Our advice for navigating Brexit
We are now eight months (and counting) into our response to the significant changes to our industry brought about by Covid-19. Thrust upon a landscape that offers no sense of short-term stability, it’s difficult to see the distraction of Britain’s exit from the EU as anything other than a further challenge we could all do without.
Our ‘independence day’ of January 1st 2021 will likely fall in the middle of national and regional lockdowns, social distancing measures, and be received by a hospitality sector battered by restrictions. Of course, there are the longer-term opportunities that Brexit may afford us; greater control of our regulations, the chance to develop prosperous trading relationships in new markets being just a couple, but these are difficult to fathom against a backdrop of such uncertainty.
Whilst the negotiations with the EU continue, we currently have no idea whether we’ll leave with a deal or not, and so we need to prepare our businesses for the worst case scenario of a ‘no deal’ exit.
If we do end up with a ‘no deal’, we’ll all need to consider two elements which I will discuss below.
1. Availability of product
I won’t go into the reasons why we believe availability of product may be affected by our exit from the EU but I will say that this may not be restricted just to products imported from the EU. Demand could well rise for their British equivalents which would mean a squeeze on availability here too.
It’s important that we, as wholesalers, work really closely together with our customers over the coming months to understand where the risks to availability sit on the products bought from us, so that we are able to discuss and agree the right contingencies. This may mean increasing stockholding (at the customer or wholesaler), agreeing alternatives with account managers, or tweaking menus with food development teams to avoid potential impacts on core ingredients. This is not scaremongering; there will of course be food available from 1st January 2021, even in the event of a ‘no deal’, but we may need to make some difficult choices when it comes to products affected by import delays, paperwork and longer, more complex supply chains.
2. The impact on prices
In terms of the impact on food prices, this can come by way of tariffs for imported goods, or through food inflation due to demand/ supply on products produced in the UK. For tariffs, we know that a ‘no deal’ exit could result in average increases of around 13%+ if we move to WTO terms. This seems unthinkable in the current economic environment, but we do need to prepare for inflation by understanding where the biggest impacts could come from, and thinking about mitigation and product choice in advance. At Bidfood, we’re able to help by providing a risk assessment for customers by analysing their baskets of goods against the WTO tariffs.
Whether or not a deal is negotiated between the UK and the EU, we can expect changes at the end of the transition period that will affect the hospitality sector. Not only changes on the immigration front, but potentially changes to food legislation in the future, there could be some currency fluctuation and there will still be new processes and procedures involved in importing categories like fresh meat, dairy and produce.
My advice to all customers as we head into this period of uncertainty is to keep up to date with the developing situation via the regular communications sent out by our Bidfood team. These will continue to keep you informed about changing legislation, our preparedness, and could be a useful source of advice whether you’re a customer or a supplier. Together, we should really try to stay flexible in our future operations and planning, and accompany this with creativity and agility in our thinking to help us deal with the evolving situation.