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Supermarket sandwiches are to get more expensive in the wake of Rachel Reeves’s Budget after the UK’s biggest manufacturer warned of an “unprecedented” jump in costs.
Greencore, which is Britain’s biggest sandwich maker, said it was in talks with its supermarket customers about the increased costs it faced from the higher minimum wage and £25bn National Insurance (NI) raid announced by the Chancellor in October.
It said in an update to investors on Thursday: “The group continues to face an unprecedented labour cost challenge from the National Living Wage and National Insurance increases set out in the UK Budget and as highlighted in our year end update, we are committed to offsetting this in full in the following ways; manufacturing automation, operational excellence, labour planning and technology investment, alongside our usual inflation recovery measures.
“The nature of our business is labour-intensive, and the Group has been working hard to offset this cost, however given the scale of the challenge, we are also engaging in constructive dialogue with our customers to help mitigate these costs.”
Experts said customers should expect to see the price of sandwiches and other takeaway staples on supermarket shelves rise.
Darren Shirley, of Shore Capital, said: “The step change of government-imposed costs – NI, even the employment reform bill that’s going through, which we don’t know the outcome of yet – there will be a need to pass this on to the consumer.”
Mr Shirley said he expected food inflation to rise to between 3.5pc and 4pc in 2024 in the wake of the Budget, having previously predicted it to be around 2pc.
Headquartered in Dublin, Greencore runs 16 factories across the UK, employing around 13,300 people. Its customers include Marks & Spencer, Sainsbury’s, Morrisons and Aldi.
The company made 748m sandwiches and other food-to-go products last year, as well as 125m ready meals, 204m bottles of cooking sauces and dips.
Greencore is the latest food manufacturer to warn of rising costs in the aftermath of the Budget.
“This is an industry wide message that’s come across all food,” added Mr Shirley.
Greencore has already had to put its prices up once in the past years because of wage inflation, adding an average of £1 to the cost of a sandwich to account for an increase in the minimum wage last April.
Dalton Philips, its chief executive, said last January: “We’re hugely supportive [of wages rising], because if you can get wages moving again, that’s going to ultimately put more money in people’s pockets. But the reality is, on our wage bill, it is a material increase.”