PROMOTED: Food cost increases as a Brexit outcome
allmanhall, independently owned food procurement experts, forecast the potential impact of Brexit on costs and offer preparation advice.
The key date remains 31 December 2020. But it is best to assume that the situation is fluid, and anything is possible up until then. We do know that an agreement needs to be ratified in the European Parliament beforehand, but it has been mentioned that this could even sit after Christmas if necessary.
All the remaining realistic outcomes of the current negotiations will lead to cost increases.
Even in the event of a deal, allmanhall is forecasting in the region of a 3-5% weighted basket price increase, through non-tariff costs. If there is a no-deal scenario, then WTO terms could result in an excess of an 8% increase, depending on the specific mix of food purchases.
The WTO tariffs on food are, on average, significantly higher than most other imported categories. For food, the tariffs average at 18%. With 30-35% of UK consumed food imported from the EU, it means that a circa 6% impact on the weighted cost of food is likely. There are some food types that are hugely impacted by tariffs. A schedule of the published tariffs can be found here.
Key Cost Forecasts:
Deal = 3-5% food cost increase
No Deal = 8%+ food cost increase
4 things you can do to prepare…
- Stock up, especially on EU originating products
- Consider using a higher proportion of UK product
- Be as flexible as possible around your offering
- Communicate through the supply chain and to your end customers.
In a period of so much uncertainty these are a few small steps that may then make the transition easier once we know more in 2021.
Visit allmanhall.co.uk for more details.