ConfectioneryNews earlier this month issued a survey for its readers, which includes major candy players such as Nestlé, Mars and Ferrero.
The survey attracted more than 80 responses, the majority from employees with companies based in the UK.
Respondents were asked question on the business outlook for their companies after the UK last month voted by a 52% majority to quit the EU.
The UK’s new Prime Minister Theresa May has said she plans to trigger Article 50 of the Lisbon Treaty next year, while the UK’s divorce from the EU is expected to be formalized by December 2018.
‘Non-EU opportunities were already there’
Around 56% of respondents to our survey agreed or strongly agreed Brexit would mean lower sales volumes for their company; while slightly over half agreed or strongly agreed it would negatively impact their business.
Euromontior International has projected confectionery will be the worst hit UK food & drink segment after Brexit with a compound annual growth rate (CAGR) decline from 2015 to 2020 as consumers cutback on discretionary items.
The majority of our survey respondents felt Brexit would not open up new markets for their company’s goods or mean less red tape.
“The non-EU opportunities were already there,” said one respondent. “Brexit just makes the EU opportunities harder to secure out of the UK."
Another said: “Higher UK regulations may mean imports from certain countries within EU are subject to a more rigorous set of standards than previously used which can affect their supply chain.”
Opening up new markets?
However, the majority of respondents (41%) disagreed or strongly disagreed Brexit would result in difficulties in sourcing unskilled labor.
The majority (47%) are also not expecting an increase in redundancies at their firms in the short term.
One respondent said: “The Commonwealth of Nations will become important once again,” while another said Brexit would open up a “global marketplace.”
Prices and commodity costs
The bulk (57%) of our respondents are anticipating increased commodity costs for cocoa and sugar after Brexit.
Cocoa prices on the London futures market, one of three exchanges for the commodity, have climbed 7% almost a month on from the Brexit referendum on June 23.
The average daily price was at £2,265 per metric ton (MT) on the day of the vote and rose to £2,417 per MT yesterday (July 20).
Some UK newspapers such as the Independent and The Guardian have speculated that chocolate prices are likely to rise as a result.
Around two thirds (65%) of our survey respondents agreed or strongly agreed UK food prices will increase post Brexit.
Legislation and safety
The majority (64%) of our respondents expect the UK will continue to apply EU food, beverage and feed legislation, while the bulk disagreed or strongly disagreed Brexit would mean watered down food safety standards.
Legal experts say all EU-derived legislation will be up for review once the two-year exit process is triggered under Article 50.
Confectioners react
Nestlé, which has its confectionery unit headquarters based in York, UK, previously said it would “continue to operate in the normal course” and would “follow developments closely.”
Cadbury maker and UK chocolate and sugar confectionery market leader Mondelēz International said it was also closely monitoring the situation, but said it remained committed to manufacturing in Britain.
Scandinavian confectioner Cloetta last week reported a drop in UK sales, which it said was partly attributable to a weaker British pound following the Brexit vote.
“Less than 5% of the Group’s sales come from the UK and the possible future impact of Brexit is therefore not expected to be material for Cloetta,” said the Chewits owner.
European Confectionery Association CAOBISCO has said it was “disappointed” by the Brexit vote and expects it to have negative consequences across all EU member states.
Ian Wright, director general of trade body the Food and Drink Federation (FDF), whose members include Mars and Ferrero, in a speech called Brexit “probably the UK’s most significant peacetime challenge ever.”
He said the top priority was for FDF members to help ensure the UK maintained access to the EU’s single market and customs.