UK Food Retailers Say No-Deal Brexit Will Bring Higher Prices, Shortages

By John Saulnier, FFB Editorial Director

190131 brexit graphic02Will they stay or will they go? With the Brexit debate droning on and on, all that is clear among many members of Parliament in Westminster is that they just don’t know – even though it has been more than two years since a narrow majority of voters (51.9% to 48.1%) opted to leave the EU in a special referendum. So, with the March 29 deadline clock ticking ever more loudly, Prime Minister Theresa May is off to Brussels yet again to resume negotiations and try to reach settlement terms for a UK-EU divorce she didn’t favor in the first place.

As the politics plays out on both side of the English Channel and beyond, the food industry is preparing for the worst in the event the UK crashes out of the customs union without a tariff deal, thus leaving importers and exporters to trade under WTO rules. Frozen food companies have been stockpiling inventory for some time now, and at this point available cold storage space in Britain is reportedly all but impossible to find. Indeed, it’s so bad that Greencore is even considering airlifting certain ingredients to the United Kingdom needed to make sandwiches – as long as its retail supermarket buyers chip in to help pay for the freight. Good luck with that!

It’s hard to imagine that folks in the UK will not be able to make sandwiches, with or without produce from the continent – even if it means eating BLTs without the lettuce for a while. Then again, a scarcity of cucumbers could spiral into a national crisis.

“We have begun stocking up on a small amount of certain products in the event of a no-deal, such as frozen prawns and tomato paste,” a Greencore spokesman told The Sun newspaper in an article published on January 29.

Last time I checked, much of the frozen prawn tonnage consumed in Europe and the UK does not originate in EU, but rather is imported from suppliers in Asia and South America. In other words, it’s sourced from countries where WTO rules already apply.

190131 brexit graphic03In the lead up to Brexit, Trowbridge, Wiltshire, England-based Apetito, a major supplier of frozen and refrigerated food to the health and social care sector in the United Kingdom and subsidiary of Rheine, Germany-headquartered Apetito AG, has invested £5 million in planning and preparation ahead of what could be a “no-deal” Brexit scenario, as previously reported by FrozenFoodBiz.com. It has significantly increased stocks of “high risk” raw materials and finished goods to make value-added products that range from cottage pie and roast chicken to curries, fish dishes and vegetarian items.

Meanwhile, some member of the British political class insist that their counterparts on the continent will make concessions in the end, since they regard the UK as a “treasure island” market for its manufacturers of cars, chocolate, champagne and other desirable products. Others, particularly those in the Remain faction, are not so sure that Jean-Claude Juncker of Luxembourg and like minded members of the European Commission from Germany, France and elsewhere will be keen on granting favorable terms to a departing member of the club.

A number of the UK’s leading retail grocery chain and foodservice executives, concerned that a “significant disruption” in the nation’s food distribution and manufacturing sectors is on the cards should a hard no-deal Brexit come about, have urged members of Parliament to “urgently find a solution” for what they believe is an unnecessary problem. In a jointly signed letter from the British Retail Consortium, chief executives of Sainsbury’s, Marks & Spencer, Asda, Waitrose, KFC, McDonald’s and other companies have warned that their prices would likely rise without a deal, since nearly one-third of food eaten by Brits is supplied by EU countries whose exports would be subject to tariffs.

Here are excerpts from the January 28 letter:

190131 brexit graphic01"This complex, 'just in time' supply chain will be significantly disrupted in the event of no deal. Even if the UK government does not undertake checks on products at the border, there will still be major disruption at Calais as the French government has said it will enforce sanitary and customs checks on exports from the EU, which will lead to long delays; Government data suggest freight trade between Calais and Dover may reduce by 87% against current levels as a result. For consumers, this will reduce the availability and shelf life of many products in our stores.

"As prudent businesses we are stockpiling where possible, but all frozen and chilled storage is already being used and there is very little general warehousing space available in the UK. Even if there were more space it is impossible to stockpile fresh produce, such as salad leaves and fresh fruit. Retailers typically store no more than two weeks' inventory and it becomes difficult to restock stores if the supply chain is disrupted. We are also attempting to find alternative supply routes but there are limited options and not enough ferries, so this could only replace a fraction of the current capacity.

"We are extremely concerned that our customers will be among the first to experience the realities of a no-deal Brexit. We anticipate significant risks to maintaining the choice, quality and durability of food that our customers have come to expect in our stores, and there will be inevitable pressure on food prices from higher transport costs, currency devaluation and tariffs."

Meanwhile, based on results of a survey conducted by the KMPG auditing organization, many British firms are “praying for an extension” of Article 50 of the Treaty of Lisbon which gives EU member states the right to quit unilaterally and outlines the procedure for doing so. But this will just delay the inevitable, won’t it? Or will it give anti-Brexiteers time to mount a second referendum effort. Assuming this eventually happens, and the Remainers win, then what? Will Britain’s fate ultimately be decided in a two out of three final ballot?

Strangely fanciful times we live in these days, especially considering that the unwilling party to the divorce in Brussels continues to adamantly insist that “the withdrawal agreement is not open for renegotiation.”

It was easy to say “I do, I do” way back when. Now, with apparently half of the country saying “I don’t, I don’t” want to finalize the divorce, those with cold feet will still have enough to eat, though it could cost more to get into the door. One supposes that Brexiteers would tell their Remainer countrymen that freedom is not free.
SeaPak Expands Product Line with New Calamari Offering SeaPak Expands Product Line with New Calamari Offering
St. Simons Island, Georgia, USA-based SeaPak Shrimp & Seafood Co. has added Calamari with tomato romano sauce to its easy-to-prepare frozen product line. The launch includes rollouts at Kroger,...

Friboi Sets Rail Shipping Pace for Frozen Beef in Brazil Friboi Sets Rail Shipping Pace for Frozen Beef in Brazil
Friboi, the beef brand unit of Sao Paulo, Brazil-headquartered JBS S.A., the largest meat processing company in the world, set a new export logistics record for frozen beef shipped by railroad in

Restaurant Association Remains Positive About US Economy Restaurant Association Remains Positive About US Economy
While growth in the still expanding United States economy slowed during the first half of this year, job creation nonetheless averaged 172,000 a month during the first half of 2019. That was down

Zandbergen and AACo Strengthen Partnership in Europe Zandbergen and AACo Strengthen Partnership in Europe
Zoeterwoude, Netherlands-based Zandbergen World’s Finest Meat announced on July 15 that it is now the exclusive distributor in Continental Europe for Australian Agricultural Company’s (AACo’s)...

Frozen Products in Vanguard of Conagra Brands Rollouts Frozen Products in Vanguard of Conagra Brands Rollouts
Chicago, Illinois, USA-headquartered Conagra Brands is kicking off its new fiscal year with dozens of retail product launches across the four major domains in which it competes. The Frozen &...

Rich Products Introduces Heath Ice Cream Cake in USA Rich Products Introduces Heath Ice Cream Cake in USA
The newly unveiled Heath Ice Cream Cake is being rolled out nationally in the United States to coincide with July’s National Ice Cream Month and just in time for Ice Cream Day on July 21. The

Lamb Weston Strikes Silver and Gold with Hot2 Home Fries Lamb Weston Strikes Silver and Gold with Hot2 Home Fries
“Silver and gold, silver and gold. Everyone wishes for silver and gold…” – and for frozen potato products producer and marketer Lamb Weston, both wishes have come true. The lyrics above, composed by...

McCain Partners with ‘Don’t be Chicken’ Nuggets Startup McCain Partners with ‘Don’t be Chicken’ Nuggets Startup
Florenceville, New Brunswick, Canada-headquartered McCain Foods has announced a new strategic partnership and lead investment in NUGGS, a New York City-based startup enterprise that has developed a

Friendly Summer Meal Deals at Friendly’s and Applebee’s Friendly Summer Meal Deals at Friendly’s and Applebee’s
Friendly’s Restaurants in the United States has added several indulgent offerings to its summer menu, while Applebee’s Neighborhood Grill + Bar outlets are now featuring shrimp on its “All You Can...

Burger King Debuts Crispy Taco for Buck in United States Burger King Debuts Crispy Taco for Buck in United States
The Burger King restaurant chain began serving $1 Crispy Tacos across the USA on July 9. Available for a limited time, the product features a crispy, crunchy tortilla filled with seasoned beef,...

Bolton Now Owns 100% of Tri Marine Tuna Supply Operation Bolton Now Owns 100% of Tri Marine Tuna Supply Operation
The global tuna supply business of Bellevue, Washington-headquartered Tri Marine has been sold to its longtime partner, Bolton Group. Terms were not disclosed. Workers at Tri Marine’s SolTuna ...

United States DOE Salutes Lineage for Energy Efficiency United States DOE Salutes Lineage for Energy Efficiency
Lineage Logistics is a winner of the 2019 Better Practice Awards presented by the United States Department of Energy’s (DOE) Better Plants Program (Better Plants). The Better Plants designation is

Thai Union Opens Preschool for Migrant Workers’ Children Thai Union Opens Preschool for Migrant Workers’ Children
Thai Union Group, the Bangkok-headquartered frozen and canned seafood producer and marketer, officially inaugurated its fourth preschool in Samut Sakhon to help the children of migrant workers obtain

Froneri to Acquire Nestlé Ice Cream Business in Israel Froneri to Acquire Nestlé Ice Cream Business in Israel
Leeming Bar, North Yorkshire, England-headquartered Froneri, Europe’s second largest ice cream manufacturer and third biggest worldwide, will enter the Israeli market in earnest with the pending...

300 Jobs to Melt Away at Closing Unilever Ice Cream Plant 300 Jobs to Melt Away at Closing Unilever Ice Cream Plant
Unilever plans to cease production on August 30 its ice cream factory in Henderson, Nevada, USA, and close the facility for good before the end of the year. The move will eliminate approximately

Pork Processor Karro Food Group Purchases Young’s Seafood Pork Processor Karro Food Group Purchases Young’s Seafood
Karro Food Group, a major UK pork producer owned by CapVest Partners LLC for the past two years, has acquired Grimsby, England-based Young’s Seafood. The company has been on the block since...

Private Equity Firms Positively Give a Hoot for Hooters Private Equity Firms Positively Give a Hoot for Hooters
Hooters of America (HOA), the Atlanta, Georgia-headquartered fast casual restaurant operator that bills itself as “delightfully tacky yet unrefined,” has been acquired by Nord Bay Capital and

Performance Food Group to Acquire Reinhart Foodservice Performance Food Group to Acquire Reinhart Foodservice
Richmond, Virginia-based Performance Food Group (PFG) has entered into a definitive agreement to acquire Reinhart Foodservice from Reyes Holdings in a transaction valued at $2.0 billion, or

Umami Ice Cream Cool Treat to Eat in Summertime Japan Umami Ice Cream Cool Treat to Eat in Summertime Japan
The “fifth flavor” of umami has been enjoyed among epicureans in Japan and beyond since Dr. Kikuane Ikeda of Tokyo Imperial University identified glutamate as the key ingredient in Kombu kelp more...

Pumpkin Cheesecake Latest Vegan Treat from Central Foods Pumpkin Cheesecake Latest Vegan Treat from Central Foods
Collingtree, England-based frozen food distributor Central Foods has extended its free-from range with the launch of a vegan, gluten-free pumpkin cheesecake. It defrosts in just two hours in the

Orkla Buys CBD Specialty Fudge and Toffee Maker in UK Orkla Buys CBD Specialty Fudge and Toffee Maker in UK
Oslo, Norway-headquartered Orkla Food Ingredients has sealed a deal to acquire British fudge and toffee manufacturer Confection by Design Ltd (CBD) through its NIC Enterprises Limited subsidiary at

Lamb Weston to Purchase Ready Meals Pty in Australia Lamb Weston to Purchase Ready Meals Pty in Australia
Lamb Weston Holdings has entered into an agreement to acquire Ready Meals Pty Ltd, a frozen potato processor in Australia situated about 34 kilometers southeast of Melbourne, for an undisclosed

Amy’s Kitchen Breaks Ground for Plant in Upstate New York Amy’s Kitchen Breaks Ground for Plant in Upstate New York
Petaluma, California-headquartered Amy's Kitchen, a manufacturer of value-added organic frozen food products, has broken ground for construction of a 389,000-square-foot specialty frozen food plant

Contamination Concern Prompts Andouille Sausage Recall Contamination Concern Prompts Andouille Sausage Recall
Elon, North Carolina-based San Giuseppe Salami Co. by Giacomo is recalling approximately 832 pounds of ready-to-eat frozen Andouille Sausage products that may be contaminated with extraneous

ASDA Fires Up Oumph! Range Just in Time for BBQ Season ASDA Fires Up Oumph! Range Just in Time for BBQ Season
Mjölby, Sweden-headquartered Food for Progress is broadening its distribution of meat-free frozen products in the United Kingdom with the planned rollout of Pulled Oumph!, Kebab Spiced Strips,...