Confectionery to be worst hit UK food sector after Brexit, says Euromonitor
Market analysts Euromonitor International predict a compound annual growth rate (CAGR) decline of -0.2% for UK confectionery from 2015 to 2020.
Confectionery ‘most affected’
Overall, Euromonitor does not foresee a huge impact on consumer spending for UK goods, but discretionary items such as confectionery will be the “most-affected”, it says.
UK consumers were the second largest purchases of the combined category biscuits, snack bars, chocolate confectionary and crisps among EU members in 2015, behind only Belgium.
The UK consumed 25 Kg per capita of these categories combined last year, according to Euromonitor.
UK confectionery exports
UK confectionery exports amounted to £1bn ($1.4bn) in 2015, down 4% on the prior year, according to data from the Food and Drink Federation (FDF). Chocolate accounted for £579.6m ($806m) of UK exports last year.
CAOBISCO ‘disappointed’ and concerned about potential trade barriers
European Confectionery Association CAOBISCO said its members were “disappointed” by the Brexit vote.
“This historic decision will have consequences across all Member States,” said a CAOBISCO spokesperson.
According to the trade body, the UK is a key destination of intra-EU exports of chocolate, biscuit and confectionery products. For example, it is the second largest export market of Germany.
“Companies, and in particular SMEs, are therefore concerned that a separation would cause trade barriers and regulatory complications in the future,” said the CAOBISCO spokesperson, adding it would depend if the UK remains a member of the European Economic Area.
CAOBISCO is calling for a revamped, more citizen-oriented EU project that will encourage its members to invest in the EU.
Majority of UK food industry favored Remain
UK trade body the Food and Drink Federation (FDF) said 70% of its members favored a vote for the UK to remain in the EU in a poll released in March.
Ian Wright, director general at the FDF, said: “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.”
Nestlé to ‘operate in the normal course’
Nestlé Confectionery headquarters is based in York, UK, where it also has a product technology center. Nestlé UK exports around £350m ($479m) of products per year to 70 countries worldwide. It's largest export sales come in the EU.
A Nestlé spokesperson said: “We note the outcome of the referendum in the UK and the decision of the British electorate to leave the European Union.
“The practical consequences of this decision will become clearer in the coming months. Nestlé will continue to operate in the normal course and will follow developments closely.”
Mars had supported Remain
Mars’ Wrigley subsidiary is the UK’s leading gum maker. Wrigley's UK factory and head office are based in Plymouth, where 35% of volumes are exported to Europe and beyond. Mars Chocolate also operates a factory based in Slough, Berkshire.
Mars had supported the Remain campaign as it believes in the benefits of the EU single market.
"Although we supported remaining within the EU, today’s result does not affect our commitment to our UK operations in Europe and growing our UK businesses," said a Mars spokesperson. "As negotiations and discussions commence to determine the nature of the UK's future trading relationship with the EU, we hope that decisions are made swiftly in order to give our business the certainty it needs."
Mondelēz committed to UK manufacturing
Mondelēz International leads the UK chocolate and sugar confectionery markets, according to Euromonitor. The company’s Cadbury headquarters is based in Uxbridge, while it also operates its Bournville confectionery factory near Birmingham.
A Mondelez International spokesperson said the company had prepared for a Brexit outcome in the referendum.
“Was a business that sells products across the EU, we are closely monitoring the situation in terms of next steps. Our brands are much-loved by UK consumers and we remain committed to manufacturing here in Great Britain.”
UK and EU businesses may need to renegotiate deals: Legal experts
The UK now undergoes a two year exit process to end its EU membership, which will include a review of EU-derived legislation.
Jamie Cartwright, partner at Charles Russell Speechlys, said trade uncertainty would stretch beyond tariffs and quotas and will bring in focus individual agreements between UK businesses and their EU counterparts.
“With the prospect of the repeal of certain legislation and the separation between the UK and the EU created by Brexit, parties on both sides of cross border agreements will be forced to reflect upon their trading terms to ensure that they continue to offer the protection they require,” he said.
UK legal firm McGuire Woods said in a release:” …There are various possible models for the UK’s on-going relationship with the EU once exit actually takes place, but there is no precedent and everything is up for negotiation.”
Posted by Alejandro Grande,