However, certain industries are reaping the rewards of inflation and reporting record earnings. If you’re in the oil drilling business, wheat trading business, toy shipping firm, or fine wine selling business, there are enormous profits to be made.

Here are the top five industries that have benefitted from inflation.

Energy Industry
Due to their outstanding earnings, companies that extract and process fossil fuels have recently hit the headlines. Due to rising demand and supply concerns following Russia’s invasion of Ukraine, wholesale gas prices have skyrocketed on global markets and oil prices have been hovering at about $100 per barrel.

Between April and June, Saudi Arabia’s Aramco reported record earnings, while BP made £6.9 billion and Shell surpassed that with £9 billion in global profits.

Due to its oil, gas, and nuclear assets, Centrica, the parent company of British Gas, has seen its profits increase fivefold.

However, many firms in the United Kingdom operate with little attention. Harbour Energy is regarded as one of the largest North Sea producers. By acquiring oil and gas operations, Harbour Energy expanded and generated a profit this year.

Mining industry
Coal is unpredictably giving a huge comeback as countries search for alternatives to Russian gas. For mining companies that have specialized in the dirtiest fossil fuels, it is paying off time for them. Record pricing helped Glencore’s thermal coal unit treble profits to nearly £15 billion in the first half of 2022.

Many of its competitors have abandoned coal, but Glencore insists that it will play a crucial role in the transition of some countries to the generation of greener energy and that it will work to reduce production over the next few decades.

The government has requested energy companies to postpone the closure of UK coal-fired power stations due to concerns that there may be a disruption in the flow of gas from Russia to Europe this winter. Due to Russia’s suspension of pipeline flows, German utility Uniper announced that it will initiate producing electricity for the market at its reserve coal-fired power station Heyden 4.

Food industry
Although Bunge, Cargill, Louis Dreyfus, and Archer Daniels Midland (ADM) are not household names, their products are often found on dinner plates around the world. The “ABCDs” are the most important traders of food products, particularly grain.

These supply chain middlemen can be key players in ensuring that food supplies reach where they are required during times of global disruption. For instance, they can assist countries in finding alternate sources of wheat when shipments from Ukraine and Russia are disrupted.

But as a result of the disruption, wheat prices are currently 25% higher than they were last year. Numerous other essential commodities also witnessed an increase in price.

ADM revealed that its most recent quarterly profits increased by 60%. Bunge did less well, but the company is upbeat about the remainder of the year. In the most recent fiscal year, privately held Cargill’s revenues increased by 23% to a record $165 billion (£140 billion). It claims to have donated $163 million, or 0.1% of sales, to charities and other good causes.

Shipping industry
Despite the fact that COVID pandemic shutdowns hampered economies and supply chains, they enhanced the performance of shipping firms.

As consumer demand soared during COVID lockdowns, freight charges have risen and remained high. Due to restrictions, ports became crowded and new shipbuilding projects were put on hold.

By the end of 2022, the container shipping sector will have earned half a trillion dollars in profits over the previous two years, predicts consultancy Drewry.

Due to the continued disruption at ports, AP Moller-Maersk, the second-largest container shipping company in the world, increased its annual profit prediction for the third time this year. It added that “normalization” of prices may now not occur until the end of the year.

Luxury watches & fine wine industry
A combination of rising inflation, historically low-interest rates, and sluggish economic development make it challenging for investors with a ton of money to burn to find acceptable returns on traditional investments.

They are moving on to other things. The value of investments in fine wines and designer watches increased by 16% the previous year while art and whiskey and coins witnessed an increase of 13% and 19% respectively.

Investors were betting that the value of collectibles would rise faster than inflation, and that trend has persisted into this year. Bordeaux Index, the biggest fine wine trader in the world, recorded a 37% rise in sales over June of last year.

The post Top five industries benefitting from inflation appeared first on International Finance.

Top restaurant groups were compelled to go through significant restructuring programmes during the COVID pandemic when they were forced to rely on state support packages that included business rates holidays, and furlough payments for staff.

Byron, Gourmet Burger Kitchen, and the Italian chains Strada and Carluccio’s were some of the high-profile restaurants that were forced to close down many of their outlets during the peak of the COVID pandemic as a result of the heavy financial loss they incurred during the multiple lockdowns and other coronavirus restrictions.

International Finance Magazine recently caught up with Professor Sherri Kimes, who is considered to be one of the top thought leaders and experts in Revenue Management.

Sherri Kimes is a Professor Emeritus of Operations Management at the Cornell University School of Hotel Administration and a Visiting Professor of Analytics and Operations at the Business School at the National University of Singapore.

For more than 25 years, she has been teaching, conducting research, and offering consulting services in this field.

She has published over 100 articles and chapters in books and has received multiple awards for her research. In 2017, she was given the Hotel Sales and Marketing International Association Vanguard Award for Lifetime Achievement in Revenue Management.

Professor Kimes serves as a consultant to many top business enterprises around the world including Fairmont Raffles Hotels International, American Airlines, Walt Disney World Resorts, Hyatt International, The Peninsula Group, Four Seasons Hotels and Resorts, Starwood Asia-Pacific, and Marina Bay Sands.

In an interview, she shares her insights about the restaurant business, the impact of inflation, recession in the food industry, and much more.

The United States Census report stated that the COVID-19 pandemic had damaged the sales of restaurants by up to USD 280 billion. How will the restaurants deal with it?
Off-premise dining (i.e. delivery and takeaway) has been growing in popularity and is projected to become even more important in the future. Restaurant operators who have adapted their operations to serve an omnichannel consumer base will fare well. Those who didn’t make that adjustment will most probably struggle.

How has inflation affected the restaurant business across the globe?
It’s a huge challenge. The restaurant operators don’t want to have to raise their prices, but given the increased costs of ingredients, they have to be able to stay in business. That being said, research has shown that customers are fine with price increases if the company’s costs increase.

Due to the soaring prices, customer spending has witnessed a slowdown. How can the restaurants overcome this shortfall?
The increasing costs have of course led to an increase in prices since restaurant operators need to remain profitable. There are a few things they can do such as:

(a) Develop attractive meal bundles

(b) Offer lower prices during low-demand periods

(c) Increase their efficiency so that they produce more with fewer resources

Losses at top 100 restaurant groups had increased to more than £800 million in the previous six months. What measures do they have to take to overcome it?
They’ve had to adapt their operations to leverage the trend toward more off-premise dining (i.e. delivery and takeaway). There’s also been an increase in the adoption of technology and automation.

A recent survey has revealed that over 1,400 restaurants in the UK shut shops in 12 months. What is your take on it?
That doesn’t surprise me at all since the restaurant industry is a very fluid and competitive industry. There’s a constant flow of new restaurants coming in and some existing (and new) restaurants just aren’t able to make it.

What impact will the recession have on the food & restaurant industry?
Like all industries, it will be very challenging for the food & restaurant industry during the time of recession.

Image Credit: Sherri Kimes

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