As Brexit confusion continues to loom, Euromonitor has outlined its predictions for top implications of the best and worst-case scenarios for the food industry.
A Light/No Brexit, a No-Deal scenario and disorderly No-Deal Brexit all remain possibilities. Below you can read the research firm’s predictions about how these scenarios might affect the food industry.
A No-Deal Brexit Could Cost the UK Food Industry USD1.5bn
According to Euromonitor, sales value of packaged food in the UK is forecast to be affected to a greater extent than volume through 2023. Under the Light/No Brexit scenario value will be higher than the baseline by 1.2% (or USD1.0bn).
Under a no-deal Brexit, however, value is forecast to be 1.7% lower (USD1.5bn less), and a Disorderly No-Deal Brexit would mean sales below the baseline forecast by 4.4% (down USD3.9bn).
Ready Meals Likely to Be Most Disrupted Category Under No-Deal
The ready metals category is particularly vulnerable to the impact of Brexit. Exposed to import disruption, price increase and availability issues, in the even of a no-deal Brexit. Euromonitor forecasts sales value lower by 6.5% compared to a Light/No Brexit scenario.
Pasta and Noodles Sold in the UK Have the Largest Dependencies in the EU
EU imports of pasta and noodles are fundamental to UK consumption at present with over 85% stemming from abroad and over 75% of that coming from the EU.
Under the analysis and including the size of each market ready meals and vegetables, potato & starch products and pasta and noodles look to be area of particular concern if Brexit disrupts imports.
The Fresh Food Supply Chain Cold Receive the Biggest Shock
The UK imports approximately 2/5 of the food it consumes. These imports break down to approximately ¾ coming the EU, ¼ from elsewhere in the world. Categories heavily imported from the EU include ready meals, vegetables and metal products. These are particularly likely to feel the negative impacts of any no-deal Brexit given the shorter shelf life of these products.
Soft Drivers Are More Significant Than Price Increases for Most Food Categories
If price rises occur, Euromonitor’s forecast model reveals a number of particularly vulnerable categories across the packaged food category. This particular factor can be examined via price elasticity, which is the responsiveness of value sales to a change in product price. In line with economic Brexit forecast scenarios, ready meals and savory snacks are particularly exposed.
Concluding the analysis, Tom Rees, industry manager – Food & Nutrition for Euromonitor International stated “The ubiquitous negativity of a difficult Brexit is clear. All top UK-based packaged food companies sell in categories most exposed to Brexit risks. But the potential impact are by no means limited to UK-based companies – and they are by no means small for overseas producers. The top 10 overseas packaged food companies – by sales to the UK – are also strongly exposed across he categories that carry Brexit risks.”