European food – binge or bust

Are you a fan of Belgian waffles, Hungarian Goulash or Greek Moussaka? Perhaps you enjoy grilled halloumi alongside your arancini.

The European Union is jam-packed with delicious foods that are native to its members. Italy is well known for its scrumptious pasta dishes, for example, and France for its crêpes and brioche.

For the past two years, the UK’s government has been deep in negotiations with the leaders of the EU to form an exit plan. This hasn’t gone well, and with just over a week left before the UK gives (or gets) the proverbial boot, the pressure is on.

‘Brexit: Food Prices and Availability’, a report published by the House of Commons, said 30 % of Britain’s food comes from EU countries and, currently with no tariffs or customs barriers. An additional 11 % is derived from non-EU countries that have deals in place with the Union’s members.

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While the outcome of Brexit remains pretty much unknown, it is likely that once the UK becomes a non-EU country, businesses importing to the UK will face these extra charges.

Analysts have long argued that this aspect of Brexit is unavoidable, regardless of a deal or no deal outcome, and that the consumers will be the ones that feel the pinch as businesses raise prices to cover the import fees.

However, to quote Albert Einstein, “in the middle of difficulty lies opportunity”, and this is certainly true for investors and food producers and manufacturers.

The UK is home to a few interesting food companies that could benefit from the post-Brexit world. While listed on the London Stock Exchange, several of them have manufacturing plants outside the British Isles, making them relatively well-placed to negotiate the no-deal fall out.

Associated British Foods, for example, has been under pressure since the EU Referendum and its share price, while volatile, has been on a downward spiral –falling 33% over the past three years. Although its name conjures images of this green and pleasant land, it has brands based all over the world.

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Devro, which makes casings for sausages and salamis, has also had a rough ride. Its share price is down 31% over three years. But its manufacturing plants in the UK, mainland Europe, US and China spread its Brexit risk out nicely.

Of course, food stocks shouldn’t form the backbone of any investment portfolio and Brexit negotiations are unlikely to be easy for any company caught between borders and tariffs, especially food producers and manufacturers, which rely heavily on their goods being supplied to a global customer base.

But no matter the deal, no deal or no Brexit, we all still need to eat – and the more delicious the food the better.

Learn more about Brexit and find popular markets here.


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