Russia and Ukraine have been at war for the best part of one year now. Initially, due to the high export volumes of vegetable oils and cereals from Ukraine and Russia, a severe shortage of certain products, including sunflower oil had been predicted.
Looking at the total imports to Europe of a range of products, neither Ukraine nor Russia play a dominant role for Europe for these goods.
Source: EUROSTAT
We did see shortages of some food products, like sunflower oil, in Europe for some month, but the situation has normalised again. The stakeholders in the food supply chain were very efficiently fixing broken chains.
Nothing to be concerned about then?
What is affecting us worse than the direct impact of Ukrainian and Russian sunflower oil and cereals exports are the energy prices that have substantially risen.
The energy prices increased dramatically. According to the German portal Strom-Report (electricity report), prices for a MWh rose from 83€ in August 2021 to 465€ in August 2022, an increase of more than 500%. And while this does not impact on the availability of most products directly, it does impact on the prices. Not only fuel and heating, but also prices for production of materials, and, of course, food.
As a consequence, most consumers have less money available to spend on food. That also adversely affected consumer loyalty to retailers as more and more consumers hunt for offers across several food stores. Retailers already reacted, featuring more prominently their own-label products as well as expanding the product range of own-label products to avoid the drift to discounters.
The latest Trend Report Nutrition, published earlier this month, and produced with support from the German Federal Office for Agriculture and Food (BLE), states that due to the increased cost of food and energy, fewer people can choose the food that would be right for them. “Crisis, war and increasing uncertainty restrict the [food] choices consumers in lower socio-economic groups of the population can make” [translated and rephrased]. And further “for population groups with lower income, there is a high risk of malnutrition and wrong nutritional choices” [translated and rephrased].
And it is quite evident when looking at bioproducts (organic products) that these days are left on the shelves of many retailers and discounters.
The IPA survey reported already in early 2022 that the number of adults preferring organic foods fell by almost 30%. In November 2022, Deloitte conducted a similar survey, with a similar outcome: the number of consumers that are prepared to pay higher prices for organic and sustainable products had halved.
All three reports, the nutrition trend report, IPA and Deloitte, make the same observation: consumers in the lower income bracket can no longer (afford to) make the right food choices.
It remains to be seen which measures the national governments and the European Commission will implement to avoid a reduction in life expectancy due to wrong or malnutrition in Europe.
