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A no-deal Brexit could result in food stockpiling, increased costs and crashing consumer confidence

01 August 2018 by
A no-deal Brexit could result in food stockpiling, increased costs and crashing consumer confidence

If food has to be stockpiled or even rationed in the event of a no-deal Brexit, increased costs and falling consumer confidence could have serious implications for the hospitality industry, a purchasing expert has warned.

Last week Dominic Raab, the newly appointed Brexit secretary, acknowledged that the government would have to act in order to ensure continued food supplies in the event of a no-deal Brexit.

Chancellor Philip Hammond added that it was "sensible and responsible" for the government to work with industry sectors to stockpile vital supplies.

Rachel Dobson, managing director of buying specialist Lynx Purchasing, said suppliers would "undoubtedly adapt", but that price rises and damage to consumer confidence were likely to result.

Dobson said: "The food and drink supply chain has evolved into a just-in-time model, where products are transported across the country, and even across borders, and delivered where and when they are needed.

"If transportation became more challenging due to long delays at ports, then suppliers would undoubtedly adapt, possibly by storing more products in local depots closer to the customer. That would, however, increase costs, due to the need for suppliers to tie up funds in buying and storing products rather than simply ordering them when needed, as well
as the capital cost of building local warehousing.

"If we did reach the point where food was being stockpiled and supplies rationed, though, you have to question just how much of an eating-out market would be left in the UK. The hospitality sector relies on consumer confidence, which would definitely suffer in the more extreme no-deal Brexit scenarios being talked about in some quarters.

"We have to hope common sense prevails and an accord is reached that allows for the continued delay-free transportation of food and drink, as well as other products, to enable operators to plan with confidence."

Kate Nicholls, chief executive of UKHospitality, said any cost increases for the sector would be particularly unwelcome. She explained: "The ability to access goods easily through the current just-in-time system is of huge importance to food businesses.

"UKHospitality has repeatedly stressed the importance of a deal that supports the sector and allows businesses to operate flexibly and this applies as much to food supplies as it does the workforce. Any possibility of increased costs for the sector, at a time when cost burdens are already high, will be incredibly unwelcome."

The British Retail Consortium has told the government that stockpiling is "not a practical response". It said that its member retailers do not have the facilities to store stockpiled goods and, in the case of fresh produce, it would not be possible to do so even if they did.

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