Sietske de Groot, Operational Manager, Influence Group
Speaking at the Annual Meeting of the European Food Flavour Association, the Influence Group unpicked the different tastes of Brexit.
Companies in the food flavouring sector are highly innovative, small to medium-sized enterprises. They have a vital role in global food production. After all, their products are what makes food kick.
Nobody knows what new EU-UK trade terms during and after transition will look like, yet companies have to plan ahead; contracts are being negotiated, funding sought, tenders published, materials sourced, staff recruited, investment plans drawn up and R&D budgets allocated. They have 18 months to get fit for Brexit, and possibly longer if the UK manages to agree a transition period. However, for as long as the divorce bill is not settled, negotiating the nitty-gritty of, for example, product testing procedures that would need to be agreed between markets, cannot be contemplated.
Uncertainty is the new normal and ‘risk management’ should be on the radar of all businesses. But how on earth can you plan for a market that will either be separate from, or that might still be bobbing along, the single market? This is where scenario planning comes in. We have heard it all: ‘soft Brexit’, ‘hard Brexit’, ‘Swiss Brexit’, ‘Free Trade Brexit’.
Although the Government’s preference is for a ‘bespoke’ deal, the EU has said that no new model will be on the table; it is either ‘Norway’ or ‘Canada’. This means either a soft Brexit, with continued free access to the single market, or a ‘free trade Brexit’ with tariffs slashed on goods but not much else.
So here is how to get smart. First answer the questions below:
- Where are my clients?
- What is my route to market?
- Where do I get my products approved?
- Which regulations apply?
- Which jurisdiction governs my contracts?
- Where do I pay tax?
- Which licences do I have?
- Where do I recruit staff from?
- Where do I have offices?
- What are my competitors doing?
Then cross-reference with all the different elements in existing trade relationships in a Big Brexit Matrix, and count your blessings. Or not. Each part of the business needs to be risk-assessed for the all the elements of the different scenarios.
To come back to Europe’s flavour industry, food flavourings and substances approved by the European Food Safety Agency and the European Chemicals Agency can stay on the market after 29 March 2019. Products that enter the UK market after that date may still be allowed for a while, but may be subject to unknown procedures, or they may not. This depends on what trading terms the EU and the UK will agree. This tells us businesses may want to think about speeding up placing products, and about freeing up resources to closely monitor the negotiations and regulators on either side of the Channel.
So get planning and map your unknowns. Although not anticipated, this may even result in unexpected discoveries and niches that the different flavours of Brexit could unearth.