Despite one of the warmest and wettest winters on record, climate issues appear to have been overshadowed by other concerns such as the cost of living, healthcare, and security during recent election campaigning. Although all parties agree on the need to cut emissions, boost renewable energy and reduce pollution, their approaches vary.
These policies will inevitably affect long-term climate conditions and are something often linked to short-term weather patterns. Politicians may be able to influence upcoming voting behaviour, but our unpredictable UK weather is something beyond their control.
Similarly, retailers and manufacturers can’t control the weather, but they can plan for it, or at least control ‘for’ the weather. Even with accurate long-term forecasts, fully capitalising on favorable conditions or mitigating adverse effects remains challenging.
However, by analysing data from last year’s weather and its impact on business performance, and combining this with long-term forecasts, manufacturers can better predict the likely effects on future growth prospects. This understanding allows them to manage expectations and make more informed decisions on how to stimulate growth.
Weather significantly impacts supply and costs worldwide, not just in the UK. For example, hurricanes in the US can disrupt orange harvests, and El Niño affects cocoa production in the Ivory Coast. These global weather phenomena are increasingly influencing manufacturing costs.
While the weather’s impact on supply is well documented, its effect on demand is less clearly understood. In the past year up to May, the UK experienced 36% more rainfall and 15% fewer sunshine hours compared to the previous year. However, due to warmer nights, average temperatures were around 8% higher. This raises questions about which product categories and sales channels were affected and to what extent. Manufacturers need to consider these weather variations when evaluating their business performance to make more accurate assessments.
Manufacturers might think the impact of weather on their business is intuitive and straightforward, but it’s not. For example, carbonated soft drink manufacturers might be content with a 4% decline in volume for the four weeks leading up to 25 May compared to last year, considering the 111% increase in rainfall and 23% decrease in sunshine hours.
However, seeing that ice cream volumes rose by 8% and bottled water by 13% during the same period tells a different story. This broader context suggests that other weather-affected categories’ performances should prompt soft drink manufacturers to reassess their outlook and strategies.
With average temperatures up 8% year to date and 12% in May, consumption habits and shopping behaviour have shifted. Ice cream sales have increased, but convenience stores have lost 0.9 percentage points in market share as more consumption happens at home. Similarly, bottled water take-home packs gained 1.1 percentage points in May, while the symbols and independent channel lost 0.6 percentage points in volume share.
This trend benefits manufacturers in volume but hurts margins. high street footfall data supports this shift, showing increased foot traffic in only five out of 20 weeks compared to last year. Surprisingly, carbonated drinks have not followed the expected trend, performing quite differently – highlighting the need to understand weather impacts and broader category context when analysing business performance.
Manufacturers can’t control the weather, but they can understand and interpret its impact accurately. This enables them to effectively manage and adapt to weather-related changes, even during the current political storm.
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