Fredericks Dairies is the UK's largest independently owned ice-cream manufacturer. Like any other market dependent on dairy products as primary raw materials, the firm has seen an unprecedented increase in the cost of these ingredients over the past 18 months. The combination of restricted worldwide supply and increased demand for dairy products, including skimmed milk powder (SMP) and whey protein concentrate, has seen prices rise by more than 150% over this period. The reduction in supply has been caused by a combination of successive droughts in Australasia and a physical reduction by processors in much of the production capacity for SMP, following years of over-supply and unsustainably slim margins. Equally, increased demand has been driven by the increasingly affluent populations of emerging economies such as China and India wishing to enjoy Western-style diets.
It must be remembered that not only has the ice-cream itself been affected by the increases, but other key components, such as chocolate, also rely heavily on dairy produce and have been similarly affected.
These huge shifts in raw material costs have led to manufacturers having to pass on unprecedented price increases to the trade. Indeed, the market had been subject to flat, if not deflationary, pricing for 15 years. What all this means is consumers now face paying significantly more for ice cream than for many years.
Has the number of customer complaints about the price of goods increased recently?
