Weak pound to see British retailers source produce locally – Report
A new report by Kantar on Brexit’s impact on the British retail landscape has highlighted that UK mulitples may look to source more produce locally.
Kantar says retailers with headquarters inside Britain will primarily be concerned in the early stages about the financial market effects.
“In the short-term their ability to import goods from the European Union will be adversely affected by a weaker Pound:euro exchange rate.
“Nearly all retailers will look inward to source locally and we at Kantar Retail feel that the retailers that have done the best job of cultivating good relations with British farms and fisheries will do better than their peers in the immediate term,” it said.
Kantar found that the mid-term effect of goods sourcing is likely to be the largest factor of consideration for British retailers. The prices of fresh produce will definitely go up as much of this is sourced from the EU.
“The prices of fresh produce will definitely go up as much of this is sourced from the EU.
“In the case of Tesco, for example, almost 50% of butter and cheese consumed in the UK comes from milk sourced from EU markets.
“Inflationary pressures will further boost the call for locally-sourced/manufactured products as the retailers’ ability to source from the EU suppliers offering better trade terms is adversely impacted.
Kantar also said that higher commodity prices and tariffs will also impact production of traditional retail products, even though a significant proportion of goods are produced locally.
“Supply chain costs are likely to go up due to higher trade tariffs,” it said.
The pound has fallen to its lowest level in 30 years after the UK defied market expectations to vote to leave the European Union.
It had been on the slide against the majority of the 16 most actively traded currencies globally since the start of 2016.
Irish food and drink exports to the UK accounted for 41% of total exports in 2015, valued at €4.4 billion, significantly this was an increase of 7% on the previous year.
As such, the exposure of the food and drink exporters to fallout from the UK electorate`s decision to leave the EU is more acute than any other sector.