The Russia-Ukraine conflict to cause further supply chain challenges

The latest food and drink trade statistics for January 2022 reveal a slight increase in UK imports, while exports decreased slightly, with the latter demonstrating the prolonged impact of Brexit and the recent Omicron variant on staffing shortages and supply chain issues.

Considering the decline in UK exports more closely, food and drink manufacturers will need to continue to establish new overseas relationships and establish alternative growth strategies to overcome the challenges that have arisen throughout the last two years, especially post-Brexit and the increased administration burden needed to trade with countries in the EU. Businesses within the perishable food industry continue to face the impact of Brexit more than most due to more rules and regulations for exporting perishable products.

How will the Russia-Ukraine conflict impact the food and drink industry?

In addition, we are yet to see the full impact of the Russia-Ukraine conflict on the sector. While Eastern Europe only accounted for £230m (around 1 per cent) of UK food and drink exports in 2021, we can still expect this number to significantly decrease throughout the year. It’s the further supply chain disruption and the wider impact on agriculture that could have an acute impact on food and drink manufacturers – making it harder to recover post-pandemic and Brexit.

Manufacturers will also need to carefully manage prolonged supply chain and staffing issues while also adopting a new approach to business in terms of what products they export and where. As such, this will have a knock-on effect on consumers, who should expect to pay more for food and drink produce, due to supply shortages and the change in key raw material prices eg wheat, sunflower oil etc.

Could we see a shift to buying more local produce in the UK?

The coming months will be turbulent for the sector, with food and drink manufacturers needing to make strategic decisions about their domestic and overseas trade. UK consumers will need to adapt and consider how to become more self-sufficient; choosing to buy local produce and eating seasonally to reduce the UK’s reliance on imports and thereby seek to minimise any impact of expected price increases.