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Shortages and severe price hikes to hit Belgian supermarkets

12:59 21/03/2022

Industry experts warn that empty shelves and 20% price increases could become the norm in Belgian supermarkets over the next few weeks. 

The shortages and price hikes are a consequence of the Russian invasion of Ukraine, Le Soir reports, exacerbated by skyrocketing energy prices and the lasting effects of Covid-19 on supply chains. 

Shoppers can expect to see the unwelcome and “unprecedented” changes in as early as a few weeks, according to Silvie Vanhout, head of the Gondola Academy, which has been training sales and marketing specialists in the distribution and production of fast-moving consumer goods (FMCG) for the past 10 years.

“Distributors are coming back to their suppliers because they find the negotiated prices unsustainable - logically, no retailer wants to be the first to raise its prices,” Vanhout explained.

“And producers are doing the same. Some of them, for example Lotus with the Colruyt Group, even refuse to supply their products at the agreed price because they would be forced to sell them at a loss due to their extra costs. The big international brands have gained more power: they can move their sales to other chains or other countries to get better prices.”

Distribution system not designed for price variations

On top of a rigid system grappling with price variations, supply issues threaten the production of certain processed foods made with sunflower oil – a major export from both Ukraine and Russia whose shortage also threatens the beloved Belgian frite

This shortage is also expected to affect crisps, chips, sauces, spreads and biscuits, along with foods that contain gelatine, such as sweets and jams. 

“Due to a lack of raw materials and a price agreement, we will be faced with empty shelves in supermarkets within a few weeks. About 40% of the assortment is potentially affected,” Vanhout warned. 

“The shop chains, which are afraid of empty shelves, will react by replacing national brand references with their own products. But this will not happen with a snap of the fingers.”

Some shops begin limited purchases

Some stores have already taken measures in advance to prevent panic buying or hoarding. Colruyt, the country's largest supermarket chain, announced that it’s limiting its sales of flour and oil due to high demand for both products.

Lidl is doing the same for oil, toilet paper and canned vegetables, La Libre reports, though the companies say there is no actual shortage yet and supply is sufficient for normal consumption. 

“This is a preventive measure to allow the shelves to be restocked and to give all customers the opportunity to make a purchase,” a Colruyt spokesperson explained.

Lidl said they “are making a constructive appeal for solidarity and making sure that there is enough for everyone” by limiting purchases to what’s strictly necessary. 

“There is no shortage, but we want to temper the sales. We notice that the news of the war is increasing demand and we want to avoid a situation like the one two years ago,” a spokesperson said, referring to the panic buying of 2020 brought on by the pandemic. 

Costs of some groceries could rise by 20%

Gondola’s Vanhout said that even if people continue to buy exactly as they always have, they’ll still notice a more expensive grocery bill. 

“We are going to see a 5-10% increase in prices for the whole year. For the products affected by the biggest price increases and shortages of raw materials, such as wheat and sunflower, it will be +15 or even +20%,” said Vanhout. 

“The top of the range will certainly be reached if we have another catastrophic summer for agriculture.”

Price increases will arrive by category: first cereals, then biscuits, then beer. Prices are already higher for certain product families such as tea and coffee, which have gone up by 3.5%. 

Local fresh produce may be spared from the runaway inflation to some extent, even the produce grown in greenhouses that is now facing massive increases in energy bills.

“We will also see an increasing price gap between national and private labels,” said Vanhout. “This will be an advantage for discounters such as Lidl and Aldi, whose assortment includes more own brands. This could even increase their turnover.”

 

Written by Helen Lyons