Former Sainsbury’s boss says Brexit will have a bigger impact than Covid on food and drink

‘In two years’ time you are all going to realise Brexit was bigger news than Covid,’ warns Justin King

Holly Bancroft
Friday 17 September 2021 14:27

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Brexit will have a bigger impact on the food and drink industry than the Covid pandemic, the former boss of Sainsbury’s has warned.

Speaking at the Convenience Conference in London on Thursday, Justin King said that it was inevitable that prices would rise because of supply chain issues.

“In two years’ time you are all going to realise Brexit was bigger news than Covid,” said Mr King. “I think it’s already clear that’s true. Labour relative to your business is going to become a much more expensive resource because of that, and that means productivity and your approach to it is going to fundamentally change.

“A lot of what’s happening with this is the new normal. Our labour situation in the UK is now structural and long-term, with a real lack of political will to sort it.”

Justin King, who predicted in 2017 that Brexit would lead to “higher prices, less choice and poorer quality”, added: “There is a border in the Irish Sea. It is not going away and forever that is going to change the nature of business.”

Mr King also warned of price rises and said that the industry was in “mid-crisis”, adding: “We have a long way to go and we absolutely don’t know what the journey is.”

Justin King served as chief executive of Sainsbury’s parent group, J Sainsbury plc, for a decade before stepping down in 2014. He was previously director of food at Marks & Spencer and also held senior positions at Asda.

His comments were the latest in a string of warnings from sector chiefs about the impacts of Brexit on the food and drink industry. On Thursday, the chief executive of Co-op, Steve Murells, said that supermarket prices increases are “coming” due to supply chain problems.

With the industry dealing with a severe shortfall of workers and rising commodity prices, Mr Murrells said that the supermarket chain would look to offset the costs “as best we can”, but said “some of that will filter down” to customers.

Marks & Spencer also announced on Thursday that it would have to close 11 of its French stores due to Brexit.

The quintessentially British brand said that supply chain problems caused by the UK leaving the European Union have made it “near impossible” to maintain standards and keep shelves full.

Paul Friston, M&S international director, said: “As things stand today, the supply chain complexities in place following the UK’s exit from the European Union now make it near impossible for us to serve fresh and chilled products to customers to the high standards they expect, resulting in an ongoing impact to the performance of our business.

“With no workable alternative for the High Street stores, we have agreed with SFH to close all 11 franchised stores.”

There are currently around 500,000 job vacancies across the food and drink supply chain and a demand for workers is leading to wage inflation, which is likely to be passed on to customers.

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