Sandwich prices to rise after increase in minimum wage

SUPERMARKET sandwiches are to become more expensive as a looming rise in the minimum wage puts up the cost of making them.

Greencore, the UK’S biggest sandwich maker, said yesterday it would need to increase its prices when the National Living Wage increases by £1 an hour in April.

The company produces 779m sandwiches a year and supplies most of the major supermarkets, including Sainsbury’s, Marks & Spencer and Co-op.

Dalton Philips, the Greencore chief executive, said: “We’re hugely supportive [of wages rising], because if you can get wages moving again that’s going to ultimately put more money in people’s pockets.

“But the reality is, on our wage bill, it is a material increase.”

The National Living Wage will rise to £11.44 from April in the biggest cash increase since the minimum wage was created in 1998.

Mr Philips said the increase will add around £30m to Greencore’s costs.

He said: “Obviously, you do everything you can to mitigate it by operational efficiencies and all the good work that all companies try.

“But at the end of the day it’s £30m and you can’t mitigate it all. And some of that does seep into price rises.” Greencore employs around 13,600 people across 16 factories in the UK.

As well as making hundreds of millions of sandwiches, it makes around 25m packs of sushi and 132m chilled ready meals every year.

Supermarkets ultimately set the price of the goods they sell. However, a rise in what Greencore charges may well be passed on to shoppers.

The likely increase threatens to reverse the recent slide in food inflation. Grocery inflation dropped from 7.7pc to 6.7pc last month, according to the British Retail Consortium.

Industry bosses have warned that they face significant increases in costs in the months ahead that threaten to push up prices.

As well as the rise in minimum wage, business rates are also to climb and new border checks will add to costs.

Helen Dickinson, chief executive of the BRC, said earlier this month: “The Government should think twice before imposing new costs on retail businesses that would not only hold back vital investment in local communities, but also push up prices for struggling households.”

Mr Philips said despite the cost of living crisis, shoppers were increasingly opting for pricier, premium sandwiches.