Olive oil market leader Filippo Berio has warned of “spiralling costs” and shipping issues from Italy after its UK profits were dented by inflationary pressures last year.
In 2021, the brand managed to replicate the Covid-driven bump in 2020 volumes and sales, according to newly filed UK accounts, with sales dipping £0.1m to £63.5m on volumes down just 1%.
Compared with pre-Covid levels of 2019, sales remained up by more than 25%.
“At the start of 2021 we expected to see a significant fall in sales, but as it transpired, there was still a significant Covid effect during the year, which diverted food consumption from the hospitality sector back into the home,” said UK CEO Walter Zanre. “We also continued to support the brand with advertising, which helped us to maintain our sales.”
However, “significant” inflation on shipping and UK logistics costs, as well as raw material and packaging, depressed profits, which fell from £4.4m to £1.8m.
Zanre said inflationary pressures had ratcheted up in 2020 even before Russia’s invasion of Ukraine caused “another massive increase in raw material costs”.
He said the group was also having “significant problems” with shipping from Italy due to a lack of containers and an “inevitable” increase in costs.
“So on top of spiralling costs we also have availability issues,” he added. “Coupled with the general slowdown in grocery sales, it makes for a very challenging year.”
The accounts noted that the grocery sector was “very resilient” to economic downturns and pressure on household budgets, due to more discretionary areas typically being cut back.
It acknowledges consumers may trade down to cheaper alternatives, but will continue to invest in marketing and the brand to defend its category position.
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