Thorntons owner says leaving single market and customs union could cause shortages and delays
It might be a good year for Britons to stock up on Easter eggs, after a major chocolate manufacturer warned of the risk of shortages, higher prices and products turning stale after Brexit if the government goes ahead with pulling out of the single market and customs union.
The Italian confectionery giant Ferrero, which owns the Thorntons brand among others, has told MPs that much of the chocolate it sells in Britain is manufactured in Ireland, France, Belgium, Germany, Poland and Italy.
The company’s ability to produce quality chocolate, from bars to Easter eggs, relies on consistent regulations in the UK and the rest of Europe, and the the free movement of goods across borders, according to a submission to parliament’s cross-party business select committee.
Ferrero, an employer of 3,500 people in the UK, where its turnover is £483m, says that if tariffs were applied on the raw ingredients it could add 10% to the cost of its chocolates. However, the company says, “of greater significance to Ferrero specifically would be the non-tariff barriers”.
The potential obstacles to trade that are prompting the alarm include the UK’s possible divergence from EU standards in food and labelling, which would complicate Ferrero’s business model and possibly increase costs “by as much as 10%” while reducing “the number of different products on the market”.
The chocolatier claims that “inadequate customs arrangements” when the UK leave the customs union would also lead to shortages and products going stale as they wait in storage at Dover and Calais. Thorntons products are manufactured in Alfreton, Derbyshire, but sold across Europe.
“While we are aware of proposals to increase capacity at Dover, there must be concerns about whether these are adequate,” the company said. “The impact of delays in customs must be acknowledged as a serious risk. Ferrero products sold in the UK are manufactured in locations across Europe and imported on nearly 5,000 trucks each year.
“Delays at customs would be costly and could impact on the freshness of our products in store. This is of particular concern for Ferrero, as the shelf lives of Ferrero products are typically a third shorter than those of competitors … There could even be the risk of stock shortages in the event of severe delays.”
Catherine Bearder, the MEP for south-east England, said: “Over 5,000 Ferrero trucks come into the UK each year – a severe hold-up at Dover could mean empty shelves in shops, especially during busy periods like Easter.”
Ferrero, which bought Thorntons in 2015, has suggested that the transition period after Brexit before a new free trade agreement is struck with the EU should be “as long as necessary to allow business to plan sufficiently for operating”.
As it stands, the UK has agreed a 21-month buffer, although Theresa May suggested earlier this week that the period could be extended.