Inflation is pushing up all prices, including those in the shopping cart, and nougat will not escape the trend. The strong increase in energy costs and raw materials such as honey or sugar will force companies in the industry in Xixona to make their products between 5% and 10% more expensive. They do this, yes, timidly and by sacrificing profit margins because the costs they incur are higher than they are transferring. Therefore, sweetening the next Christmas will be more expensive for families.
The war in Ukraine and speculation in the gas market directly affect energy costs, which attracts everything else. The industry is one of those sectors that has suffered particularly hard from this rise in inflation, to the point of tying many companies to the ropes. In this context, and just a few months before Christmas, the Nougat Companies of Protected Geographical Indications (PGI) Jijona and Alicante found that the difficult economic situation was taking their toll.
This is the case of Turrones Coloma, directed by Amalia Coloma, noting that companies face a delicate situation because “the costs of electricity and some raw materials cannot be fully covered. And even more, for an industry like ours where production has been concentrated in such a short time, a period where we have confirmed that the bills we have to face are increasing rapidly.
Almond, which is a basic and indispensable product for nougat, has not experienced a serious price increase, thankfully on behalf of the sector. What’s skyrocketing, according to Coloma, are sugars, honey and some additives, which are now almost 50% more expensive than last season. To this we must logically add energy, the price of which continues to rise. “Everything is out of control and we don’t know where we’re going,” he complains.
Therefore, companies have no choice but to reflect these price increases on their products. “No less—says the manager of Turrones Coloma—considering that companies will also have to forego profit margins, we’ve rolled over all the gains. In our case, we are talking about increases of 8% to 10%». The operations manager also reminds that prices have been frozen for several years, “so there is no other choice but to take this measure. What we can’t do is lose money.
In very similar terms, Beatriz Sirvent, in charge of marketing at Almendra y Miel, a nougat-producing company known as 1880, El Lobo or Doña Jimena refers to herself. “Unfortunately,” he says, “we are all the same. And we are talking not only about the raw materials used to manufacture the products, but also about the cardboard and plastics we use for packaging, which have become about 40% more expensive ». That is why the company’s prices are in the same 8% and 10% range. “We are well aware that consumers are also having a hard time and have to make an effort to fill their shopping cart – so it’s time to cut margins,” he points out.
In any case, he does not believe that these price increases will affect sales. In her words, “We’re talking about a very solid product that always ends up in homes at Christmas time. We’ve already gone through pandemics and nougat withstood the pull ».
Manuel López, director of the Hijos de Manuel Picó company and more focused on artisanal production, emphasizes that “we have been fortunate enough to close deals that allow us to buy almonds at affordable prices. What we cannot avoid is the exorbitant increase in the cost of honey and sugar and, of course, energy.
However, on this last point, he emphasizes that the company decided to take action by betting on the installation of solar panels on the roof of the factory. According to López, “it is by no means a panacea, but there is no doubt that something has helped us. Luckily, we had already channeled this project earlier in the year, so we were able to launch it just as electricity was more expensive.
However, the firm also chose to raise prices, in this case between 4% and 5%, “to be somewhat competitive in the market. Of course we’ve tightened earnings, but we think it’s the right thing to do right now.”
And in the midst of all this, how is the campaign delivered? Manufacturers are optimistic and even hope to increase their sales last year when they have already increased by 5% and reach figures very similar to pre-pandemic figures. In particular, companies integrated into the regulatory council billed around 150m euros in nougat; this figure rises to over 200 million when considering the Christmas desserts in general, as well as other nougat varieties outside of Jijona and Alicante. .
Export played an important role as it grew around 10%. This year’s production started in June, in a season that is getting earlier every day in order to provide easier service to foreign markets, especially non-EU markets.