Price shock: Why biscuits cost more

Price shock: Why biscuits cost more

The cost of almost all foods goes up, with a new one estimate from Eurostat indicating that consumer prices rose here by 8.2% during the year to the end of May.

This leads to higher costs at the checkouts, where Kantar recently estimated that the average household’s grocery bill will be € 330 higher this year.

But not all price increases are the same – a myriad of factors affect different products in different ways.

To help you understand what is happening, we have taken a closer look at a handful of everyday foods to see what is causing the price change.

Everyone has seen significant price increases recently, but everyone has a different story to tell about the reasons for this.

In this piece we will look at pastries – especially biscuits.

What’s the matter with biscuits?

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Adam Maguire discusses thriving biscuit prices RTÉ Radio 1’s Today with Claire Byrne

Most people would think of biscuits as a pretty basic product. For example, if you wanted to make some chocolate biscuits yourself, you might just look at 7 or 8 ingredients to make it.

But they are actually a really good representation of the incredibly complex, global supply chain that exists today and that many of us take for granted.

The flour, for example, probably comes from the UK. But much of it in turn is probably imported from Ukraine or Canada.

The sugar you need probably comes from Brazil or India – but it may be being refined in Romania or Portugal.

Your eggs and butter can come from Ireland – but many large producers can buy them from the Netherlands or Poland, or Turkey or New Zealand.

The chocolate can come from Belgium or Germany – but the cocoa beans to make the chocolate come from the Ivory Coast or Ghana.

The vanilla in the vanilla extract probably comes from Madagascar or Indonesia, the salt can come from China, USA or India. The bicarbonate in soft drinks may also be from China or the USA.

So all these ingredients come from all corners of the world, through other companies based in the UK or EU.

And what’s amazing is that they are usually readily available on your average supermarket shelf, at a cost that allows you to make a batch of biscuits quite cheaply.

So what went wrong?

But this incredibly complex supply chain has received a few knocks in recent years – especially in Ireland. The first big one was Brexit.

Let’s say you do not want to make the biscuits, you just want to buy a package of them instead.

But when you think of the big biscuit brands on our supermarket shelves, chances are they are British. Even some of the major European brands selling products here would supply Ireland with bars and biscuits made in the UK.

The same applies to the retailer’s own brands, most of which would normally be manufactured on contract by British biscuit companies.

And it was all well before Brexit – the products were just moving freely across the Irish Sea. But once Britain left the EU, it became much more complicated.

So how are these products treated now?

According to the Brexit agreement that entered into force at the beginning of last year, if you have a British-made product and export it to the EU, you do not pay customs duties. And the same is true in the other direction.

But if you import a product from a “third” country and then export it to or from the EU – you pay a duty.

These are called the rules of origin.

But there is a middle ground between the two situations.

This means that if you import a product from a third country and do something with it to change it, such as mixing it with lots of other things to create a brand new product, you may be able to circumvent the tariff when you export it.

But it is not a simple matter, and there are some rather complicated rules and regulations that producers have to follow.

So even if you can technically circumvent the tariff, you now have to produce a lot of paperwork to explain how and why it is so. And that everything must be checked at ports of entry, which slows down the supply chain and adds time and costs for each delivery.

So even if the cost of the ingredients or production does not change, it suddenly costs a little more to get the products from the factories in the UK on the shelves of Irish supermarkets.

Does that mean Irish biscuits are cheaper?

Not really.

After Brexit, British flour can still be imported duty free, but according to these “rules of origin” a duty of € 172 / tonne is applied if more than 15% of that flour comes from elsewhere.

And the reality is that many large flour users here – especially bread makers – have to import flour with a lot of wheat from countries other than the UK, so they have to deal with that tariff.

And while some have changed supply lines to try to pick up from the European mainland, Bord Bia estimates that about 78% of the flour that comes in here still comes from the UK.

As a result, the cost of all pastries increases.

CSO data does not tell us how biscuits and cakes are affected – but it does tell us what happens to the price of bread.

If we compare December 2020, just before the UK actually left the EU, and June 2021 – which is before things like energy prices really started to increase – we can see the price of a large white sliced ​​boiler rose by 5.4% – from around € 1 , 30 to 1.37 €. Which is a big hope in just six months.

At the same time, a brown sliced ​​pan rose by 7.5% during the same period – from EUR 1.47 to EUR 1.58.

And it’s only going to get worse because of the weather-related wheat shortage in Canada, and production from Ukraine is likely to fall sharply because of the war there.

But are prices really going up?

You may think that despite this you have not seen any major change in the price of a packet of biscuits. And you may be right.

But what you may be missing is that the package of biscuits you buy is not what it used to be.

This is because many companies will use what is called “Shrinkflation” to secretly sneak in a price increase.

What they do is keep the price the same but give you less for it – maybe there is one biscuit smaller in the package, or each biscuit is slightly smaller than before.

This is also a classic tactic with chocolate cakes – some big brands have shrunk by more than a quarter in recent years while the cost has remained unchanged, or maybe even gone up.

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