UK wholesale dairy prices have crept up after a dip during March and early April, with bakers being hit by the rising cost of unsalted butter in particular.
The price of unsalted butter stood at £3,450 per tonne (p/t) in May, up from £3,250 p/t last month, according to the latest DairyCo Datum price update.
Meanwhile, bulk cream has risen from £1,500 p/t to £1,700 p/t in the past month. DairyCo, a levy-funded not-for-profit organisation working on behalf of Britain’s dairy farmers, said despite high output, supplies of butter have been reported as limited, as manufacturers are reluctant to sell while prices are on the up.
Julie Jameson, owner of JJ’s Butterfly Cupcakes, said for a small business such as hers the increase in the cost of butter, which makes up around 40% of her total ingredients costs, is really affecting margins. "When you translate the rise into the cost of producing each cupcake, the profit margins are getting smaller and smaller," said Jameson.
She uses unsalted butter, but refuses to switch to a cheaper margarine alternative as her cupcakes are marketed as being luxury products. "I cannot increase the price of the cupcakes either, as consumers will just choose to buy them elsewhere."
Choy Cheam, cupcaker at Cupfectionery, said the price of a 250g pack of unsalted butter across wholesalers, cash-and-carries and supermarkets has increased by around 30p in the past 12 months. She now uses a different type of nozzle to ice the tops of her cupcakes, in order to use less icing, but has increased the amount of chocolate decorations used.
Kim Jensen, regional sales manager (bakery), Arla Food Ingredients, said the whole dairy market has seen prices rise in the past year due to "extraordinary demand" for products, mainly coming from China.