January 27, 2021

The Autumn Budget – The FMCG industry reacts…

The FMCG sector is still digesting the possible implications of Phillip Hammond’s Autumn Budget but here we get the initial reactions of a number of leading industry figures.

Ian Wright CBE, FDF Chief Executive:

“Food and drink manufacturers – 97% of whom are SMEs – will welcome the Chancellor’s announcements today on productivity, exports, infrastructure, enterprise, business rates, investment and entrepreneurs.

“FDF is particularly pleased to see our representations on the way the Apprenticeship Levy operates have been listened to and acted upon.

“While we are committed to reducing packaging waste and working with Government, today’s new tax on plastic packaging will result in significantly increased costs for UK food and drink manufacturers, due to the input costs required to produce food-grade recycled packaging.

“However the shadow of Brexit, and in particular a ‘no-deal’ Brexit, hangs over the food and drink industry and gets darker every day. While that remains the case, it is hard to see how we can long continue with business – or politics – as usual.”

Miles Beale, Chief Executive of the Wine & Spirit Trade Association:

“We welcome the Government’s decision to freeze duty on spirits, which will support this great British sector to invest, grow and create jobs – as well as supporting the public finances through increased revenues.

“However, the decision by the Chancellor to increase wine rates significantly is a hammer blow to this great British industry. It actively undermines a sector that has been hardest hit since the Brexit Referendum and will be thoroughly unwelcome for the 33m consumers of the nation’s most popular alcoholic drink.

“This inflationary rise is grossly unfair, unjustified and counter-productive. The UK is the world’s biggest wine trading nation and, as such, deserves government’s support, not punishment.

“The wine industry is, unfortunately, no stranger to harsh treatment from Chancellors. Since 2012 wine overtook beer as the largest contributor to the public purse through duty payments, and no alcoholic drink has paid more to the Treasury since then. Today’s announcement means that only twice since 2003 that Chancellors from either party have showed their support to an industry employing some 190,000 people across the country.

“By increasing the UK’s already excessive duty rates the Chancellor will clobber wine importing businesses, including thousands of SMEs; stifle growth of our flourishing English wine industry and; raise prices for consumers.

“The freeze in duty on spirits announced today will be hugely welcomed by the hundreds of producers across the UK, and over 280,000 people employed across the spirits sector. Gin exports are now worth over £532m, and the freeze announced today will give UK spirit producers the confidence to continue to expand their export markets and seek to take advantage of future trading opportunities.

“However, this Budget represents a missed opportunity. It ignores the evidence from the last Budget that Treasury coffers actually increase following a freeze in wine duty. The inflationary rise in wine duty suggests the Chancellor has closed himself off to the concerns of our world leading industry and is wildly out of touch with British consumers.

“Moreover, today’s announcement puts us further out of step with excise duty rates internationally. It won’t please those wine-producing nations who want to agree FTAs with the UK either. It forces British businesses to compete on an ever more uneven playing field, which is grossly unhelpful particularly when final preparations are being made to leave the EU – potentially without a deal.”

Phil Wild, CEO of James Cropper:

It’s encouraging to see the Government seek to work closely with industry to progress the development of a sustainable infrastructure around recycling. 

“Significant strides have been made in the supply chain already. This can only improve as more plastic-free packaging solutions are made available and the infrastructure for waste materials works to keep recyclable materials in the value chain.  

“We have shown that there are credible plastic-free packaging alternatives through our COLOURFORM innovation, which is renewable, recyclable and biodegradable. It was inspired by the principles of a circular economy – one where packaging leaves no trace. 

“Partnerships between brands, recycling facilities, waste management companies and government are key in building on the great work that is already being done in establishing best practice for ‘on-the-go’ recycling.  

“We hope that the decision from the Chancellor will put fire in the bellies of UK businesses to accelerate plans to seek plastic-free packaging alternatives.

“The jury is still out on whether the [latte] levy may have helped tackle the issues surrounding disposable coffee cups.  

“More needs to be done to build an effective infrastructure, not just for cups, but other waste materials, to facilitate effective recycling and keep recyclable materials in the value chain.”

Christopher Snelling, Head of UK Policy, Freight Transport Association (FTA):

“The £420m announced in today’s Budget to repair potholes is a drop in the ocean when you consider that work that will cost more than £8bn is needed to rectify years of under investment in our road network.  The damage caused by potholes to the UK’s logistics fleet is adding unnecessary cost to the operation of vehicles tasked with keeping Britain trading, and FTA is concerned that the funding released by the Chancellor today will mean that operators will continue to incur these unreasonable costs at a time of extreme trading pressure.  More could and should have been done to help the logistics sector at such a critical time in the nation’s trading history.  It is a lost opportunity.

“The freeze on the Heavy Goods Vehicle HGV VED for 2019-20 is to be welcomed, and FTA is particularly pleased to hear that the government is set to maintain the difference between alternative and main road fuel duty rates until 2032.  This will support the de-carbonisation of the UK transport sector and give operators confidence to invest in alternatively fueled vehicles.”

Frank Woods, Retail Sector Specialist at NFU Mutual:

“The government’s commitment to reduce business rates for the smallest retailers in the UK is welcome, but is not going to satisfy those calling for a more fundamental reform of business rates across the country.

“And while the £900m relief will result in short term savings for the smallest shops across the UK, the larger retailers who employ the majority of people across the sector will not receive a direct benefit from this. And of course it is those larger retailers who have been grabbing the headlines over the past 18 months, for all the wrong reasons.

“For them, the question is whether the additional £675m to be invested in high streets will have any impact at all, especially as many of them rely on out of town retail parks for a large proportion of their sales.

“Taking steps to invest in transformation of city centres supports the widely recognised need for change. Making it easier for properties to be developed as homes to encourage more people to live in central urban areas will also help to build communities in areas where boarded up shops now dominate. Whether it will be enough to staunch the bad news that has been emanating from the sector in recent years is not so clear.

“Minimum wage increases may prove difficult for retailers to absorb, particularly while attracting talent is proving more difficult with Brexit approaching. A freeze on fuel duty will be a relief for those relying on logistics or deliveries.”

Glen Friel, Sales and Marketing Director at Aston Manor Cider:

“The Chancellor’s failure to fully recognise the issues the cider industry is facing is of some concern.

“Though we are grateful that the situation hasn’t been worsened with this freeze, as the industry has been in decline for several years, we asked for a 2p reduction in duty on the price of a standard pint.

“This would have been fair and allowed British cider makers the chance to continue to support local communities and the rural economy.

“At Aston Manor, we have invested tens of millions in recent years, increasing local employment and becoming more sustainable. It will be harder to continue to do the same in future years without recognition from Government of the specific challenges we face.”