermarkets.

With news from the grocer in this past week that UK supermarkets are cutting the prices of pasta, what lies ahead for the UK ambient pasta market.

Ups and downs

“The good news is that input costs are coming down across some parts of the cost stack, for example, petrol, international freight, durum wheat prices and energy,” says Phil Durham, Atlante UK Business Unit Director.

“However, some inflation will remain baked into prices stopping them going back to where they were, such as wages and cost of borrowing.”

Risk factors

Atlante’s risk assessment identifies two major variables that need to be watched closely and reacted to quickly in the coming six to 12 months:

• Geo-political instability. The risk factor for large industrial manufacturing processes remains high with global instability linked to Russia-Ukraine and China-Taiwan. There are also national factors at play in Europe as societies deal with debt and inflation. As always, when risk is high, costs go up or remain high, to manage that uncertainty.
  
  
• Environment. We must not forget that we are dealing with a raw ingredient that is at the whim of nature regardless of technology. Water scarcity in Europe will be a major factor in the 2023 harvest, with a lot of concern in France and Italy. If yields are down while demand remains high, costs are at risk once again due to this imbalance.

“The whole industry from grower to consumer continues to plot a path through a very traumatic time. There is hope, but there remains risk and concern, and with that cost,” says Phil. “Despite all that, ambient grocery remains an incredibly good value source of calories and we forecast a continued strong performance in these categories.”

Analysis of factors impacting ambient pasta 

2022 saw core pasta retail prices rise by +73% (55p to 95p for 500g). This was driven by five factors throughout the supply chain, and it was the combination and speed that caused so many problems. And it is still coming through, as shown by the recent UK ONS inflation results with food at +18% (and that is before taking into account a mix impact). Atlante splits the root cause of this across five factors that it continues to track and manage on a weekly basis:

Phil concludes: “Now, the commercial challenge for players up and down the supply chain is how, when and how much do they pass on savings down the chain where they find them?

“Our strategy is the same on the way up as it is the way down (if indeed we are on the way down), to be open and honest, quick and timely, clear and firm.”

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