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Consumer companies fear Brexit fallout

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IFRS 9 Impairment How It Impacts Your Corporation And How We Can Help


Consumer companies fear Brexit fallout

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Source: Associated Press

Say it quietly, but the political story that has dominated Europe for the past 2.5 years may be nearing its endgame. Britain is scheduled to leave the European Union on March 29, 2019. Negotiations have moved at a glacial pace, but as the deadline nears and reports of a deal on financial services being close to an agreement gather pace, there are signs that the U.K. may not be destined for as disorderly a Brexit as many have feared.

That would be welcome news for consumer-facing companies operating in the U.K. As our analysis below shows, Nestlé SA, Unilever NV and Diageo PLC have all warned of the very specific effects a hard Brexit would have on their ability to do business, from research and development to packaging and distribution, and all points in between. Smaller domestic operators would be even harder hit, with Mike Coupe, CEO of supermarket chain J Sainsbury PLC, saying it is "inconceivable" that certain products would not be in short supply.

Brexit is by no means a purely European issue. The situation will also be monitored closely by the Trump administration, which is preparing for bilateral trade talks with Japan, the EU and the U.K. Given the positive nature of trade relations between the U.S. and the U.K., that deal could be the "quickest and easiest" to clinch, one analyst told S&P Global Market Intelligence.

Of course, the fallout from Brexit will continue long past March 29. But for politicians and companies alike, some semblance of a resolution cannot come soon enough.

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Many of Europe's largest consumer companies, including Nestlé, Unilever and Diageo, have warned that a hard Brexit scenario would cause major supply chain disruptions.

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Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage, and tobacco industries that draws on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence.