Brexit - what it means for cake makers
page updated 23rd January 2020 . . .
Well, with just over 1 week to go the Westminster Government has fallen strangely silent - news and information has dried up and we're having to accept that Brexit is really happening. We've updated the information below to help customers in Eire and across continental Europe and want to reassure you that we are working to find solutions as quickly as possible.
page previously updated 20th October 2019 . . .
The latest news from Westminster is that leaving the European Union on 31st October isn't going to happen and that the EU have agreed in principle to an extension. This will probably mean the UK leaves on 31st January so, although the dates are different, the general information below still applies.
We may all be pretty fed up of hearing the B-word, but there’s no getting away from the fact that in a few short weeks from now (if Boris Johnson sticks to his timescale) something monumentally important could happen. Leaving aside all the wider political, social and economic issues, what will this actually mean for cake makers here in the UK?
Many of our customers run cake businesses so we’re talking about people’s livelihoods. If you are one of those customers then we urge you to read this. We don’t have a crystal ball but we can tell you how we’ve prepared and what our plans are. All we can do is report – each cake maker can then decide for themselves how best to prepare for what comes next.
Can we do all this without making our own views known? . . . probably not.
The main danger period is the first 3 months following Brexit. Things have a way of stabilising over time (we're not suggesting everything will get back to normal - it won't!), but during the first 2-3 months we’re going to see the most serious problems and disruption. As we move into the Spring of 2020 we sincerely hope that any backlog of freight in and out of Europe will have been cleared and things may be beginning to move again.
The single biggest danger is disruption. The way goods enter and exit the UK will change – new paperwork / requirements / processes / duty / tariffs / timescales will mean delays and a huge backlog of goods plus the actual cost of delivery will increase substantially. This applies to goods entering the UK from Europe as well as goods leaving the UK.
Ensuring continuity of supply
We’re doing our best – the whole cake / baking / food industry is doing its best, but there is a limit to what is possible. Manufacturers have stockpiled sugar and other essentials but virtually every sugar silo in the country has been filled – silo rent has gone through the roof so the cost of stockpiling is becoming very expensive. We increased production of Couture and other brands we are responsible for months ago and have stocked up as much as we can – the warehouses are bulging. This should help see us all through the initial couple of months. We’ve tied up a huge amount of capital and resources in stockpiling for our customers and we’ve now almost reached our limit – we’re running out of warehouse space (and spare cash) so we have to report that we’ve pretty much done as much as we can.
There’s also a second tier of goods where ensuring continuity of supply is crucial – these are less obvious but still essential. For example, the raw board and foils used to make cake boards all come from Europe. Again, every manufacturer has stocked up as best they can to at least see us through the Danger Period.
Any product that is made in the EU or that travels through the EU to reach the UK is a 'problem'. For example, Massa Ticino is made in Switzerland but has to travel through the EU to reach us. Massa Ticino shipments will be caught up in the chaos at UK ports the same as anything else so, again, we’ve stockpiled as much as we can to help ensure supply in the short term. The same goes for Saracino (Italy), Sudzucker (Belgium), Cake Dutchess (Netherlands), Callebaut (France/Belgium) and many more. We really hope we won’t run out but it is a possibility.
Delays & Disruption from outside the EU
With UK Ports and Customs struggling to cope during the Danger Period, delays are inevitable with imports of products from outside the EU. Faye Cahill lustre (Australia), Agbay levellers (USA), Crystal Candy (South Africa), Evil Cake Genius (USA), Silvia Favero (Argentina), CK Products (USA), Caking It Up (Australia), Satinice (USA), Chocolate Drip (Australia), Ateco (USA), Colour Mill (Australia) . . . the list just goes on and on. Again, we’ve stocked up as much as possible and have several more shipments already en route from these brands that will arrive before the Brexit date, but we're not in a position to guarantee they'll always be in stock during the next 2-3 months.
The exchange rate is terrible. Sugar is traded in Euros (and US dollars) and sugar production prices are agreed annually in October, so the timing of this is hardly ideal. There are other strains on prices too… the massive increase in demand as manufacturers stock up means the cost of ingredients increases (classic demand v. supply), plus the huge expense of storing stockpiled products and the actual increased cost of importing goods from Europe.
Put all this together and it’s inevitable that sugar prices will increase and that increase will trickle through to all sugar-based products like sugarpaste. Cake Stuff have committed to only passing on the increase without adding any margin – in other words, if a brand of sugarpaste increases by 6p per kilo then we’ll pass on that 6p increase and not a penny more (don’t read anything into the 6p figure – we have no idea what any increase may be).
Likewise, a poor exchange rate against the US dollar means all of the products we currently import from the States are costing us a helluva lot more than they did a year ago. We’ll do everything we can to keep increases to a minimum but they’re going to happen, so it goes without saying that we’ll continue doing anything possible to ensure we always offer you the best possible price on any product.
Cake Stuff customers in Europe
We’re sorry – we’re deeply sorry – Brexit is not our wish at all and we want to go on record and say that. During the initial 3-month Danger Period there is simply no point in us sending out orders that will simply join the mountain of boxes waiting to enter Europe. Even if we ensure that all the relevant customs documentation is correct (and we will!) your orders will be caught up in a massive backlog and that’s no good to you. So, for that initial period, we are suspending all deliveries to customers in Europe.
Please believe us when we say that this is not a ploy to get you to order but, if you can, order now. The last thing we want is to let you down but please understand that following Brexit the situation will be chaotic, so it’s best that we do not add to that chaos by trying to deliver time-sensitive orders throughout Europe.
After we clear the 3-month Danger Period (hopefully around Easter 2020) we sincerely hope that the backlog of freight in and out of Europe will have been cleared and things are working more smoothly. At that stage we will be only too delighted to re-instant deliveries to customers in Europe. We will be liaising with DPD and other delivery partners throughout for their latest advice on backlog and delays.
Stocking up v. panic buying
In a classic political move, the government is passing responsibility for continuity of supply on to businesses. It’s a subtle tactic and you may not even have noticed it, but we predict that at some point shortly after Brexit we’ll see a government minister on TV stating that they gave businesses plenty of notice so any problems the public are facing with shortages are down to the businesses who didn’t bother to prepare. Nice one!
Here’s where we leave ourselves open to criticism no matter what we advise: if we advise you to stock up we’ll be accused of encouraging panic buying - if we tell you we should have enough stock to last 2-3 months but we sell out, we’ll be accused of being ill prepared. So we’re not advising anything – we’re simply reporting the situation as it currently stands. If you run a cake business then common sense says to look at the diary and ensure you have enough key products to fulfil both confirmed and potential orders, especially where you rely on a particular brand of sugarpaste etc. How much extra you decide to stock up on really isn’t for us to advise.
what happens next?
If you know the answer, please send it with your name and address on a postcard to ‘10 Downing Street, London SW1A 2AA’ and you may win a prize.
In fact, you may be offered a position in the cabinet.
We’re trying to keep it light but we’re only too aware that this is serious. What we can say with certainty is this: (1) prices will go up and (2) certain products may be unavailable for a short period. There is absolutely no doubt about this but we will do everything we can to minimise the impact on our customers. We have done what we can to stockpile and prepare but we’re a small company and have reached the limits of what is possible, let alone what is reasonable.
It’s now over to you to decide how best to prepare your own business. We wish you the very best of luck and we're here to help and support you through the next few months as best we can.
See you on the other side!