1. Inflation is Real
Based on the Singapore Government statistics, food-only inflation is 4.5% in May 2022 compared to May 2021.
While these numbers may be staggering, the actual numbers might actually be far worse.
Because the reported numbers are what end-consumers are experiencing.
But what is not reported as much is how much is being absorbed by the various importers, wholesalers, and F&B outlets.
Take it from someone who has been in the wholesale food product business for the past year, and I can tell you, that prices have been increasing insanely!
Recommended Read: What I Learnt During My 1-Year SGUnited Traineeship - Part 1
2. Price Increases
Over the past year, these are the price increases we as wholesalers experienced.
MSG: +47%
Dried Seaweed: up 47%
Dried chilli: +32%
Soya bean: +31%
Ee-mee: +31%
Plain flour: +28%
Cooking oil: +24%*
Instant noodle: +23%
Refined Sugar: +17%
Salt: +14%
Various canned food: +5% ~ +10%
These are the more commonly used items by F&B stalls, although other more "niche" items also went up 5% or more.
I only included dried goods because that is the industry I am in.
But the numbers from poultry and vegetables are not any better.
*On a side note, cooking oil prices have fallen a bit recently, but it is funny how my petrol prices have not dropped.
3. Cut F&B Outlets Some Slack
Cut the hawkers and coffeeshop stalls some slack.
If they raise your prices, understand it is not their choice.
A lot of my F&B customers who I have spoken to are all afraid to raise their prices because:
1) They get scolded by their customers for raising prices.
2) If they are the first to raise prices, customers will flock to their competitors. There is always more than one chicken rice stall in a given hawker centre, and it is a perfect competition scenario.
Prices had increased dramatically over the past year, and there are no signs of slowing down.
Because of war and covid lockdowns,
1) Supplies like corn, wheat, and other raw materials are not being farmed, processed, or packaged, and that's causing a low-supply issue.
2) Supply-chain is affected with docks closed or overwhelmed, leading to a lot of goods going out of stock due to delay or any available stock going to only the highest bidder.
3) Supply-chain issues also extend to containers, where there are goods to ship but no containers to load the goods onto for shipment. This is also another cause for "out of stock" or "higher shipping cost".
As an industry; importers, wholesalers, and F&B stalls have absorbed as much of the price increases as we can.
On a whole, the industry is surviving on breakeven levels or marginal profitability.
If a whole lot of items have increased by more than 5%, but inflation is only 4.5%, that means someone has been absorbing the price increase.
Hence, please do not scream at us if we raise prices, it just means we have reached a stage where we can no longer absorb the price increase.
We have families to feed as well.
4. The Consequences
Recently, several headlines of F&B stalls closing down have been trending on various social media platforms.
The few reasons for closing down that kept surfacing during interviews with them are intense price pressure for raw materials, labour, and rents.
As much as I am all for fierce competition for business, survival of the fittest, growing to achieve economies of scale, etc; please understand that if the industry consolidates to only a few major players instead of the current set of diverse players, prices will still go up because one, demand still outstrips supply; and two, buyers have fewer options to purchase from.
Recommended Read: Why You Should Max Your CPF Retirement Sum Early
5. What Can We Do?
1) For starters, we can be more understanding if prices have increased at the stalls that you eat or buy produce at.
Not scolding us, or even understanding that the price increase is our last resort is a great motivation for us to continue what we are doing.
2) Continue to patronise the stalls you like, even if they have increased the price.
You may complain online that the bubble tea you drink has increased in price, but you will still buy it and not scold the person serving you at the counter.
Please do the same when you are buying from the other F&B stalls - especially if the stall owners are old uncles and aunties.
3) Consider tipping if you can afford it, even at hawker centres or coffee shops.
Every cent counts and goes a long way in helping the industry stay afloat until the crisis is over.
Promos & Referrals
We are starting to build a list of Promos and Referrals for our readers.
Click here to view the full list of Promos and Referrals we have.
Hey You!
If you have a money-related story about you or your relatives' that you want to share, let us know in the comments below or email us at investmentstab@gmail.com.
Alternative, you could fill in the form below for us to contact you.
Story Form
Dear Reader!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
We hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help tailor our content to you.
Survey
Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?
Follow us on Facebook and Instagram for more timely updates about finance-related articles and memes! 😁
Subscribe to our newsletter too in case social media platforms decide to stop showing you our content.
Have feedback? Tell us now!
0 comments:
Post a Comment