Pizza set to feel the heat from Brexit-linked price pressure

Pizza prices are set to come under growing pressure in the coming months, as manufacturers struggle to cope with rising cheese prices and the impact of Brexit.

Although analysis using Brand View data suggests chilled and frozen pizza prices have not seen a lot of movement to date, the Pizza and Pasta Association (PAPA) warns in a new report the sector is highly vulnerable to Brexit-related price pressures.

Most chilled pizza sold in the UK is made in this country, but manufacturers import a lot of key ingredients, such as tomato sauce from southern Europe or Parma ham and buffalo mozzarella from Italy. In frozen, roughly 85% of pizzas are imported into the UK, meaning there is a direct impact on suppliers from the recent weakening of sterling.

Rising cheese prices - as dairy markets have recently started to recover - are a particularly acute pressure point for manufacturers at the moment, says PAPA chairman Richard Harrow.

“Cheese is the raw material that has the biggest impact on the sector because it’s used for every product,” he adds. “If there’s a spike in pork prices, for instance, it will only affect some lines. But with cheese it’s everything.”

How much of these increases will ultimately field through to consumers is difficult to say at this stage, Harrow says, and will depend sector by sector. “In retail, there isn’t any appetite to pass this on completely to consumers.”

If pizza prices go up across the board, including at foodservice level, retailers could stand to benefit, however, as customers trade down from takeaways and restaurants. “Historically, in tough times, retail pizza has done quite well,” says Harrow.

Pizza is not the only Italian favourite to face inflation. PAPA also warns about possible Brexit impacts on pasta, most of which is imported into the UK.

A report by MySupermarket recently suggested pasta was already leading the way in terms of categories hit by post-Brexit inflation.

However, analysis using Brand View data of dry and fresh pasta SKUs on sale in the big four, Waitrose and the discounters shows prices have largely been stable on a year-on-year basis. A 500g pack of own-label penne, for example, is the same price in Tesco, Sainsbury’s, Morrisons and Waitrose as it was a year ago, and has actually come down in Asda, Aldi and Lidl. The discounters have cut their prices from 49p to 45p, with Asda moving from 59p to 55p earlier this year.

Where prices have increased recently, both in fresh and dry pasta, it’s been on products that typically see a lot of price fluctuation throughout the year. For example, some Sainsbury’s 500g own-label fresh pasta lines have risen from £1.25 to £1.40 in the past month, but £1.40 does not mark a new 12-month high.