Brexit’s impact on the UK coffee industry
Coffee is a very important industry for the UK. It employs around 150,000 people and has a revenue of nearly 13 billion EUR. It is also one of the largest coffee-consuming markets in Europe. In 2016, the UK announced it was leaving Europe. For UK industries, this created economic uncertainties. On 31 December 2020, the United Kingdom (UK) officially left the European Union (EU). Now, almost a year later, we look at Brexit’s effect on the UK coffee industry.
Brexit and its uncertainties caused every industry to analyse the possible impact on their activities. In 2018, the British Coffee Association (BCA) partnered with the Centre for Economics and Business Research to investigate the most specific concerns for the coffee industry. These included legislation and free trade, free movement of labour and trade tariffs.
The BCA pointed out the massive cost that Brexit would add to the manufacturing and supply of British coffee. The association also showed concern for the impact on smaller brands and European-based companies. BCA expected that Brexit would result in less consumer choice and fewer brands on the UK market. New trade tariffs would also affect shops bringing already-roasted beans into the UK and businesses that export roasted and instant coffee to the European Union (EU).
The coffee industry after Brexit
Brexit affected the coffee industry in many ways. Extra paperwork and administrative costs in the trade with the EU created extra costs for businesses. Luckily, the much-feared import duty of 7.5% for roasted coffee and 9.0% for instant coffee was not put in place for trade between the EU and UK. This is due to the new EU-UK Trade and Cooperation Agreement.
Brexit also led to labour shortages, in transport especially, that affected the coffee industry. The situation slowed delivery times between port, factory and coffee shop. At another level of the coffee supply chain, the UK faced a shortage of baristas. Many left the country because of Brexit.
Impact on coffee-producing countries
UK-based importers have strong relationships with coffee-producing countries. This means that they do not rely on the EU to access supplies. About 95% of British green coffee imports are sourced directly from producing countries. This has not changed much because of Brexit. Brexit might even strengthen direct trade relations between UK-based importers and roasters with exporters in producing countries.
Impact on exports
The new trade barriers between the UK and the EU do not have much impact on the coffee industry. The UK does not play a major role in green coffee re-exports. It is also not a big roasted coffee exporter. Even though the EU is its main trade partner, volumes are relatively low.
ITC Trade Map data shows that the UK re-exported 8,400 thousand tonnes of green coffee to the EU in 2018. It re-exported 5,700 tonnes in 2020: 79% of the UK’s total green coffee exports. For roasted coffee, the UK exported about 22,000 tonnes to the EU in 2020. That is nearly 78% of total roasted coffee exports. It is also an increase from the 18,000 thousand tonnes exported in 2018, 69% of total roasted coffee exports.
Gustavo Ferro and Lisanne Groothuis from ProFound – Advisers In Development wrote this news article for CBI.