Gourmet popcorn lovers may soon be left with a bad taste in their mouths, with the post-referendum slump in sterling set to result in price hikes for the popular snack.
The founder of upmarket popcorn brand Joe & Seph’s said that a weaker pound has driven up the price of imported goods like sugar, chocolate and corn, while compounding climbing dairy costs.
“We are now looking at how much of these increases we can absorb and how much will need to be passed on to customers in the form of higher prices,” Adam Sopher said.
Mr Sopher, who started Joe & Seph’s with his father in 2010, explained that the London-based company was already feeling a squeeze from the rising cost of butter, amid a European fat shortage and a 5% drop in UK milk production versus 2015.
But the drop in sterling prompted the company’s supplier Foodspeed to raise butter prices by a further 50p per kilo at the start of September.
Meanwhile, the popcorn company is stuck importing foods like chocolate and corn, which tend to grow in hotter climates.
“Where we unfortunately cannot source raw materials in the UK... our costs have increased and look like continuing to increase, but in the near term we are hoping for increased sales from reduced value of (the) pound.”
The pound has dropped by around 18% against the US dollar since the referendum, and fallen about 15% against the euro over the same period.
Other industry players like PopChips are also keeping an eye on rising import prices.
PopChips’ general manager for the UK and Europe Will Bowler agreed that there has been an immediate jump in costs following the post-Brexit vote slump in sterling, particularly in raw materials and fuel.
Joe & Seph’s has taken out some limited forward contracts to hedge against further currency volatility, but for the most part the company is trying to manage on its own.
In the short term, Mr Sopher is banking on rising export sales to offset raw material costs.
Both Mr Bowler and Mr Sopher are optimistic that the drop in sterling will present more export opportunities, as their respective popcorn-based snacks become cheaper for overseas customers.
“The collapse of the pound has meant that our products are now 15% cheaper for Europeans to buy, 15% for the Middle East and 35% for the Japanese.
“We are now looking to invest a lot more in exporting our gourmet popcorn as a result to take advantage of the opportunities for increased sales,” Mr Sopher explained.
Joe & Seph’s currently expects revenue to rise from £3.5 million to £5.5 million over the next 12 months.
The company currently holds roughly 5.8% of the £120 million UK popcorn market and Mr Sopher is optimistic that market share will continue to grow, despite the challenges posed by Brexit.
“From a share perspective, I think we’re in a really strong position as a brand, so I can still see our share increasing over the next few years regardless of Brexit. I’m quite positive actually about the outlook.”
He added: “We’re very much taking each day and reacting based on what we see.”