Brewers’ Brexit benefit? It’s possible, says drinks analyist…

By: JimOldfield

July 13th, 2016

Britain’s Brexit from the EU could have a positive influence on the UK craft beer scene, says a leading drinks industry analyst.

Francois Sonneville, beverage analyst at Rabobank, says that, with domestic competition likely to ease as foreign competitors are affected by the weakness of the British pound, British brewers could flourish. However, he warened that they are, conversely, likely to be impacted by changing import tarrifs and as yet undetermined trade agreements.

Sonneville says: “In exports, British craft brewers would also benefit from the British pound’s weakness, but here, import tariffs would be a negative.

“The transaction effect of devaluation in the British pound is limited. Most barley and malt, which make up a small proportion of the cost price, are sourced domestically, and although raw material for packaging is often imported, most added value is created in the UK.”

He believes that in the short term, the drinks industry as a whole will feel the effective devaluation of the pound, while the uncertainty over future trade agreements is likely to “loom in the longer term” and he fears that “deterioration” of trade deals between the UK and EU is likely.

Sonneville says: “Some companies might benefit from this, but the overall effect will be negative, and those that might be impacted should look at contingency planning”.

About 18 per cent of the UK beer market is imported. Most leading brands are owned by international brewers, brewing both in both the UK and abroad.