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< Back to news 22 June, 2017

Brexit One Year On: Whirlpool of Worry

Is it sucking independent food and drink businesses to the brink? One year on from the decision to leave the EU, we are urging the Government to provide clarity on what is to come to limit increasing inflationary pressures and uncertainty in the £27billion UK food & drink industry.

Hans Ziebeck, Director of Purchasing at Beacon, said: “The benefits of Brexit if you are a small independent British business have been pretty hard to spot in the last 12 months. We are still no closer to understanding how this will play out and as such a damaging whirlpool of worry has formed which is hitting smaller independent businesses the hardest.

“Currency concerns, a pausing of investment, the uncertain future of migrant workers, rising prices and the threat of a consumer spending slowdown are all combining to make business as normal incredibly difficult which is threatening the future prosperity of the UK food and drink market. What is really concerning is that there could be worse to come in the second half of the year as transformation companies who import ingredients begin to run out of previously hedged currency and suppliers start renegotiating terms of new cost structures.

“Since the start of the year we have seen an unprecedented number of price rise notifications from our suppliers, a 267% increase on the same period last year. Beacon has managed to mitigate price rises of up to 25% in some cases already, but ultimately the continued upward pressure on pricing is not sustainable and must be absorbed somewhere within the value chain which means the end consumer is going to continue to feel the pinch for the foreseeable future, either at the supermarket or on menu prices.

“If rising prices translates into a slowdown in consumer spending then it is a very real possibility that in the coming months and years we will begin to see smaller businesses disappearing from the marketplace altogether.”

On top of the currency pressures, Hans went on to explain that there are a whole host of other questions brought about by Brexit that urgently need to be resolved. 

“Currently two thirds of all food and drink exports are through the EU, with up to 96% of all exports trading through Free Trade Agreements negotiated through the EU (these also protect the UK from cheap imports). We are no clearer on the impact of export tariffs, custom checks (potentially export licences will be required). We currently have a 23bn euro trade deficit on food with the EU; we import £3bn of fresh fruit, £2bn vegetables and are the world’s largest importer of wine at £3bn. How will these categories be affected?

“My main concern is that one year on this could be the tip of the iceberg for the food, drink and hospitality industries. We need clarity and we need answers as to how these valuable and important industries will be supported.”

If you want to review the costs of your food and drink, or to see how Beacon could help your business contact us today.