THE managing director of Scottish wholesale firm Dunns Food and Drinks says energy price hikes which came into effect on April 1 will cost the business hundreds of thousands annually.
The firm has already taken measures to mitigate the impact, including reducing delivery frequency and considering installation of solar panels at its Lanarkshire headquarters. Jim Rowan has also warned of the inevitable impact of wage inflation.
Jim Rowan, managing director at Dunns Food and Drinks, said: “There are two ways to look at the rise in prices – you can cry into your pint, or you can do something about it.
“We can’t do anything about the cost of gas and electricity, but we can take action to offset it as much as we can – we can’t just keep passing costs on to our customers forever.
“Petrol and diesel prices have risen 30-40p per litre since January, which when coupled with the stop on use of red diesel, which we use to run our vehicle refrigeration, will increase our fuel bill across the fleet by around 20 per cent annually from April 1.
“The biggest issue, however, is the cost of electricity. We have a 20,000 sq ft freezer and the real-terms impact of that will be hundreds of thousands of pounds. We’re a small to medium sized business – and we will have to pass some of that impact on to customers. We’re experiencing it ourselves with suppliers implementing a 10% surcharge.
“We’re already looking at new solutions. We’re considering adding solar panels to our main site which, although a significant capital outlay, will reduce our energy costs by around 70 per cent, as well as improving our green credentials.
“There is also going to be serious wage inflation. Our staff – who don’t lead extravagant lifestyles – are having to find an extra £2,000 a year, and the first place they look is their employer. We have already increased wages in line with the real living wage and will implement a further increase shortly to help offset the impact of these cost-of-living rises.
“The pandemic taught us to look inwardly and that’s helping offset the impact of price rises. We have made ourselves hyper efficient. Everybody knows the phrase, ‘if it isn’t broken don’t fix it’, and we’ve turned that on its head. We’ve looked at everything we do and decided what we can do to make it better, or whether we should be doing it at all.
“New technology has played a significant part, we are now 67% online. Where we once had telesales teams working at evenings and at weekends, we now don’t do that. It hasn’t come at the cost of jobs – our headcount has risen from 108 to 118 since the start of the year and we are looking for more – but we have redeployed staff into areas of the business that help us grow and deliver what customers want as efficiently as possible. We’ve consulted customers, and reduced deliveries to be more efficient. We’ve also moved into direct-to-consumer sales, which is not something we’d have considered pre-Covid.
“We’ve all endured Brexit and the pandemic, but I believe the impact of what’s happening in the Ukraine will make Brexit look like a walk in the park. Ukraine is a hugely important country for the food sector. Staples such as sunflower oil and chicken are doubling in price. Bread will be next as we see wheat affected. That’s a challenge at a wholesale level, and consumers will feel it too.
“The important thing is to keep going. We will get through it. I don’t know how long this will last, but you mustn’t give up hope. Otherwise, what’s the point.”
