Finsbury Food searching for new suppliers as it faces rising costs due to Brexit

A 'material proportion' of ingredients come from Europe, meaning the group is looking for new sources ahead of Brexit

Caitlin Morrison
Monday 17 September 2018 10:32 BST
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Bakery group Finsbury Food, which makes Vogel’s bread and creates cakes for Thornton’s, has warned that costs will go up after Brexit and said it is looking for UK suppliers to replace European sources of eggs and milk.

The company, which also produces the Mary Berry cake range, said that while the majority of its trade is done in the UK, a “material proportion of bakery commodities”, like dairy and eggs, are sourced in Europe.

“Any tariffs on trade therefore will have a bearing on the UK bakery market, the UK manufacturing industry and the group. Contingency planning is already in place looking at alternative UK sources of products,” the group’s chief executive, John Duffy, said in a statement.

“Whatever the structure of the final deal, anything different from the current status quo is likely to have an impact on both the food manufacturing industry and on the group.”

Finsbury also said it is likely to face higher logistic and administration costs due to increased customs checks at the border, and because it will need higher stock levels as a result of longer delivery times for ingredients.

Meanwhile, current trends show that uncertainty about the Brexit deal is having an impact on sentiment among consumers, who have stopped taking on extra debt and started saving their money.

This poses a risk to Finsbury, because spending on non-essential goods and treats will fall, putting a dent in demand for the group’s products.

“Finsbury is not being complacent in its response to likely Brexit scenarios and has a cross functional team preparing a number of strategies in order to minimise the impact of Brexit,” Mr Duffy said.

Finsbury provided the update on its Brexit planning in its preliminary results for the year to 30 June, which showed group revenue increased 2.4 per cent to £290m. However, profits fell 65 per cent, due mainly to the closure of the company’s Grain D’Or business, which was prompted in response to a jump in butter prices last year.

Mr Duffy said: "Our performance over the period has further illustrated the group's resilience and our ability to deliver against our strategic priorities, ultimately allowing us to grow like for like sales and profit year on year, reduce our debt further after significant investment, and continue to grow the dividend."

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