The large distribution warns of new increases in the price of fruit and vegetables due to the war in Iran: "Everything has a limit"

BarcelonaThe effects of the Iran war continue to strain the large retail sector, which finds it increasingly difficult to contain the costs of fruit and vegetables. This Wednesday, the main association of manufacturers and distributors in the State (Aecoc) has warned of the possibility of new price increases in the not-too-distant future if the conflict in the Middle East drags on.

"Our cost containment limit is close. No matter how much magic we apply, everything has a limit [...] and we are not far from that point," acknowledged the president of Aecoc's Fruit and Vegetable Committee, Enrique de los Ríos, at the presentation of a study by the organization on the sector's prospects in the current context. For the also general director of the Unica group, the increase in costs is the main risk associated with an escalation of tensions, a statement that the rest of the sector also subscribes to. According to the analysis presented this Wednesday, eight out of ten companies state that rising costs are the main impact derived from the current geopolitical scenario.

Although the executive believes that large retailers still have "a cushion" to maintain prices, he also observes that everything will depend on the evolution of the ongoing conflicts. In this sense, he is confident that the situation in the Strait of Hormuz – through which large volumes of fertilizers– will "calm down" and he wishes for an end to the conflict between Russia and Ukraine. "We hope that the easing of tensions coincides with our limit [for cost containment] and that this will be just another crisis," he summarized.

Despite everything, De los Ríos pointed out that Spanish consumers "are lucky" to live in a country where they can still buy fruit and vegetables "very affordably" and where supply chain management "is very efficient." However, he also issued the following warning: "Efficiency moves slower than geopolitics."

Moderate optimism

Despite concerns about the possible increase in the cost of the shopping basket, large retailers are "moderately optimistic" regarding the growth of the fruit and vegetable sector. As indicated by the Aecoc survey, four out of ten managers predict that the sector will continue to grow despite geopolitical tensions, while half foresee "some stagnation". Only 10% believe that it will be necessary to prepare for a future recession or do not dare to make forecasts.

Good proof of this attitude is reflected in the sales recorded during the first quarter. Even with more strained supply chains, nine out of ten companies have maintained or increased their revenue compared to the same period last year. Profitability, on the other hand, has also not suffered: 86% of major retailers have grown or stabilized in this regard.

Although inflation is manifesting as the biggest concern, Aecoc completely rules out product shortages, a specter that, on the other hand, has manifested itself in sectors such as aviation due to a possible lack of kerosene. In this regard, the existence of surpluses is an indicator. In Spain, for one out of every three manufacturing companies, exports represent more than 50% of their sales.