Safeguarding the UK’s supply of chocolate treats after Brexit, with or without a deal
Brexit day is getting closer, and businesses are working to prepare. Richard Laming, Head of Public Affairs at Ferrero UK looks at what this could mean for the British love of chocolate.
Chocolate is a mainstay of British life. In fact, the UK is the world’s third largest market for chocolate. The very first chocolate bar was made here in 1847, and today 99% of British households enjoy chocolate, with the average household buying it once a week. And it’s an export success too: chocolate is Britain’s third biggest food and drink export, after whisky and salmon, worth more than £700 million a year.
But Brexit uncertainty is posing risks. What can a chocolate company do to protect its customers, its suppliers, and its employees? Come to Derbyshire to find out.
Nestling in the beautiful countryside north of Derby is Thorntons, the well-loved chocolate confectionery company established on high streets all over the country. Thorntons is the biggest employer in the Amber Valley constituency of Nigel Mills MP, and has been based there since the mid 1980s. It’s a familiar and reassuring presence in the community, producing some of Britain’s best-loved premium chocolates that make for a delightful treat or the perfect gift.
Thorntons was founded in 1911, and became part of the Ferrero Group in 2015. It can now draw on the resources and know-how of the world’s third largest player in chocolate confectionery, to build its business and prepare for the future. More than £30 million has since been invested in Thorntons, in the manufacturing site, the retail network, e-commerce and national promotion to revive and grow the love and passion behind the brand.
Ferrero overall now employs around 3,000 people in the UK, with a turnover of nearly £500 million and a headquarters in Stephen Pound MP’s Ealing North constituency. It is a well-known household name, with 6 in 10 households buying Ferrero products every year. These include leading brands such as Nutella, Kinder and Tic Tac as well as the namesake Ferrero Rocher.
To help people enjoy these great brands as part of a balanced and varied diet, they are in small portions: 95% of Ferrero products come in portion sizes less than 150 kcal.
But for a company with quality at the heart of everything it does, Brexit poses a new and unprecedented challenge.
The chocolate industry is by its very nature international. The cocoa is grown in West Africa or South America, and while some of the other ingredients can be local – milk, sugar – others will come from all over the world. Hazelnuts come mainly from Turkey, almonds from California, vanilla from Madagascar. The finished products, too, are often manufactured in one European country and sold in many others. The Ferrero products on sale in the UK, for example, come from six different European countries, and in total around 60% of British chocolate consumption comes from abroad, overwhelmingly from the EU.
New trade barriers could start to put this at risk. The prospect of different rules on food standards and food safety could make it harder and more expensive to import and export.
New labelling rules could divide up the market, putting up prices and reducing consumer choice.
Customs controls could impose delays and costs on imports – Ferrero has 5,000 trucks a year arriving in the UK – as could tariffs if we fall back to WTO rules.
And our staff come from many countries, too, bringing their skills and experiences to share with their British colleagues.
If we feel some of this to be at risk, how can we prepare?
The right long-term free trade agreement between the UK and the EU could prevent a lot of these problems. There are practical and functional solutions waiting to be found for the customs officials and the food standards agencies. This isn’t politics, it’s just common sense.
But it does depend upon a deal. What if common sense does not triumph? What if the negotiations fail, or if parliament rejects whatever deal is agreed?
With a complex and sophisticated supply chain, this becomes a bigger challenge.
We can work with our suppliers and logistics partners to build up advance stocks of some products and ingredients, in order to keep our consumers supplied, but there are limits to what we can do. The shelf-life of some ingredients can be quite short – Ferrero products are renowned for their freshness – and storage capacity is limited. And remember, every additional pallet of product stored in our warehouse represents an additional cost to our business, diverting resources from investment in skills, productivity or innovation.
Along with the other major voices in the British food industry – farmers, manufacturers and retailers alike – we are calling for a deal to be agreed and that cliff-edge avoided. That way, consumers can keep their ready access to a wide range of safe, enjoyable and affordable food, with chocolate as a small but special part.