BREXIT - SEEKING ANSWERS

At the Alexir Partnership we undertook a mini survey to understand the impact that Brexit has on companies in the Food Packaging and Food Manufacturing Sectors and the issues and challenges these businesses are facing as a result of it.

“Start Planning Now”

Research conducted among an online sample of professionals in the Food Packaging and Food Manufacturing Sectors in the UK during January 2017. The information contained within this eBook is strictly for informational purposes. If you wish to apply ideas contained in this eBook, you are taking full responsibility for your actions.

About the eBookThe decision to leave the European Union has already had a major effect on the value of sterling which helps some but not others.

Our survey helps us all in the industry to identify the issues that need overcoming and reveal how businesses foresee handling the Brexit transition. By making the results available in this ebook we can hopefully give you some guidance on the key issues, the priorities and how other people in our industry are planning for this.

Businesses feel that the media reporting led to business uncertainty and thereby created a lack of confidence amongst consumers.

A positive impact for the economy is that companies can potentially increase their market share by bringing back manufacturing to the UK from the continent.

According the survey, 97% of respondents say their organisation will be affected by the business impacts associated with BREXIT.

The UK’s vote to leave the European Union will impact companies in Britain and beyond. Our survey shows that the majority of businesses believe their organisation will be affected by the BREXIT transition.

The key issues/challenges highlighted by the respondents include volatility of the currency markets, continuing access to the single market, supply chain management and dealing with the regulatory changes.

Other issues that were brought to light include access to talent in the single market, access to seasonal workers from the EU, duty taxes on British products exported to the EU and taxes on European goods.

73% of respondents say the biggest concern for their business is the volatility of the currency market.

“Lock down FX

rate to reduce

volatility risk”

Which aspect of the business impacts are of most pressing concern to your organisation?

75%

31%41%

9%

31%19%

Is your organisation now making plans to respond to these business impacts?

16%

84%

The pound has fallen to its lowest level in more than 30 years against the dollar following the UK's vote to leave the European Union. It has been one of the most noticeable consequences of the BREXIT result.

Respondents of our survey mentioned that for most of them the decreasing value of the pound meant that it would be more expensive to import products from outside the UK which has a direct effect on margins. On the upside it would be cheaper to export products from the UK to Europe.

Respondents also mentioned that it would be more expensive to source raw materials from outside the UK. This is of particular importance for businesses in the food packaging and manufacturing industry as it becomes more expensive to maintain their existing supply chain.72% of respondents believe that BREXIT is an

opportunity and think that foreign investors will be looking to invest in the UK.

“Spread your risk to

minimalise the

potential severe

impact”

What impact does the decreasing value of the pound have on your business?

72%

31%41% 34%

16% 9%

Do you believe that foreign investors will be looking to invest in the UK and purchase goods and services?

72%

28%

The survey shows that one of the main priorities for businesses in the food packaging and food manufacturing sector is to alter the supply chains.

Companies must develop or revise their plans to improve the supply chain. They have to determine how BREXIT will lead to an alternative sourcing model as well as identifying which trading countries could be more strategic than others.

For 50% of the respondents altering the supply chain is their top priority in dealing with the impact of BREXIT.

According to respondents of the survey another top priority is changing their business strategy. How does the post-BREXIT era impact their business and how should they respond to it? What changes do they need to make to their long-term business agreements?

Respondents see negotiation of their existing deals with European partners as a priority as well as revising their Terms of Business to build in protection. Other businesses may be so adversely impacted by BREXIT that they may seek to terminate their business relationship.

“Trust the UK Economy”

What are the top priorities in dealing with the impact BREXIT has on your business?

47%

25%31%

50%

28%

9% 12%

Is BREXIT your top procurement challenge for 2017? 28%

9%

62%

More than ¾’s of the respondents see an opportunity in BREXIT to source more of their products and services in the UK. In addition more than half of them feel they are in a position to change suppliers, materials and logistics as their best weapon against the procurement challenges that BREXIT affords.

Start planning

now

Lock down exchange rates to reduce

volatility risk

Source from UK suppliers

Are you in a position to change sources, suppliers, materials and logistics as your best weapon against the procurement challenges of 2017?

In your opinion is there an opportunity for growth in UK sourcing of products?

65%

35%

78%

22%