The CEO of Sainsbury’s has urged the government to assist food businesses grappling with surging energy costs attributed to the ongoing conflict in Iran. Simon Roberts disclosed ongoing discussions at a high level regarding the urgent need for intervention.
Concerns have arisen over the possibility of farmers and producers passing on increased expenses, potentially leading to price hikes for consumers. While Sainsbury’s has not yet felt the impact of the Middle East conflict on costs, there are apprehensions that energy price spikes may soon affect salad and other producers using heating in greenhouses and polytunnels.
Roberts emphasized that there are currently no shortages, noting, “We are experiencing unprecedented levels of fresh food availability.” However, he acknowledged the inflationary pressure and the high energy expenses faced by food producers, pledging to collaborate with suppliers to minimize the impact.
The CEO mentioned engaging with the government to advocate for support on energy costs for food companies. He highlighted recent productive dialogues on various topics, with energy being a significant cost concern for the food industry, urging the government to take decisive action in the sector.
This plea for assistance coincides with the government grappling with economic repercussions from the Middle East conflict, potentially affecting tax revenues. Additionally, calls have emerged for financial aid to assist low-income households expecting higher energy bills later in the year.
The escalating energy costs have already impacted businesses, exemplified by the collapse of renowned pottery maker Denby before the conflict escalated. Concerns persist that other firms may face closure due to potential spikes in energy bills.
Sainsbury’s has cautioned about uncertainties stemming from the Iran conflict clouding the outlook, potentially lowering profits for the year. The supermarket anticipates underlying operating profits between £975 million and £1.075 billion for the 2026/27 financial year, amid the unpredictable impact of the conflict.
Despite challenges, Sainsbury’s remains optimistic about outperforming the grocery market and maintaining profitability. The company, which saw a 30% increase in share price over the past year, reported profits of £1.025 billion in the previous financial year, aligning with expectations.
Roberts indicated that shoppers have not yet adjusted their behavior significantly due to concerns about the financial impact of the conflict. However, he suggested that consumers are likely to switch to own-brand products and purchase more frozen food in response.
Regarding fuel supplies, Roberts reassured that there are no fuel shortages at Sainsbury’s forecourts, mentioning a temporary increase in demand at the conflict onset but affirming that the situation has stabilized.
The company’s positive start to the year indicates resilience amidst challenging market conditions, with an ongoing focus on meeting consumer needs and ensuring operational stability.