Since this article was first published in 2022, the market dynamics affecting oils, fats, and wider food manufacturing have continued to evolve.
Updated April 2026
While the immediate shocks of Brexit, the Covid-19 pandemic, and the Russo-Ukraine conflict have eased, many of the cost pressures identified remain in place (albeit in a more structural form).
Food inflation peaked in 2023 but retail prices remain significantly higher than pre-2020 levels. For manufacturers, this means that cost management is no longer about navigating short-term volatility, but adapting to a new, elevated baseline.
In oils and fats specifically, supply pressures persist. Disruption in the Black Sea region has partially stabilised, but this has been offset by other factors, particularly climate-related impacts on key crops such as olives and oilseeds.
In addition, ongoing geopolitical instability continues to influence global supply chains. The 2026 Iran conflict has contributed to renewed uncertainty in energy markets and shipping routes, particularly around key transit points such as the Strait of Hormuz (adding further pressure to fuel, logistics and ingredient costs).
Consumer behaviour has also shifted. While price sensitivity remains high, shoppers are increasingly balancing cost with health, quality, and sustainability. This has driven growth in private label products, smaller pack sizes, and reformulated offerings that deliver value without compromising on experience. (Food Standards Agency)
As a result, many manufacturers are now taking a longer-term approach, focusing on reformulation and ingredient optimisation to reduce reliance on volatile commodities like fats and oils.
Fat replacement solutions continue to play an important role in this strategy, helping to deliver consistent quality while improving cost stability and supporting nutritional goals.
2022 is posing significant external challenges for food manufacturers. Factors such as: Brexit, a post pandemic inflationary economy, and geopolitical chaos, has put the UK on the edge of a recession.
In the first 5 months of 2022, retail food & drink prices rose by 8.7%, with further expectations for this to rise to 20% in the first few months of 2023.
One of the main areas where this inflationary pressure is seen very acutely is in oils & fats.
A quick look shows both butter & olive oil retail prices to have increased by nearly 20% in the past 12 months.
(Source: Office fo National Statistics, June 21-June 22)
So what are the causes of these increased prices?
1. Raw Materials
Supply of oils and fats has decreased considerably in recent months.
This is largely due the conflict in the Ukraine, which has squeezed exports of these raw materials from Ukraine, Russia & the surrounding Black Sea territories. Collectively this region is responsible for around 75% of global sunflower oil exports – having a knock-on effect of a wholesale price hike of almost 30%.
The global response to these shortages is further compounding the situation – with China, Indonesia & others already limiting their oil exports.
2. Feed & Fertilizers
Additionally, Farmers are facing increasing prices for feed & fertilizer. This, amongst other factors is responsible for 80% wholesale price increases in cream & butter.
3. Fuel Prices
The final factor affecting the whole supply chain is the increase in fuel prices. Russia is the second largest global producer of crude oil, but because of economic sanctions & geopolitical turmoil, global fuel prices have risen by over a third compared to the 12 months to July 2022!
So, what does this mean for consumers?
Food prices is the biggest single determining factor of consumption patterns.
Inflation in 2022 is already significantly impacting the way consumers live their lives. Consumers are buying cheaper items, fewer items and are changing their retail outlets.
Consumers are making changes to manage budgets. More than half of consumers have bought fewer groceries or skipped meals, with many having cut spending.
Solutions
Even with the most generous of assumptions, the factors contributing to higher oil & fat prices are medium term. Therefore, sustainable & long-term solutions are needed to mitigate price volatilities.
Ulrick & Short’s fat replacements solutions have been developed to replace the functionality of fat to mimicking the same texture, volume & mouthfeel in a wide range of applications such as bakery, ready meals, dressings & sauces.
To find out how we can help you reduce your reliance on fats & oils, register here for our webinar on Tuesday 20th September!