As wholesale prices for UK Cheddar surge amid warnings of an “imminent” supply shortage, Britain’s favourite cheese remains cheaper in the mults than it was a year ago.
UK Cheddar wholesale prices were up 30.9% year on year in September to their highest level since 2013 [Mintec], but average retail prices are down 6% year on year across 767 Cheddar SKUs in the big four [Brand View 52 w/e 18 October 2016].
Block Cheddar prices are down 6% across branded and own-label SKUs.
Notable price cuts on brands include Tesco knocking £1.50 off its range of 350g Cathedral City Cheddar blocks, now £2.50, and Asda rolling back prices on selected Seriously Strong 350g Cheddar SKUs by £1.50 to £2.
But prices have also been slashed across own-label SKUs, with Sainsbury’s taking £1 off a number of 400g own-label blocks including its Own Label Mature Lighter Cheddar, now just £2.
Average prices for grated Cheddar are down 7%, meanwhile, with a number of rollbacks across own-label line-ups in the big four.
Asda has taken 20p off its own-label British Mature Grated Coloured Cheddar, now £1.80, while Sainsbury’s has cut 25p off selected lines including its own-label Mature Grated Cheddar 500g, now £3.25.
Sliced Cheddar prices are down 12%, with Sainsbury’s, Morrisons and Asda all slashing prices on own-label sliced SKUs over the past year.
Suppliers warned last week that retailers must start paying more for Cheddar to combat a growing shortage as UK production is hit by the double whammy of farmers scaling back on milk production and exports surging as sterling weakens in the wake of the Brexit vote.
Cheesemakers have seen their milk supplies plummet by 10% because farmers producing milk for manufactured products “didn’t get the support that liquid milk farmers have had during the past two years”, says Wyke Farm MD Rich Clothier.
With the new EU dairy scheme paying farmers 12p/litre if they stop producing milk, the problem will only get worse unless there are “substantial price increases” to Cheddar suppliers so they can get farmgate milk prices to 28p/litre “as soon as possible” to allow farmers to stay in business, he warns.
“It will be a bumpy road until spring unless we can get prices up quickly,” adds Clothier. “There are going to be severe shortages if we can’t get value back into the supply base.”
With British cheese now highly competitive abroad, retailers could find themselves with no supplies if they refuse to pay higher prices, another source warns. “Supermarkets will always be the priority, but processors have lost so much money over the last couple of years and they need to get back into shape. The weak pound means they now have a lot of other options.”
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