Exclusive: Baking Industry Might Benefit from Brexit

The Brexit equation has many unknowns, but many aspects of the process will affect the bakery industry. To clarify some matters on how Brexit will impact the bakers in the UK, we spoke to Simon Peacock, a director at Alantra’s UK advisory business.

Bakery businesses will need to be agile as negotiators to deal with the next challenges. One of the biggest game-changers will be the acquisition of ingredients and especially cereals from the European and global markets. Peacock says smaller and mid-market players will need to be more agile and will have to be more flexible in the way they buy, and consider greater margins for prices.

He admitted that a positive aspect and the advantage of the market is the fact that the British have the mentality of a consumer with big expectations that require high-quality products.

Peacock observes that bread is a simple product and the costumer wants it fresh and local. “You don’t want it to be shipped from Italy or somewhere else. This a product which has the benefit of a short shelf life.”

The current employee volatility in the workplace could be affected by the new working conditions; international employees who usually arrive in the UK to work for a limited duration might be put off entirely. “But the UK has always been a country that welcomed overseas people who wanted to work hard, who wanted to fill jobs, and I don’t think we have an issue at all on the long term, but I do think that there will be a short-term challenge,” he highlights.  

On the other hand, Peacock says that Brexit brings other difficulties for workers as well, as they are affected by exchange rates for the money they send back to their families in their countries.  

Indeed, the figures show that immigration in the UK dropped following the Brexit announcement. The UK Office for National Statistics (ONS) said the number of people moving to live in Britain long-term had fallen to 230,000 in the year to June 2017– the largest drop since records began. While net migration was still adding to the UK population, there had been “statistically significant” decreases.

What’s New about Brexit?

The latest month brought the possibility that everyone considered the worst case scenario: Britain crashing out of the European Union in March 2019 with no trade deal in place. This is known as a “no-deal Brexit.”

For example, on August 7, Minette Batters, the NFU president, urged the government to put food security at the top of the political agenda after the prospect of a no-deal Brexit was talked up this week.

“The UK farming sector has the potential to be one of the most impacted sectors from a bad Brexit – a frictionless free trade deal with the EU and access to a reliable and competent workforce for farm businesses is critical to the future of the sector,” she said.

The prime-minister Theresa May affirmed she is confident an agreement can be made in time, the international trade secretary, Liam Fox, warned that the prospect of a no-deal Brexit was now at “60-40”, fuelling fears at the NFU and among food importers.

Food security in Britain is in long-term decline, with the country producing 60% of what it needs to feed itself, compared with 74% – 30 years ago, according to figures from the Department for Environment, Food and Rural Affairs (Defra).

However, the Brexit secretary, Dominic Raab, previously said Britain would have “adequate food supplies” after Brexit.

Alantra is a global investment banking and asset management firm focusing on the mid-market with offices across Europe, the US, Asia, and Latin America. Simon Peacock is a Director in the UK advisory business of Alantra and a leading adviser to the Food & Drink sector. 

You can read more on this topic in our print magazine European Baker & Biscuit (Jul/Aug 2018)!

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