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UK Food Supply Faces COVID, Post-Brexit Disruption

Published on Dec 21 2020 3:52 PM in Supply Chain tagged: Trending Posts / Lidl / Aldi / Marks & Spencer / COVID

UK Food Supply Faces COVID, Post-Brexit Disruption

France's move to block freight from the United Kingdom following the discovery of a much more contagious strain of the coronavirus has shone a light on Britain's food supply.

The £200 billion ($273 billion) food and grocery market had already been preparing for the end of the Brexit transition period on 31 December when deliveries from the European Union will be disrupted, whether or not a trade deal is agreed.

Below is a summary of the market and some of the issues it is facing:

Imports 

The EU is the United Kingdom's largest trading partner, accounting for nearly one-third of the country's food, but in January a much higher proportion of fruit and vegetables is imported from the EU relative to the summer.

For example, the United Kingdom sources 85% of its tomatoes from the EU in January, falling to 30% by June in the UK growing season, according to the British Retail Consortium (BRC), which groups more than 170 major retailers including supermarkets and other shops.

Sainsbury's, Britain's second-biggest supermarket, said on Monday that gaps would start to appear on supermarket shelves within days if transport ties with mainland Europe were not quickly restored.

Stockpiling And Panic Buying 

In preparation for all eventualities on 1 January, the supermarket groups, independent retailers and wholesale firms have been increasing their stocks of tins, toilet rolls, and other longer life products.

The move, also being mirrored by manufacturing groups and construction firms, had already pushed up the price of freight deliveries in recent weeks as firms struggled to meet the huge demand to bring goods into the country before the year-end.

The suspension of trade plus the post-Jan. 1 disruption will be most keenly felt in the fruit and vegetable sector. Sainsbury's said it was looking for alternative transport for produce sourced from Europe. Air cargo is one alternative option but it is again much more expensive.

The discovery of the new strain of the coronavirus has also disrupted the Christmas plans of millions of British people, with those living in London and surrounding areas ordered to stay at home and not travel over the festive period.

Large queues snaked around Tesco, Sainsbury's, Waitrose, Marks & Spencer, Aldi and Lidl stores in London, according to Reuter's reporters, as shoppers had to rethink their plans.

Retailers will be hoping to avoid the panic buying that gripped the country earlier this year when shelves were stripped bare before the first national lockdown.

Prices 

The BRC and supermarket groups have both warned that if Britain leaves the bloc without a free trade deal the imposition of tariffs would force them to raise prices to mitigate the additional costs.

Under Britain's new tariff schedule, which would apply from 1 January if a deal is not agreed, 85% of foods imported from the EU would face tariffs of more than 5%, the BRC said.

Tesco has said consumers should expect price rises of between 3% and 5%. The government has disputed those figures, saying the impact would be less than 2%.

Major Players 

The four major players in the UK food market are industry leader Tesco with a 27% share, Sainsbury's with 15.7%, Walmart owned Asda with 14.1% and Morrisons with 10.3%, the latest data from market researcher Kantar shows.

Over the last decade German-owned discounters Aldi and Lidl have steadily won share from the traditional "big four" and together now have 13.9%.

News by Reuters edited by Donna Ahern, Checkout. Click subscribe to sign up for the Checkout print edition.

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