Fertiliser fears

24:08So just look at the different bottlenecks to see how much and how long you can run for with the straits closed. And it's just kind of that backup option, like the East-West pipeline that that saudi had it wasn't really operational at full capacity but then it was run and then similarly uae also with its own internal pipeline network to be able to move some tons outside of the strait of almost looking at those types of options that you can turn on should

24:32Will Bain:something geopolitically happen again that's armad el-hosey the chief executive of ferty globe there and we'll hear him a little bit later on in the program speak more specifically about farmers and the impact around there. And we'll also hear from a farmer in North Wales in the second half of the programme as well. Matt, just sort of lost count of how many times Mr Ahosey said, how long, how long. Is that how you feel about this as well? You know, trying to work out now, even if there is a best case scenario, peace deal signed, how long the sort of lingering impacts hang around for. Yeah, exactly.

25:07And the impact on consumer confidence. And consumers have had quite a few hits to contend with as have businesses. And so, yeah, this is the latest in a line of good news. Let's hope this is the one that really does signify that it's the beginning of the end. But then we'll have to get heads down into moving through it. And it will take time. We know that.

25:32Will Bain:Well, Lindsay, that bridges us across quite nicely to what's been going on in the markets the last couple of days. consumer confidence certainly something that jd weatherspoons and their boss tim martin were talking about in the in the results yesterday yeah that's right you know they've highlighted yet again that costs are just you know like a continuing obstacle for them basically they've cut their profit forecast now three times this year and that's a magnitude of about 10 percent since uh since about the start of the year so you know this is a problem for for a lot of businesses And it's partly down to consumer confidence, but with a business like Weatherspoons as well, it's also the higher taxes on hospitality, it's wage hikes as well, it's energy prices.

26:15So it's coming from a range of reasons. But, you know, I think encouragingly, we're still seeing demand holding up. People are still going to pubs. They are still spending, just perhaps not at the rate that they were.

26:25Will Bain:And this is the first time this morning that we've kind of strayed near UK politics. So your regular reminder at this time of year, I'm sure you've heard us make these announcements before, but obviously it's polling day right across the UK today. So less politics than usual right across Five Live until those polls close. That's part of our kind of legal obligations as a broadcaster. So we'll be slightly careful in terms of policies and who said what. But just in terms of that confidence picture, Matt, what are you seeing in terms of consumer confidence around the UK right now? Yeah, consumers are still there.

27:02They're more cautious, for sure, and taking their time to make purchases and engage with new brands, more selective, really trying to get value for money. So they're still spending. They're not stopped spending. They just become far more intentional.

27:17Will Bain:and when what does that kind of look like that intentionality if you like well for us it means that we're getting lots of questions before people purchase which is great because we have a team there to deal with it about trying to get the right um you know mix of products to start with rather than perhaps trying a bunch and then changing down the line so there's definitely some i guess selectivity and some caution around it although people are still buying yeah and lindsey in terms of what it's doing to prices in the second half of the year, not just Weatherspoons that we heard talking about tinkering with their prices, but next kind of speculating about what they would have to do.

27:55Will Bain:They were saying, weren't they, they were going to hold the line in the UK, but raising their prices perhaps outside the UK. Just hearing from lots of, I guess, the type of companies that people use and see every day on that. Yeah, that's right. You know, the prices can kind of feed through into the economy, you know, in a few different ways. So thinking back to that fertilizer story, So you think, firstly, you've got cost push inflation. So it's a direct cost for farmers. They're going to have to pass that on in prices. But then you get a supply shock as well. So if your fertilizer is too expensive, then farmers are going to use less.

28:27They're going to switch crops. Then you've got yields coming down as well and less supply. And that pushes prices up as well. So there's a couple of different mechanisms here. And thinking about food inflation, it's already 3.7%. The Bank of England is saying inflation is going to be going up over the next 12 months. are saying it could be about 3 % by the end of the year. That's about a percentage point higher than they thought it would be at the beginning of the year. So, you know, it's kind of a progressive problem at the moment, but we haven't yet actually seen this really sort of having a direct impact on prices yet, but I think it's going to come.

29:02Will Bain:Yeah, and I think Paul from Gillingham, who's been in touch on the WhatsApp, puts a pretty good exclamation point at the end of all of this, says, morning, Will and everyone. How can the world cope with an erratic president whose rhetoric changes with the tide from peace to obliterate, have a cuppa, wait for the dust to settle. Does it feel a bit like that, Matt? Yes. We can't. But yes, it does. It was quite a relief to actually open the BBC website this morning and see something different in the top slot rather than Mr Trump. And here, that disruption may or may not finally be closing in. We'll, of course, keep talking about it.

29:40Will Bain:Sean, back with you tomorrow morning. so I'm sure we'll be chatting more about what's going on with that peace deal then. Plenty more from Matt and Lindsay in the second half of the programme. If you want to join the conversation as Paul did 08085 909693 is the WhatsApp where Paul got in touch with us on 08085 058 sorry is the text number if you want to get in touch that way. Make Mother's Day even more special at Whole Foods Market. Kick off brunch or dinner with quality cheese and charcuterie with no synthetic nitrates. Then go see food. There's an abundance on sale at Whole Foods Market, where it's all sustainable while codder responsibly farmed.

30:18At the bakery, grab seasonal treats like their strawberry pretzel cream pie. And you can't go wrong with a ready to heat quiche Lorraine, deviled eggs and fresh cut fruits to go. Celebrate mom with Whole Foods Market.

30:33Will Bain:Wake up to money with Will Bade. Morning, welcome back to Wake Up To Money on Thursday the 7th of May where our panel this morning are Lindsay James, investment strategist at Quilter and Matt Hiscock, the chief exec of the supplements brand Wild Nutrition. 85058 to get in touch with us on the text 08085 909693, the WhatsApp number if you want to get in touch with us that way. Matt, just interested, just hearing that in the news, this BBC investigation into AI-generated fitness influencers. I mean, you're sort of adjacent to that space, that sort of wellness space. Is that a growing problem around that?

31:11Will Bain:As, you know, we were chatting right at the start of the program, the kind of explosive growth and kind of wellness as a sector. Is that becoming a bit of an issue? Yeah, it is. It really is a fast growing industry and this is often driven by influencers. And I think for brands, it's harder to control the messaging that goes out there with influencers on social media. and we're in a regulated industry, certainly the supplement industry. And so you have to be very careful about what you say. So we welcome regulatory oversight. We work voluntarily with an association that's sort of part of the FSA really to check on messaging.

31:50And I think that's advisable for other brands because there are so many things you can't say. I think it's important to be aware of those and to be really transparent with customers to build trust.

32:02Will Bain:Yeah. And what about AI and marketing? Because that is also an area where we're seeing a big move, isn't it? Because it can be a big saving rather than using a traditional advertising agency. Anything that you've dabbled with in terms of AI and your marketing yet? Yeah, yeah, we're there. I mean, for us, it's about doing more with the same number of people. And so we've dabbled in AI with creative, with a little bit around customer care, a little bit around marketing and a little bit with analysis. Despite all of that, we've still hired over 40 people in the past 12 months. So for us, AI is not about replacing human interaction.

32:40I think in this category for health and wellness, AI works well when it's paired with real expertise. So we are leveraging it, and it's helping us do things faster and sometimes better. But we're not going all out.

32:57Will Bain:Yeah. Lindsay, it feels like it's going to be an increasing area for the advertising standards agency, doesn't it? Oh, yeah, definitely. And in the financial world, absolutely as well, because it's so heavily regulated. So I think trade carefully in this one. I was going to say, even the Financial Conduct Authority, he's AI generated, isn't he? The squirrel that's meant to get everybody saving. Are you a fan of him? Have you seen him? I haven't, to be honest. I've missed that treat. The savvy squirrel he's meant to be. So he's meant to encourage people to invest more, but he is AI generated and he's been out and about in a Hawaiian shirt drinking cocktails.

33:33Will Bain:I presume meant to be the sort of fruits of your wares if you've invested with it. But yes, it seems like an embracement, but also a nervousness about how much it can change, doesn't it? 85058 for your texts, questions, queries, points you want to get across this morning. Let's hear a little bit more from Ahmed El-Hosy then. As I was saying, we were chatting too with the boss of Fertiglobe about what's going on with fertiliser, specifically in terms of sort of supply chains for farmers as well. So here he is talking a little bit more about the impact, I guess, that that's having on the agricultural sector.

34:05If the strait were to open and, you know, there would be clarity on safe passage, which I think is easier said than done. But if we can get clarity on a safe passage, I think sentiment would kind of allow for lower pricing and pricing to go down. But at the same time, you know, there's been a little bit of that over the last few weeks. We had a lot of stop starts with ceasefires and everything over the last few weeks. And effectively, what a farmer will do and the distributor to that farmer will do, will try to delay purchases as much as possible. Now, when it comes to Europe, UK, the US, a lot of the buying has already been done.

34:39So actually, that's the good news. So people are planting already and a lot of applications already started. You know, they're buying some of this higher priced product in over the last month or two. But if this were to extend out longer, you're going to see that delayed purchase, you get to a position where they can't wait any longer and they're going to have to buy that higher price product or decide not to apply that fertilizer, in which case they may not even plant at all. So nitrogen fertilizer intensive crops, they need the fertilizer to get these higher crop yields for crops like corn, wheat, rice.

35:15And so those types of crops, if they don't, if the farmer can't make the math work on these much higher priced inputs, you could have less production, less grain production and higher prices in the future. So a delayed effect.

35:26Will Bain:Yeah, absolutely. And presumably as well, as you've said, the price pretty much almost doubling by your numbers. Right. That is going to take some time to come down. Presumably that is not going to come down quicker than when people are going to be thinking about rebuying that again as we move kind of towards the back end of the summer and into the autumn again. Yeah, I mean, even think about, to give you an example, the U.S. The U.S., a lot of the farmland sits in the Midwest, which is, you know, right in the middle of the country, you know, the Corn Belt and all that stuff, kind of the northern part of the U.S.

35:56Those farmers need to have the product on a barge in the U.S. Gulf Coast at the Mississippi River, right at the southern part, you know, Texas, Louisiana area. they need to have that by mid-May to make it in time for their season. If the straight opens tomorrow, right, there's no way product will arrive from the Arab Gulf all the way to the Mississippi River within, you know, this short time period of, you know, eight, nine days, right? So, you know, it's about also the logistical movements. When it opens, can it get there in time for when that farmer needs it in Australia and Brazil and South Asia or whatever it is?

36:30And the other element of it is it's not just that the straighter foremost needs to open, you need to start generating product again at some of the producers. Some of our peers here within the Strait of Pormos have been shut down for the last couple of months. They haven't been accumulating product and vessel loads.

36:43Will Bain:That's Ahmed El-Khozi, the chief executive of Fertiglobe, the fertilizer firm there. We're listening to that is Clea Jones. Clea's a sheep farmer, beef farmer, poultry farmer, all kinds of farming in Denvershire, in North Wales, joined us live this morning. Clea, morning. Great to have you back on the program. Good morning. Is that the question now about how long it sort of kickstarts back into gear again, the sort of fertiliser supply chain? Yeah, so the issue we have is, yeah, once we've got it, thankfully in the UK we've had it, the fertiliser in our sheds, usually around about March. So some of us, I was lucky I got it in before the situation in Iran, but I'd say half of the farmers hadn't.

37:37So that's going to definitely be a knock-on effect for the farmers. And unfortunately, it'll have to be passed on to the customers. So we'll be seeing increased foods from the summer onwards, really, because we can't just keep paying so much for our fertiliser and not getting enough back from the supermarkets.

38:01Will Bain:I was going to say, how easy is that to do? Because those supermarket contracts are often locked in, aren't they, for a long period of time? yeah so um with the being an egg farmer we we our biggest cost is feed which is uh corn and wheat so wheat prices have started to go up because farmers have struggled to put fertilizer on which means we're going to have lower yields uh next year because other things like weather um is going to be affecting it that we took this talk about some droughts in australia already so the price of corn will start to go up, which means that our feed will go up, which means that we're going to have to pass it on to the supermarkets.

38:45And the way we do it is we do it with a thing called a COP contract, a cost of production contract. So as our costs go up as farmers, we then have to tell the supermarket and then they then have to then increase the prices of eggs. It's a new thing we've been doing. It started during 2022 with the Ukraine because the price of coal went up then and it was crippling us. And so the supermarket brought it in as a way of a mechanism that would safeguard us. So hopefully in the next few months it will kick in again and the cost will have to be passed on to the customers.

39:30Will Bain:unfortunately interesting so people will see we see changes in prices pretty quickly you think potentially on supermarket shelves yeah within the summer onwards um i i i would presume yeah and what kind of products are under most pressure would you say i mean you've mentioned eggs uh well you know anything bread uh anything wheat based uh will will be going up um and And everything, really, milk should be going up because we depend quite heavily on fertiliser, growing grass for feeding the cows and growing all our crops. So it really is everything is affected in food production when you're talking about fertiliser.

40:13Will Bain:Right. And presumably as a result, it doesn't come back down again quickly. No, well, it all depends. It will take it goes. It goes up quicker than it does come down. And it will take a few months for it to come down. As soon as the streets are open, we can see prices. Red diesel is another one. In the pump, we've seen diesel going up by maybe 40p, 50p, but red diesel nearly doubled in price. So the diesel we put into our vehicles on the farm, the tractors on the farm has more than doubled. And that's a huge cost that we have to absorb, unfortunately. Clear. Ross in Cumbria has been in touch on text this morning.

41:05Will Bain:It sounds like he's in a similar position to you. And he's put this point. I just wondered if you're seeing this, talking about the fertiliser kind of industry here. Ross is saying they're trying to scare us, they as in the fertiliser industry, farmers, into buying now at a more expensive price, a dearer price, and then supermarket bosses are probably urging fertiliser, supposed people to keep shouting about price. I mean, is there any element of that you fear, that some of this is tactics, scaremongering, I suppose? There's definitely profiteering. They're 100 % profiteering. Like I was mentioning about the red diesel, you know, in the pump, we've not seen normal diesel double in price, but red diesel has doubled in price.

41:48So it doesn't, that makes zero sense for red diesel to double in price. So there's definitely profiteering. profiteering and on with the fertilizer i've heard farmers ordering fertilizer uh promising it was going to be delivered by uh april at the beginning of april but then the longer they were the farmers were um waiting uh the price of fertilizer was going up so some of the merchants were very slow in in actually bringing this fertilizer out because they knew every day they were able to delay it. It was going up by£10 to£20 a tonne.

42:28Will Bain:So there's definitely profiteering involved. So I guess it's important that regulators, government, keep an eye on that element of it in particular, I'm guessing, as well. Yeah, I would say so. Clare, thanks so much for your time this morning. Always appreciate it. You're welcome. No problem. Clare Jones there, farmer in Denbyshire in North Wales. Lindsay, we've kind of mentioned it a couple of times, haven't we? But just in terms of just that sort of worry about how long inflation hangs around, when you hear stuff like that, things that people can't avoid not buying, right, foodstuffs and the type of inflation that might come very quickly.

43:03Will Bain:Is that why we've seen the Bank of England being very cautious around interest rates and why the worst kind of impact, I suppose, economically on us might still be to come here in the UK as a cheery thought at 20 to 6 in the morning? yeah so it's inflation expectations here so that's really what you think inflation is going to be in you know months or to a year to two years time and then how that impacts your consumer or business behavior today so they're trying to anchor inflation expectations to two percent of course that's the long-term target and they do that by saying if we need to act then we will we will raise rates but of course that raising rates doesn't sort of fix what is a supply problem and they have been very honest about that so you know it fundamentally comes down to supply and as we've said so many times now when when we get the straits reopening but it also comes down to how you change your behavior and if you you kind of rush into securing those deals for instance for fertilizer at higher prices then you're really kind of nailing it in aren't you nailing it down and you're kind and making that a concrete outcome.

44:09So there's still very wide tram lines for how this could evolve.

44:13Will Bain:Matt, are you seeing any particular kind of products, ingredients in your products sort of stuck high inflation-wise? No, we work with our suppliers usually on an annual basis and get pricing for the year. The biggest impact to us at the moment is oil and transporting materials around because of our global supply chain, really. 85058 if you want to get in touch in the last 10 minutes or so of the program is the text number 08085 909693 the whatsapp would love to know if you're a fan of gins in tins because we'll be talking about that in just a moment but um lindsey to lead us into that conversation we had numbers from the agio the big drinks brand owner guinness johnny walker lots of others there as well um shares this has been a story with this company for a while but but shares up after um better forecast for its sales after a pretty bumpy, well, what, two, three, four years, really?

45:08Yeah, that's right. So, you know, they delivered a small sales improvement. This was a Q3 trading update they had yesterday. Sales up 0.3 % in the latest quarter. But this was a lot better than the market was expecting. It was expecting from minus 2 to minus 3%. So the business definitely isn't broken. And there was still good growth coming through in Europe and in their emerging market business in Africa. The issue here is America, and it's still the problem. It's where spirit volumes are really under pressure. And there's a few factors going on, but it's partly to do with the category in spirits being impacted.

45:42But they are talking about the ready to drink, the gins and tins idea as being a source of growth for them in months and years to come. I think they've been a little bit slow on the uptake in this area. It's been a big area of growth for others, but they've got to compete with independent brands. And that's going to be that's going to be a challenge for them because they haven't really been first mover here.

46:01Will Bain:Well, let's get into that in more detail because joining Lindsay and Matt for the last section of the programme here, we've got Arabella Marlman. Arabella is the retail editor at the drinks business, the drinks industry trade publication. And Rob Wallace back with us on Wake Up To Money. Rob's the co-founder of one of those RTDs, as they're known, ready to drinks. Moth drinks provides cocktails in cans, Moth an acronym for mix of total happiness. Yes, morning both. Arabella, spell it out for us then in terms of RTDs. We're talking about, I mean, I keep jokingly calling them gins in tins because I'm thinking of kind of sort of, you know, M &S train stations and things.

46:38Will Bain:But this has been a boom area for a while, right? Yes. I mean, it's something that's been really growing since sort of Covid. People sort of able to celebrate at home and it just brings somebody described as a party in a can. It's such a diverse area. You've got sort of hard celtzers, hard teas. you've got the gin and tonic, pre-mixed cocktails. You've got the whole gamut of the spirits business, but then distilled down and made into something much more accessible, both in terms of price point and where people can drink them. Yeah. Matt, are you a fan of these? I am. I hadn't tried one for a long time, and then I was really surprised by the quality.

47:24It's outstanding. really really good and quite economic if you think about the cost of buying all the various bottles that you only ever use once well that's a really good point i'll put that to rob actually

47:35Will Bain:as well because rob morning from us great to have you back on the program good morning i remember when i first moved to london being very striking when i when i was first living down there uh getting on a train at victoria station at sort of rush hour on a thursday night or friday night pulling out of victoria station and it was like fireworks going off all over the train you could just going off all over it but that was just like people just sort of grabbing whatever they could i guess from from m &s or wh smiths or whatever that quality point that matt was talking about clearly a big part of your brand how was the kind of how was it shifted i suppose from being something that someone grabs because they're at a train station and they want to drink it on a train on the way home on a friday night to that sort of more luxury experience that you're kind of offering too yeah i mean i think it's a great point the train out victoria station i'm sure is still a British institution of can fireworks going off.

48:26But I think what the cans are have changed. And I think we like to think we've been a bit of a part of that moving towards the sort of £2 price point back in 2020, 2019 of gin and tonic in a tin to a genuine bar quality cocktail. I mean, maybe now with the growth of tequila, it should be tequila tinnies rather than gin in a tin. But yeah, that for us has been a huge point. Offering people quality and convenience, that's the big change in the category that we're hoping to drive.

48:51Will Bain:Getting it right then, what were the kind of key things you were thinking about when you started the company? So when we started, we asked the really sort of naive question of why can't it be just as good as a bar? And the answer back then was you can't make a great bar quality margarita for£2. And that was the whole ceiling of the category. You couldn't charge more than£2 for a gin and a tin. And so we took the risk and said, look, we're going to make it as good as we can and we'll work out the cost second. And we did. And it came out twice as expensive as everybody else. and Waitrose took that chance with us and launched it into the market and it turns out people had been waiting for something that was as good as they could make and as good as any bar in the world.

49:30And so that for us has been the success. Make it as good as you can and people will pay for a better product.

49:35Will Bain:Arabella, is that the thing that's kind of shifting a bit then in this sector? Yes, I mean, there's been a huge kind of rise of sort of premiumisation. People want that quality, but also, yeah, along with the convenience. it's something you can you know take to a barbecue sit in the park with mates I will admit I am not potentially as key demographic that is appealing to but it's it brings in a younger it brings in a younger consumer people who can hang out when they you know go to a barbecue and and just it opens up those opportunities much more sort of outside consumption at home consumption as well you don't have to be tied to going to a bar and paying a premium for for that experience.

50:15Will Bain:Rob I was going to ask you exactly that actually as well who who is it then who's drinking these who's your target audience at moth and who's the is that the same across the category or different people aiming for different people sure so i think it's very occasion based generally the category is that's a slightly younger drinker you know 18 to 25 is the typical consumer for the category moth because of how premium we are we sort of we are a bit of a broader church so we say 25 to 45 plus you know people who really know what a great Negroni or an espresso martini tastes like join moth sort of regardless of age.

50:47So we're very fortunate that we sort of we capture quite a wide gamut, but we are a bit more expensive and a bit more premium. So we tend to have a little bit of the older consumer. But for ready to drink, it's one of the reasons it's in such big growth is it's so easy to enter as a category. It's not a really expensive bottle of gin or tequila. You can join the category, you know, even Gen Z's now really participating just like millennials. You can enter the category easily and then as you age and as you can afford it you sort of premiumize a bit more and that's where a lot of our consumers come from.

51:16Will Bain:Lindsay and then Arabella on this then as well you mentioned Lindsay right at the start you thought it's actually maybe a bit slow I mean hearing what Rob's saying is that why you feel that way that perhaps they've been a bit slow on the uptake of a trend here? Well for a long time they said that it wasn't helpful to their margins by going into this space but of course they don't need to invest much to do this they've already got very strong brands across spirits so i think that's something that they're overcoming because they're focusing instead on on the cash margins of it if you like so to the fact that there's limited new investment required for this growth area um but you know for in the us the spirits business has been right sort of this this problem child for them and i think it's partly down to the fact that it's price point as well we've seen people on lower incomes really struggling in recent years just same as in the uk So I think if you can offer a new product at that lower price point, but it's still got that same premium feel and it ticks the convenience box, then it's a no brainer.

52:16Will Bain:Arabella? Yeah, I agree. I think there's also the fact that it can be a very diverse market so that people are constantly looking for what the next thing is, what the next trend is. and it's a very broad as well. So you've got such a lot of people and people sort of actually doing different things that it can be potentially challenging for brands to sort of get into that. But yeah, Diageo are very well placed, but it's not necessarily a given. Yeah, absolutely. And Matt, to that point, you know, in your sector, for example, would people cringe, for example, do you think your buyers, if it was a product that was made, say, by an older fashion company, like people who stock you, Like if Holland Barrett were doing it themselves rather than your product, is that one of the sort of difficulties if you're sort of a legacy player, if you're like trying to get into an emerging space?

53:05I think in our category, legacy works well. That means provenance and understanding and usually it equals trust. I think in FMCG or in drinks, it makes sense for the incumbent players to lean into emerging trends and also retain relevance. I also think that Diageo was smearing off ice back in the day and they led the way with that one

53:28Will Bain:I remember those very, very well from nightclubs in Worcester back in the day Rob, you got anything good for the summer? Anything new being rolled out? Yeah, we've just launched a mango margarita in retail nationwide and a strawberry daiquiri so tequila and rum leading our summer Fantastic Well, I think I may well need one of those come 10 o 'clock tonight when Villa's second leg against Forest finishes I may need more than one depending on what the result is but thanks so much everybody for your time this morning Rob Wallace there the co-founder of Moth Drinks also big thanks to Arabella Marlman the retail editor at the drinks business and our panel this morning have been Matt Hiscock chief executive of the supplements brand Wild Nutrition and Lindsay James the investment strategist at Quilter remember if you ever miss a program podcasts available every single day of the week just search for Wake Up To Money.

54:17Will Bain:Wake Up To Money with Will Bain.

54:24Will Bain:Welcome to the Wayne Rooney Show. Wayne went along to Carrington to meet Manchester United captain Bruno Fernandes. Before I saw you guys playing so many times and I was following the club for so long, just coming to the club was already a dream come true, a privilege. Never thought or dreamed about being the captain of the club. I just wanted to play for it. Portugal have given me me two words like a football. I was in my grandma's house. I run with my cousins, we run outside in the streets. The Wayne Rooney Show. Watch your night, player. Listen on sound. BBC Sounds. Music, radio, podcasts.