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Packaged Food Under the Brexit Scenarios

March 2019

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.

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Key Findings

All scenarios are still on the table, from No Brexit to Disorderly No-Deal Brexit

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.

Packaged food is in the firing line

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.

Baby food, confectionery, savoury snacks and ready meals

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.

EU food imports are very important to the UK

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.

Price and availability issues are a further threat

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.

Companies are affected across the board

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. 

Introduction

Scope
Key findings

Brexit Looms Large

All Brexit scenarios remain on the table…
…and the chances of the outcomes have converged
Light/No Brexit would give the best economic outcome
A No-Deal Brexit scenario would be bad news for packaged food
Uncertainty makes for a wide ranging forecast
A Light/No Brexit would improve prospects across the board
No-Deal would hurt premium categories
Lower volume through 2023 unless there is a Light/No Brexit
Sales value: No-Deal means over a (Brexit) billion will be lost

Vulnerabilities: Price and Availability

No-Deal means tariffs and pressure on prices
A fall in sterling and non-tariff barriers would also hurt
EU food imports are significant…
…but some are more important than others
Confectionery looks resilient in the face of price changes
Frozen desserts and edible oils would suffer under availability issues

Conclusions: In the Firing Line

A No-Deal Brexit has serious implications for some categories…
…but there is resilience to be found elsewhere
No escape for the top UK packaged food companies…
…or their international counterparts

About Our Industry Forecast Models and Brexit Scenarios Tool

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Key applications for Industry Forecast Model
About Euromonitor International’s Brexit Scenarios Tool
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