As Brexit approaches, it remains unclear as to what form the UK’s exit from the EU will take. A Light/No Brexit, a No-Deal scenario and a disorderly No-Deal Brexit all remain possibilities, with the latter especially feared by many in the packaged food industry. This report explores the best- and worst-case scenarios for packaged food, the range of impact by category and other issues to consider for those looking to map the near to mid-term progress of packaged food in the UK.
In the fourth quarter of 2018, Euromonitor International’s Brexit Scenarios tool found that the chances of the various Brexit scenarios had converged, increasing the uncertainty over what form Brexit will (or will not) take. Despite various factions in the UK parliament attempting to steer the outcome their way, all possibilities remain on the table.
A Light/No Brexit is forecast to benefit packaged food sales to a greater extent than for all retail except alcoholic drinks and soft drinks; however any No-Deal Brexit would cause a greater reduction in sales than for all except those two.
Under the Light/No Brexit, No-Deal Brexit and Disorderly No-Deal Brexit scenarios, baby food, confectionery, savoury snacks and ready meals are forecast to experience the greatest impact.
Vegetable and animal oils and fats, chocolate and sugar confectionery, coffee, tea, spices and ready meals and vegetables, potato and fruit products, starches and starch products and pasta and noodles look to be areas of particular concern if Brexit disrupts imports.
Dairy, savoury snacks and ready meals are particularly vulnerable if prices have to rise as a result of Brexit. Confectionery, however, is not. Ice cream and frozen desserts and edible oils would particularly suffer if availability became an issue.
Across the top 10 UK-based packaged food companies and the top 10 overseas companies that sell into the UK, all sell in categories that are more vulnerable to the potential negative impacts of Brexit.
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