Nick Santoniccolo, Head of Finance at Italian specialist catering distributor Vincenzo Ltd, shares his company’s outlook for the global economy in 2024 and why he believes the next five years should be full of opportunity for the fresh produce industry.
In the short term, Nick says that we should anticipate a significant reduction in inflation across the board next year, ushering in a period of enhanced stability in commodity prices, particularly in the realm of fruits, vegetables, and various other food products.
“This newfound equilibrium will offer valuable insights into the authentic pricing of products at any given moment along the entire supply chain,” he predicts. “Reduced inflation will naturally benefit companies specialising in premium and niche products within New Covent Garden, while simultaneously posing challenges for businesses engaged in the trade of [more] commonplace fruits and vegetables. So brace yourselves for the onset of margin compression as a result of this stabilization, allowing for a more transparent and fair marketplace.”
A General Election looms on the horizon next year and while the exact timing remains uncertain, Nick believes it is improbable that Prime Minister Rishi Sunak will opt for a summer election, instead, the likelihood leans toward a spring or autumn election. The uncertainty that surrounds any General Election may be met with global apprehension, translating into increased volatility in the pound and a general devaluation throughout the year, he says. “This devaluation stems not only from political uncertainty but also from the implementation of lower interest rates. But generally, here at Vincenzo Ltd we view Lord Starmer as a economic moderate and a “safe pair of hands” who would act quickly to ‘reassure’ markets [if he were to] seize power. Nevertheless, be prepared for some disruptions during these periods, given their historical busy-ness for our customers.”
He adds that a decrease in interest rates opens a window of opportunity for businesses in the wholesale fruit and vegetable industry for capital expenditure. “Simultaneously, although [this is] something Vincenzo Ltd will never use, we anticipate more and more companies turning to invoice financing due to fact it will become cheaper, contributing to further margin compression and decreasing operating profits within the industry,” Nick, pictured above, says.
While inflation remains a persistent force for now, commercially minded economists in the City forecast a steady rate between 3-4% for the next five years. Nick sees this as a positive sign. “From our perspective, this moderate level of inflation signifies a healthy state for the fruit and vegetable industry, steering clear of the race to the bottom witnessed in the era between 2008 and the COVID inflationary period, characterized by zero inflation and zero interest rates,” he says.
“In conclusion, while challenges and uncertainties lie ahead in 2024, the economic landscape over the next five years presents opportunities for growth, stability, and innovation. Let us navigate these currents together, adapting and thriving in the evolving dynamics of the global economy here on Nine Elms Lane.”