With inflation set to surge even higher, cost pressures are mounting on Food and Beverage businesses from all sides. How are you navigating the inflation storm? Are you taking pro-active measures to minimise the impact on your business?
With food inflation having already risen from 2.2% in 2021 to 7% at the start of 2022, many businesses are feeling the squeeze on profit margins already. It can be a daunting time, especially on the back end of a challenging few years in a pandemic. There are a few steps you should be taking to help protect your profit margins and assets.
- Regularly review your cost base to ensure your margins remain stable – precision pricing is hard but it’s worth the effort to change to more regular reviews ie. from monthly to weekly.
- Speak to suppliers about pricing – being proactive allows you to source other suppliers if necessary and add in any buffers needed to cover shipping, distribution or manufacturing.
- Be bold – ask for price increases from retailers! Being armed with all the information they require up front, such as invoices from suppliers, raw cost of ingredients etc will allow you to justify price increases. Be prepared to be asked for promotions or discounts, which may further squeeze tight margins.
- Insure yourself – when things go wrong, make sure you’re covered. Take the time to adequately maintain your risk register to help you determine the scope and size of each risk and how much you’re prepared to wear. Critically, make sure your insurance covers you for YOUR key risks and you have the correct valuations so you’re not underinsured – there is no cookie cutter policy which will work.
Would you like to understand more about how to minimise the risk of inflation to your business? If you’d like to talk to one of our team, don’t hesitate to get in contact.