February 2025

On its 5-year anniversary, I was asked to write a few lines about the impact of Brexit on the FMCG food and drink sectors. I pondered the question concluding that, considering Brexit in isolation, it was a near impossible task.

Most economic studies require extraneous noise and events to be stripped out to ascertain the true impact of the subject in hand.   But with the backdrop of Covid, Ukraine, the ‘Mini-Budget’ interlude, climate records being smashed, the Employers National Insurance bombshell and of course the impending Trump tariff factor, even the most talented econometrician would struggle to ascertain the effect of Brexit; anything else must surely be conjecture.

Considering all that has happened in the past 5 years, Brexit cannot be held solely accountable. The Grocer (4th February 2025) commented that UK retail is now entering into a VUCA (volatility, uncertainty, complexity and ambiguity) Vortex. For retailers, operating on wafer thin operating margins and major global events occurring at the most alarming rate since the second world war, how much more can they be expected to take?  It’s like taking repeated Mike Tyson body and head blows and being expected to perform better each time you get up from the canvas.  Somehow, they manage to do it, making UK (and global) retail one of the most resilient industries on the planet.   But with some cracks beginning to emerge, Asda are really feeling the pain for example and redundancies are becoming widespread, how long can this resilience be sustained without radical change to the retailer / supplier infrastructure and really make it stick? 

As cited, by The Grocer (4th Feb 2025), the solution may rest with programmes such as Sainsbury’s Future Brands and GSCOP.   But these initiatives have been around for some time and maybe only play a role in supplier public relations or make the playing field a bit less uneven.  By not addressing its fundamental infrastructure, enabling it to withstand the next series of events that will send shockwaves throughout the industry, I’m not sure sticking plasters will suffice. Instead, I expect, retailers will continue to build their own defensive mechanisms (cost cutting and loyalty marketing, for example) or maybe they’ll leave it to market forces to weed out the weak, evening out the playing field to provide greater market share to act as the buffer.  Either way, we will leave it in their very capable hands until the next time we face the next ‘event’.

For most suppliers, without very deep pockets, they will need to develop their own strategies to weather these storms. Their longevity will be predicated on the ability to demonstrate initiative, a desire for positive change, and a strategic mindset. It has been proven that investing during the most turbulent times has generated long term benefits. This can take the form of above-the-line investment which leads to long term loyalty.  But, also by developing long term strategies, category visions for example. Setting out the roadmap today, by planning a strategic course for the next three to five years to deliver value-added volume and to deserve to win a place at the table.  By devising a category vision, suppliers are taking a proactive stance to help elevate category direction by providing shoppers and consumers more reasons to shop and consume and provide their own buffer to the unpredictability now entrenched in the natural and geo-political landscape. 

The Category Management Company are experienced in delivering insight led category management consultancy solutions, from category visions to the management of operational projects.