As US farmers battle the worst drought in 50 years and their northern European counterparts contend with opposite problem, wet weather, grain prices have soared - as has the price of a bowl of cereal.
The average price of cereal in Tesco, Sainsbury’s, Asda, Morrisons and Waitrose has risen 9%, from £4.91 to £5.42 per kilo, in the past 12 months [BrandView.co.uk 52 w/e 18 July]. The biggest rise was at Sainsbury’s, where cereals are up 25% to £5.55 per kilo. Asda and Waitrose put prices up 3%, to £5.05 and £5.77 respectively.
Cheaper own-label cereals were worst hit, with the average price up by 28% to £3.85 per kilo, while branded products rose by a more modest 7.
Although average prices have risen, manufacturers have worked hard to ensure shoppers do not pay more at the till by cutting pack sizes and tweaking ingredients to keep retail prices stable. As a result, the average price per unit rose by just 2%, from £2.25 to £2.30 per box.
Dorset Cereals introduced a 600g Gloriously Nutty cereal box retailing at £3.79 at Tesco and Sainsbury’s. This replaced a 750g box of Really Nutty Muesli, previously on sale at £3.69 in the same retailers.
At Asda, a 375g box of Kellogg’s Special K, retailing between £2 and £2.50 since January before being delisted in May, was replaced by a 320g box, which has retailed for £2 to £2.68 since being introduced.
The number of promotions across the major multiples rose slightly from 3,217 in the year to 18 July 2011 to 3,410 this year. But the average promotion has become a little more shallow, offering a 23.9% discount compared with 25.1% last year.
Tesco has scaled back cereal promotions - last year it was responsible for 49.1% of them, running 1,578 in the year to July 2011. This year it ran just 1,052, or 30.9% of the category total.
Waitrose, which launched its Tesco price match earlier this year, ran 80% more promotions than last year. In fact, with the exception of Tesco, it ran more promotions than all of the other mults, with a total of 752 compared with Sainsbury’s 746, Asda’s 456 and 404 in Morrisons.
Wholesale prices: dairy and eggs
Nearly eight months into the EU-wide battery cage ban, egg wholesale prices remain much higher than last year. UK shell eggs are up the most year-on-year, having risen by 103.6% in the past 12 months, although prices over the past month are currently down 5.1% month-on-month, to £1,609/tonne.
Shell eggs for processing, liquid egg white and egg yolk powder from the EU are all still showing hefty double-digit year-on-year increases, but month-on-month movements are more muted, raising hopes the EU egg market could be softening again.
It’s the opposite story in dairy, where all UK and EU products are currently cheaper year-on-year but - with the exception of UK milk - have either remained stable or gone up in price over the past month.
UK butter has firmed nearly 15% in the past month, as prices move closer to European levels, although - at £2,260/tonne - it is still much cheaper than it was this time last year.
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