TALK­ING POINT

Stock­pil­ing for Brexit

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Food and bev­er­age com­pa­nies seem to be fol­low­ing in the foot­steps of the drug firms in mak­ing prepa­ra­tions for a ‘no-deal Brexit’.

Heineken re­cently an­nounced plans to deal with sup­ply chain is­sues and back in

July phar­ma­ceu­ti­cal gi­ant As­traZeneca (AZN) caused quite the stir when it an­nounced that it would be­gin stock­pil­ing medicines in prepa­ra­tion for a nodeal out­come.

The com­pany said it would in­crease the amount of fin­ished medicines avail­able to phar­ma­cies and hos­pi­tals by around 20% ‘as a safety net’.

Less than a month later ri­val Sanofi an­nounced that it would also stock­pile medicines in the UK.

Sanofi is one of the world’s lead­ing pro­duc­ers of in­sulin and vac­cines and im­ports its medicines into the UK.

CROSS-CHAN­NEL TRADE RISKS IN­CREAS­ING

Every month some 37m packs of medicine come into the UK from Europe and 45m travel the other way, ac­cord­ing to a BBC re­port.

All drugs are li­censed, tested and cer­ti­fied ac­cord­ing to strict na­tional reg­u­la­tions, and for now tests in the UK and Europe are treated equally.

Un­der a ‘no-deal Brexit’ that would no longer be the case, po­ten­tially caus­ing ma­jor de­lays in the UK get­ting drugs from Europe and vice versa.

Now it seems food com­pa­nies are fol­low­ing suit. Cold stor­age firm Wild Wa­ter says it is run­ning out of room be­cause food pro­duc­ers and su­per­mar­kets are con­cerned that food will be held up at ports ‘with or with­out a deal’.

Last week Heineken, the world’s sec­ond-largest brewer, ad­mit­ted that it had be­gun adding ware­house space in the UK to give it ‘greater flex­i­bil­ity to meet cus­tomer de­mands’.

Its com­ments came af­ter the chief ex­ec­u­tive of­fi­cer of UK lo­gis­tics firm Win­can­ton (WIN), Adrian Col­man, de­scribed the Dutch firm as stock­pil­ing ‘thou­sands of pal­lets worth of goods’ ahead of the March dead­line.

EARLY CHRIST­MAS (AND EASTER) FOR LO­GIS­TICS FIRMS

The Cen­tre for Eco­nom­ics and Busi­ness Re­search es­ti­mates that

UK firms will stock­pile close to £40bn of goods ahead of Brexit

UK firms will stock­pile close to £40bn of goods ahead of Brexit.

Among the goods be­ing stored by Wild Wa­ter are 1.75m tur­key crowns, 7,000 pal­lets of cakes, 4,000 pal­lets of su­per­mar­ket deserts and 1,000 pal­lets of moz­zarella sticks of all things.

Wild Wa­ter’s chief ex­ec­u­tive Ken Rat­ten­bury de­scribed the surge in de­mand as ‘com­pletely out of sync’ with nor­mal trad­ing and says it is hav­ing to turn cus­tomers away on a daily ba­sis.

As well as fin­ished prod­ucts, cus­tomers are wor­ried about keep­ing ac­cess to sup­plies of raw in­gre­di­ents post-Brexit in­clud­ing such ba­sics as flour and fruit juices.

Be­sides brew­ers stock­pil­ing beer, Win­can­ton has seen choco­late-mak­ers pro­duc­ing and stock­pil­ing Easter eggs months ahead of nor­mal in or­der to en­sure it can sup­ply its cus­tomers.

Next year Easter falls in lateApril so there is likely to be a big rush for all kinds of sea­sonal prod­ucts be­fore the March 31 Brexit dead­line. Other UK stocks which may be linked to stock­pil­ing in com­ing months in­clude trans­port firms Ed­die Sto­bart Lo­gis­tics (ESL) and Xpe­di­ator (XPD:AIM) and ware­house land­lords like Se­gro (SGRO) and Ware­house REIT (WHR:AIM).

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