Skip to main content

Impact of economic pressures on UK hospitality

 Our single largest client base is the UK hospitality sector (hotels and restaurants).  Because of our high price high-quality products, we feel far less the impact of this crisis, but it would be wrong to say that we are not impacted.  There is pricing pressure at several levels of our production process.  

In 2019, 99% of our production was for the hospitality sector, and 100% was for the domestic market.  In 2022, 85% of our production was for the hospitality sector and 95% for the domestic market.  In 2023, 70% of our production was for the hospitality market and 85% for the domestic market.  These changes were entirely driven by our wholesalers.  They are the ones that optimize sales of our products to match market demand and our pricing points.

We will never be a farm that focuses on the UK retail market, we will never sell to the likes of Waitrose Safeway or other supermarkets.  For two reasons; our products are too expensive and too niche.  We sell heirloom fruits and vegetables to restaurants.  

Nothing in life is forever.  As a farmer you have to adapt to the trends and market demands, the key is understanding who is your market and what is your product.  Over the past two years, one wholesaler has expanded its European operations and now ships our products every day to the Netherlands, where it seems there is a great deal of demand for our fruits and vegetables.

We are unlikely to export any of our meat to the continent.  First, because it's not that special to warrant the additional cost.  However, the UK direct-to-consumer demand has exploded.   Our wholesale (again did a lot of the work) has since Covid been very successful in selling our products directly to consumers.  The difference in price for us is staggering.  Our wholesaler tells us that demand for our meat in this segment has grown by more than 50% per annum.  The only difference for us, aside from the price, is the size of the cuts (a lot smaller than what we do for restaurants).

We have seen some high-name recognition restaurants close over the past two years, and they often were clients of the farm, so we've had to retarget our sales.  We never expected that the hospitality trade would be 100% of our business, although we never thought that the direct-to-consumer business would be something either, so sometimes you have to roll with the punches.

The addition of 12 high tunnels is entirely driven by these new markets.  Our wholesaler takes a hefty commission on our products, we know exactly what is their cut and we don't have an issue with these numbers.  They provide the farm with great value, especially in the current market conditions.  


Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more