Wholesalers could pass on further costs without longer-term government support

Retailers could see further price increases from wholesalers if the government does not provide longer-term support on rising energy costs, trade bodies have warned.

On 19 October, the Food and Drink Supply chain all party parliamentary group (APPG) held a panel with various trade bodies discussing the impact of the energy crisis. The panel warned that businesses would suffer unless the government extends the cap on energy bills past April 2023.

Federation of Wholesale Distributors head of engagement Lyndsey Cambridge warned that wholesalers would be forced to pass further costs onto retailers without an extension. Wholesalers Booker, Blakemore, Nisa and CJ Lang have already been forced to charge retailers delivery fees this year to offset the pressure of rising costs.

Cambridge said: “We need guarantees that the food and drink supply chain will be protected beyond April, otherwise there is an awful lot at stake. The energy price hikes are having a profound impact.

“One of our smaller members has seen their annual bill increase from £15,000 to £50,000. One of the largest wholesalers pays £10m a year. They’re looking at £23m in the upcoming year.”

Cambridge also warned that increasing energy costs could also impact the range and service available to retailers. She added: “Our members are looking at redundancies and freezes on recruitment. They’re also reducing the sale of frozen and chilled products as well. The increases matter as wholesalers run vast fridge and food storage facilities.

“To try and offset the impact, some members are using diesel generators. They’re charging their forklifts after 1am. One member is rewiring their circuits and taking out lights. Wholesalers are looking at every possible way to save money.

“We want wholesalers included in ongoing energy cap conversations. There has to be support on supply costs, a freeze on tax and VAT and 0% interest loans. We won’t know the real-time impact until the bill lands on our doormats.”

Gavin Partington, director general of the British Soft Drinks Association, also warned of the impact on the soft drinks supply chain. He said: “The cost of fuel is set to rise further and there’s uncertainty about supply. The government needs to step in and manage the risks associated with this.

“Producers are being forced to pass on costs because they have no other option. Retailers are worried about the integrity of the supply chain post-covid. Inevitably, smaller producers are being forced to compromise where larger retailers have more options of escape.”