Dive Brief:
- U.K. food and beverage manufacturers aren’t optimistic about the medium-term post-Brexit prospects for the industry worldwide, according to a new survey from just-food.
- While EU companies anticipate a sharp but short disruption from Brexit, nearly half of U.K. companies (45%) believe it will be at least five years before the full extent of Brexit’s consequences are apparent.
- Post-Brexit challenges include currency fluctuations and the devaluation of the sterling in the near term, and securing access to European markets and workers in the long term.
Dive Insight:
For better or worse, Brexit has already impacted major global food and beverage producers, particularly in the declining value of the British sterling.
Earlier this week, Anheuser-Busch InBev raised its bid for U.K.-based SABMiller to £45 per share from the £44 per share bid both parties agreed to back in November. However, the pound’s value has diminished the value of the cash-only offer most SABMiller shareholders would receive.
Also this week, U.K.-based Diageo demonstrated another way currency fluctuations can impact manufacturers. Along with earnings, Diageo reported that the company would see a £1.1 billion ($1.5 billion) increase in revenue and £370 million ($487 million) profit boost in fiscal 2017. Because Diageo generates much of its profits outside of the U.K., those profits will be worth more when translated back into sterling.
That impact can also extend to U.S-based manufacturers that either generate a significant percentage of sales in the U.K. or EU, such as Mondelez and Kellogg, or that plan to acquire U.K.-based companies, as McCormick attempted to do earlier this year with Premier Foods.