Bulletin: Easter chocolate and business costs

Business cost changes

From Monday 1 April, food and grocery businesses will be impacted by changes to business costs.

• The National Living Wage will rise by 10%, moving from £10.42 to £11.44 per hour. This will be the largest annual increase so far and it will come on top of a significant increase in 2023.

• Increased business rates – The Chancellor announced last November that the government would freeze the small business multiplier at 49.9p but chose to uprate the standard multiplier by last September’s CPI inflation rate of 6.7%.

• National insurance - a reduction in National Insurance (NI) contributions for both employees and self-employed – although employer NI payments will remain unchanged.

IGD Viewpoint

Increased business costs will make it more challenging for businesses to drive growth again by recovering volumes, revenue or margins. There will be pressure on some businesses to pass on these increased costs to consumers. Delivering better wages depends on achieving sustained increases in productivity. This has proven to be a challenge over the years.

Availability concerns

More consumers report poorer availability of some food and groceries in-store or online recently (53% vs 47% in January). This has increased the most for hot drinks and medicines.

Poorer availability is impacted by supply chain disruption. In our latest Resilience report: A system under pressure, we highlight the 10 key risks that are likely to put the UK food system under greater pressure in the years to come.

See our full analysis.

Chocolate at Easter

Easter egg buying is being impacted by an increase in global wholesale cocoa prices. Prices reached record levels in January 2024 – over US$5,000 per tonne on the spot market (source: IFS), suggesting inflation of over 120% year on year. Retail prices have also been rising but, so far, nowhere near as much.

Global cocoa prices appear to be responding to poor supply, due to unfavourable weather conditions in Western Africa, which accounts for the bulk of supply.

IGD Viewpoint

Global cocoa production is highly concentrated – in 2022, more than half of global production was in Ivory Coast and Ghana (source: FAO). This concentration of production obviously increases vulnerability to natural events, such as the weather conditions we have seen recently; and as with other major crops, cocoa production is likely to be impacted further in the future by climate change.

Tobacco and vapes

The Tobacco and Vapes Bill was introduced to parliament this week. It will make it an offence for anyone born on or after 1 January 2009 to be sold tobacco products and will apply restrictions on flavours, packaging and point of sale displays of vapes.

Sustainable farming

The government is introducing new measures to limit the amount of land farmers can take out of productive actions under the Sustainable Farming Incentive. SFI applicants will only be able to put 25% of their land into six SFI actions that take land out of direct food production.