News article
30 October 2018
Food and Drink Federation: More than a third of food and drink manufacturers facing increased costs as a result of 'no-deal' Brexit stockpiling
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The Food and Drink Federation's (FDF) latest business confidence survey
reveals that over a third (38%) of food and drink manufacturers surveyed are
reporting an increase in
costs as a result of stockpiling ahead of a possible 'no-deal' Brexit.
With less than five months to go until the UK is scheduled to leave the European
Union (EU),
FDF's quarterly surveys have shown a significant decline in business confidence
amongst food and
drink manufacturers during 2018. Economic uncertainty has seen net confidence
amongst food and
drink manufacturers decrease by 21 percentage points when comparing results
reported in Q1 with
those reported in Q3.
When looking ahead to 2019, two thirds of businesses FDF spoke to identified
future tariff
implications as a risk to their business. Just under 60% of businesses surveyed
thought business
investment across the overall UK economy would fall in 2019, while more than
96%
expect to see
rising input prices.
For SMEs, who make up 97% of the UK's food and drink manufacturing sector,
retail market
consolidation was one of the top three barriers expected to impact the success
of their business in
2019. This follows the recent takeovers of Booker by Tesco, Nisa by the Co-op,
and the proposed
merger of Sainsbury's and Asda which present significant concerns for UK
manufacturers.
Business conditions for food and drink manufacturers have been especially
difficult this year, in
part due to the fall in the value of sterling which has contributed to
increased
costs of ingredients and
raw materials. More than three quarters (79%) of businesses FDF spoke to
reported increased
ingredient costs as the biggest impact on their businesses in Q3, while 71% of
those polled cited
increased packaging costs.
Ian Wright CBE, FDF Chief Executive said:
“These results tell us just how seriously the food and drink industry, the UK's
largest
manufacturing sector, takes a 'no-deal' Brexit. It is a grisly prospect to
which
we edge closer every
passing day.
“Yesterday's announcement from the Chancellor - with measures to support
productivity,
exports, enterprise and investment - offers some respite for our SME food and
drink manufacturers.
“But there is significantly increased worry across the sector following the
announcement of
the Chancellor's new tax on plastic packaging. This will undoubtedly place many
more financial
burdens on UK food and drink manufacturers - that loads on cost at a time when
just under three-
quarters of our members report that their packaging costs are increasing. The
storm clouds are
gathering.”
Notes to editors:
- Read FDF's Confidence Survey
- FDF conducted this quarterly business confidence survey between 19th September –
8th
October 2018 to gauge confidence levels in the food and drink manufacturing
sector in Q3 2018.
- FDF received responses from businesses with a combined UK turnover of
approximately
£11.4 billion, equivalent to 12% of the food and drink manufacturing sector
total turnover. Almost two
thirds of the responses came from small and medium-sized enterprises (SMEs).
- View FDF's response to the Autumn budget
- FDF has now entered formal negotiations with both BEIS and Defra around an
ambitious
Food and Drink Industry Sector Deal, which will provide vital stability to our
sector when it is finalised.
We hope it will support innovation, encourage the development of skills and
look
to boost trade, while
ensuring our sector makes much-needed productivity gains. The Food and Drink
Industry Sector
Deal proposals were formally put forward by the Food and Drink Sector Council.
FDF is actively
supporting the work of the Food and Drink Sector Council.
More Information
Contact Skye Oudemans, Corporate Affairs Division, at: skye.oudemans@fdf.org.uk, or 02074207120.
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