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Sunday, Apr 18, 2021

What Brexit crunch means for champagne, bacon and fries

What Brexit crunch means for champagne, bacon and fries

Deal or no deal, the food and drinks industry sees trouble ahead.

The Brexit negotiations are posing a threat to British champagne parties, bacon-filled English breakfasts, and even fish and chips.

The stalled negotiations over future trade relations between the U.K. and the EU have — the latest deadline is this Sunday — left thousands of European foodmakers in the dark over how they can send their products from the Continent across the English Channel. EU27 food and drink exports to the U.K. are worth around €33 billion, about twice as much as those to the U.S.

The uncertainty over new rules, bureaucracy and costs is a lose-lose situation: It can hinder EU food companies for which the U.K. is an irreplaceable market, while disrupting supplies of British consumers’ favorite foods.

The U.K. government has given food businesses some guidance on moving agri-food goods across the border as of January: Some sectors have even been granted flexibility in the first couple of months when it comes to standards, according to the Border Operating Model. Products of animal origin only have to submit pre-notification and health documents as of April 2021.

But that hardly resolves the problem. “If a deal comes, it will be at the 11th hour, giving businesses little time to prepare. Our members urgently need to know duties, tariffs and rules that will apply from January 1,” said Will Surman, the spokesperson of FoodDrinkEurope, an EU food-makers lobby.

Champagne 🍾


There are some products that the U.K. simply cannot produce on its own, as they traditionally have to be grown and manufactured in a particular place on Earth. Champagne is a classic example — the U.K. produces its own sparkling wine, but real Champagne can only come from the eponymous French region.

Charles-Armand de Belenet, general manager at the French Champagne house Bollinger, stresses that the brand has a love story-like relationship with the U.K. It was one of the first French Champagne houses to become a royal warrant holder in 1884 — a certification that it supplies the royal family. It’s also James Bond’s tipple and has a British nickname — Bolly — given by King Edward VII.

That’s why De Belenet says that, in the long term, the trade of Champagne across the English Channel will continue. But in the short term, like in all other sectors, there could be problems.

He stresses the company is not so worried about extra duties — it would increase the price of a Champagne bottle by 20 cents. But it's had to prepare for logistical challenges.

To be ready, Bollinger already shipped one month of stock of its bubbly to the U.K. in November.

“We had to increase our production capability during the month of November ... Especially during this time of the year, November and December, which is a big season for the shopping market, so it was a serious issue so we had to hire a few workers in order to be able to produce this incremental volume,” he added.

“Today, what we forecast is the hard Brexit, so that we work on the worst option,” he said, adding that the company is expecting traffic jams at the borders and increased bureaucracy. “We know that there’ll be some new administrative papers to fill in but we don’t know exactly all the details,” he added.

Bacon 🥓


Brexit might cause problems not only for the supply of gourmet specialties but also for everyday staple products — take bacon, an irreplaceable ingredient of the artery-clogging traditional British breakfast. Frans van Dongen from COV, which represents the Dutch meat processing industry, said the U.K. is his country's second-biggest export market for pig meat. Finding a new market for pork loins, consumed as bacon, won’t be easy, as other markets are more interested in other cuts of meat.

Any supply problems with European pig meat would also not go unnoticed by U.K. bacon-lovers: According to the British Meat Processors Association, the U.K. is a net importer of pork. Currently, around 60 percent of Brits' pork consumption relies on imports, mainly from Denmark, the Netherlands and Germany.

For van Dongen, any import tariffs for Dutch meat — ranging from €60 to €199 per 100kg — would hurt the sector significantly. But he thinks the odds of ending up with tariffs are small, even in the case of a no-deal scenario, as both markets are too intertwined.

In the short term, he’s more worried about the logistical hiccups. “We’re dealing with fresh products with a clear expiration date,” he said. “So we’re obviously worried about trucks stuck in traffic, ports that won’t be able to handle the capacity and products that can’t move because there are issues with the certification. More government manpower is needed for that certification.”

But even these issues are not the most significant for the sector: The real worry, according to van Dongen, is trade relations in the longer term.

“The U.K. has left the EU to draft its own policy and to diverge from the bloc. The U.K. has already announced a new policy about the transport of living animals. If both markets diverge and there’s no more level playing field — even within the context of a free-trade agreement — then that will have consequences on our trading relations.”

Dutch meat producers will also keep a close eye on trade relations between the U.K. and countries such as Canada, the U.S., Australia and New Zealand. “If they want to close deals with those countries, then they will have to make concessions on agriculture, and especially on meat. That will also have consequences for us.”

Chips 🍟


The U.K. is also the second-biggest market for Belgium’s potato processing sector, and frozen fries account for about 75 percent of those products. Deal or no deal, Brexit will have a significant impact on the sector, which provides Brits with their chips, said Veerle Van Der Sypt, an international trade adviser at FVPHouse, which represents the Belgian potato, fruit and vegetable processing industry.

The Belgian fries sector has one big advantage: its products are frozen. In the last couple of weeks, Belgian companies have exported large volumes to the U.K. and stocked it there. This wait-and-see approach guarantees that the Belgians can keep their supplies steady even if the end of the transition period ultimately leads to traffic jams at the border.

“Even the best-case scenario will inevitably lead to more border formalities and border checks,” Van Der Sypt said. She added that while exporting to non-EU countries is not new for Belgian potato processing companies, there is still a lot of uncertainty about the implementation of rules on the U.K. side., for example when it comes to import declarations, the registration of vehicles or licenses for unmanned containers.

“The U.K. has said that there will be some flexibility in the beginning, which is needed,” she said. “We’re counting on some common sense in the first couple of months to avoid chaos, which is in nobody’s interest.”

The potato industry is also worried about potential future trade relations between the U.K. and other countries. The U.S. also has a big potato processing sector, so Belgium is keeping an eye out on the prospects of an Anglo-American trade deal. “But even if they were to strike a deal, they will also have to take into account the costs of transport. Being a close neighbor will remain an advantage,” Van Der Sypt said.

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