Are you ready for Brexit? What better way to answer that question, with five months to go, than a trip to Sial, the international trade show in Paris this week?
With the promise that exports will flourish once the UK breaks free from the EU, it’s encouraging to note that in the run-up to Brexit, food and drink exports were up 5.1% from £10.2bn to £10.7bn in the first six months of 2018. But on a sobering note, £460m of the total £520m figure was to the EU.
So what are suppliers doing to boost exports further and particularly outside the EU? An international show like Sial is an ideal platform. So it was also encouraging to see 37 new British exhibitors – though quite a few were export agents rather than manufacturers. And as Jim Walker, joint MD of Scottish shortbread manufacturer says, they can be disruptive and undercut brands and their distributor agents.
More significantly the figure is down on the 60 new exhibitors at Sial 2016. Quite a few of those have dropped out too, the Food & Drink Export Association reports. Perhaps they were indeed playing golf, as Dr Liam Fox claimed – while the UK government figures out what it’s doing. As important as numbers is attitude. And of those British suppliers that did show up, many were deeply concerned about the last-minute, knife-edge nature of the Brexit negotiations, and visibly despairing at the prospect of a no-deal Brexit.
Others were gung-ho and saw it as a challenge. Exhibitors also reported positive meetings with visitors, including non-European customers, though as ever the proof in the pudding, with these enquiries, is in the receipt of an actual order.
But the biggest issue, even for the most bullish exhibitors, is the not knowing. As John Whitehead of the FDEA put it: “The British food and drink industry is ready and willing to export. But it’s frustrated. The lack of certainty, the inability to make plans, is killing trade.”
In one extreme example, a B2B supplier at the show said it had lost £4m worth of business (or 20% of sales), as its suppliers had asked for caveats around terms to reflect the possibility of new tariffs – caveats its customers were not prepared to accept.
And while some were prepared to live with tariffs – on the basis they were no worse than a currency devaluation – there were also fears expressed about border chaos (particularly for short shelf-life goods), rising costs due to stockpiling and extra warehousing requirements, cash flow shortfalls, as well as concerns around shortages of low-skilled foreign workers (even if there is a deal), and frustrations about packaging because the rules come April are still unknown. There was also growing evidence of an increase in paperwork, even before a deal is struck. “A sign of things to come,” said a British cheese manufacturer.
And what about importers? Several said trade to the UK was down as exporters look to “more markets environments and to lower their dependence on the UK market”. With the prospect of extra tariffs, paperwork and delays from a no-deal Brexit, the mood was summed up by Spanish cured meat supplier Fisan. “We’re scared, but UK customers more so,” said export manager Felippe Gonzales, who estimates sales are down 15% since the vote, “not because we don’t want to but because the customers are worried. It’s a shame because the UK is one of the best markets for our products, but the sector has been scared away from business.
“We’re actively focusing more on France, Germany and Asia as a result of the way our British customers have reacted to Brexit. Asia is now our main focus, we only started to export to Asia this year and it’s already 20% of our total business. It’s a pity to lose that relationship with our UK customers, but we’ve had to do it.”
The Grocer will be hosting a webinar on ‘Brexit: the Movable Feast and How to Plan for it’ on 29 November. For more details, to register and to pose a question to one of our panellists, click here.
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