The impending exit of Britain from the European Union is affecting various industries in the country. However, the possible effects on the food industry is the one that causes uncertainty and anxiety among UK citizens.

Impact of Brexit on UK Grocery Industry and Retailers

Brexit and the UK Food Industry

Britain, originally set to leave the EU on March 29, 2019, now has time until October 31 to leave with a ratified withdrawal agreement. If they leave without an agreement, the impact on the economy of the UK could be even greater. With the deal negotiated by Prime Minister Theresa May being rejected by the British House of Commons more than once, a no-deal exit seems very likely.

Why The Food Industry is So Vulnerable

An exit from the European Union may result in more trade restrictions and other changes. This can have an impact on all industries. But the UK food industry is especially vulnerable.

Huge Percentage of Food Import

Britain imports more than 50% of the food it consumes. Of these, the major share – around 70% – is imported from EU countries. Those especially true in the case of fresh fruits and vegetables. In the event of a no-deal Brexit, import costs could rise steeply, resulting in a rise in food prices.

Brexit and Access to Labour

In the UK, around one-third of the workforce in the food manufacturing industry is made up of EU migrants. After Brexit, access to this work-force may be restricted, The need to hire more UK workforce can drive up labor costs, which in turn would impact food prices.

Rise in Tariffs and Fall in Pound Value

Already the British Pound is at an all-time low against the US Dollar and the Euro. After Brexit, the value of the Pound could fall even further, resulting in higher costs of goods. Increase in import tariffs could further worsen this situation.

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Fall in Standards

Suppliers and Retailers are already compromising on their quality requirements. They are no longer rejecting produce based on shapes and sizes. They are also looking at buying long-lasting varieties of fruits and vegetables. Retailers are using AI and other hi-tech methods to understand customer behavior in food shortage situations to predict what they need to stock to meet customer expectations.

Stockpiling Food, Brexit Scenario

Not just retailers, but consumers are also looking at ways of stockpiling food, to counter any food shortage after Brexit. Some retailers are already reported to be hoarding food products in refrigerated containers, to meet demands in a post-Brexit scenario.

While the Government and many experts studying the impact of Brexit assure people that there is no need to hoard food, there is still a lot of uncertainty. The lack of a clear plan from the government to meet possible food shortages is prompting many people to stockpile food. Many retailers are also promoting Brexit Boxes of frozen fresh food and packs of non-perishable foods, to take advantage of this situation.

Other Challenges

Many suppliers and retailers are looking at sourcing food from local markets, but this may not be enough. With such a high percentage of foods coming in from other countries, it will be extremely difficult for local suppliers to meet the rise in demand.

Stockpiling food, Brexit induced or otherwise, can also run into major obstacles The availability of storage space is limited. Transportation is another challenge. Even a slight problem in logistics can lead to major disruptions as food products fail to reach the local stores.

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Not everyone is looking at stockpiling food, Brexit boxes, etc as solutions. Many are looking at cutting down on eating out and on purchase of health foods. Still, the outlook is not too bright in the event of a no-deal Brexit. Retailers are exploring ways to increase shipping capacity and storage capacity, But they are spending more on security to protect themselves in case of possible looting and riots.

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