Food industry faces ‘challenging period’ following Brexit
Food manufacturers have been left ‘disappointed’ by the UK’s decision to leave the European Union.
With 51.9% of voters in favour of a Brexit, the ‘leave’ campaign came out ahead with a lead in excess of one million votes.
However, the food and drink industry had largely backed the ‘remain’ campaign, identifying the single market, access to raw materials and the free movement of labour among key considerations in coming to its view.
As the UK comes to terms with its decision – the pound slumped to a 31-year low, more than £100 billion was wiped off the FTSE 100 and prime minister David Cameron announced his resignation – the Food and Drink Federation (FDF) has reassured industry that it will work to find a way through the ‘challenging period’ it now faces.
Ian Wright, director general at the FDF, says, “In March we released the results of a poll of our members which showed 70% support for Britain to remain in the EU. It’s inevitable in the light of those results that the majority of FDF members will regard this as a disappointing result for the food and drink industry.
“Now FDF will work on behalf of our members and all those across our industry to find a way through this very challenging period that we face.
“We’ll focus on working with the government to understand what this means for trading, market access and regulation to secure the best outcome for British food and drink manufacturing businesses and their customers.”
Dr Judith Bryans, chief executive of Dairy UK, adds, “Dairy UK will continue to liaise with the UK government, devolved administrations and all relevant organisations to promote the interests of the UK dairy sector and help to steer our industry in the right direction.
“We have an outstanding UK industry producing world class products, and our people have the ambition and the determination to succeed.”
Meanwhile, Euromonitor International predicts that confectionery, ready meals and sweet and savoury snacks will be the most affected packaged food sectors in the UK.
According to its Industry Forecast Model, volume sales of chilled lunch kits, gum and chocolate will be most influenced while the staples of rice, pasta and noodles show the least impact with the forecast barely altered.
The company says these results are consistent with what it would expect – those that are more discretionary and reliant on income will see the strongest impact. However, there are some exceptions, it notes, with sugar confectionery and dinner mixes expected to show more resilience to economic trends.
Sarah Boumphrey, global lead, economies and consumers at Euromonitor, comments, “Uncertainty is the key challenge in regard to Brexit, and this uncertainty will contribute to falls in business and consumer confidence as well as delays to investment decisions.
“Exit negotiations will be protracted, with the UK unlikely to leave the EU before 2018. The medium term outlook would depend very much on the terms of the exit negotiations, making it very difficult to quantify the economic impact, or indeed determine the regulations which UK business would still need to adhere to.
“Depending on the outcome of the ‘divorce’ negotiations, an array of threats and opportunities would exist for business.”