UK grocers face three-pronged storm
Britons’ Christmas lunches might be a little less filling this year, thanks to Brexit, ‘pingdemic’ and soaring temperatures
There’s a reason Brits are struggling to find pints of milk, packs of salad and bottles of water in the supermarket — and it’s not all due to the “pingdemic”.
Britain’s grocers are facing a perfect storm of Brexit, a record number of people self-isolating (most of them after been pinged by the National Health Service’s Covid app), and soaring temperatures that drive demand for chilled goods and wreak havoc on store refrigeration systems. All of this is leading to stocks on shelves running low.
Even before the highly contagious Delta variant started spreading, the UK’s food supply chains were straining from Brexit. This was most visible in the shortages for seasonal fruit- and vegetable-pickers — jobs that were often filled by workers from elsewhere in the EU — and for drivers of heavy goods vehicles, many of whom were from Eastern Europe.
The UK’s Road Haulage Association estimates that 15,000 EU nationals have left the industry since the start of this year. Add in some 30,000 tests for drivers of heavy goods vehicles (HGVs) that couldn’t go ahead in 2020 because of the pandemic, the closing of a tax loophole used by some drivers in April, and the crisis to find personnel for transporting goods has become severe. Job vacancies have almost doubled from 60,000 around the end of 2020 to about 100,000, according to the industry’s trade body.
Brexit creates other pressures on the supermarket sector. While the UK-EU trade deal that was struck at the end of last year was for zero tariffs and quotas, there are still frictions in the form of “rules of origin” checks (to make sure products qualify for no tariffs), food safety checks and limits on the number of trips hauliers can make once abroad. The impact of these disruptions has been most acutely felt in Northern Ireland, where the Brexit deal added another layer of bureaucracy in the form of the highly disputed Northern Ireland Protocol.
Overlaid on all of this is the pingdemic. The vast number of people required to self-isolate is disrupting all kinds of retail operations, as well as the factories that actually make and transport food to the big supermarket groups. If products do make it to stores, absent shop-floor staff mean there is no-one to put them on shelves or operate cash registers. That can lead to closing tills, or in the most severe cases, the entire supermarket.
Given the challenges, some food suppliers have resorted to measures they took in March 2020 when the Covid-19 outbreak first intensified; they cut back on less-popular products so that their manufacturing facilities could concentrate on filling shelves with more popular ones.
That helps explain what’s happening with milk. In late June, as the shortage of HGV drivers worsened, dairy group Arla Foods removed one- and two-pint bottles of milk so that it could still supply four-pint cartons, as the latter are bought most frequently by families. The smaller sizes began returning to shelves only last week.
And there’s another factor adding pressure on supply chains: Britain’s mini-heatwave. This drives demand for salads, soft drinks, beers and wine, ice-cream and mineral water (which are bulky to store) and barbecue meat. Even in normal times, it’s not unusual to see the fresh-food aisles stripped of lettuce and stocks of burgers running low after a particularly hot day. Soaring temperatures also strain refrigeration units, which can malfunction just when they are needed most.
Fortunately, some relief is coming; from Aug. 16, fully vaccinated people in England will no longer need to self-isolate if they come into close contact with someone who has tested positive for the virus. But that’s still some weeks away.
Bringing the date forward would help ease the situation and it’s possible the government could announce exemptions shortly. Making temporary work visas available for delivery drivers from outside Britain would alleviate the shortage. Meanwhile, when it comes to Brexit red tape, applying a common-sense approach, rather than being tripped up by tiny details, would also ease the burden.
If these issues aren’t tackled the food-retail industry may enter its busiest trading period — from the autumn into Christmas — hamstrung by the largely unseen parts of their operations. Marks & Spencer chair Archie Norman has already warned that the retailer is cutting back on Christmas products because of the “labyrinthine restrictions” affecting Northern Ireland.
That would be ironic because after Covid lockdowns ruined December 2020, many Brits will be looking to pull out all the stops on their celebrations this year. It would be tragic if Christmas 2021 was stolen again — this time by supply chain snarl-ups.
Bloomberg Opinion. More stories like this are available on bloomberg.com/opinion
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