Opinion: Michael Butt on Brexit and the hospitality industry

Michael Butt

29 August 2018

Many things are up in the air with Brexit, but none of the landings look particularly comfortable for the world of hospitality

In March 2019, we will be leaving the supporting embrace of the EU to bravely set sail into the WTO world. OR we will be carrying on as we are for a finite period under a transition agreement. OR for an unspecified longer period. OR forgetting the whole damn thing in a Brussels parody of the Eagles’ greatest hit.

A seemingly infinite number of monkeys have already hammered out, and continue to generate, reams of twaddle about the macro-economic effects of Brexit, despite the fact that whole-economy predictions are almost impossible, even in a steady-state system. If we could see the future we would all be millionaires; trying to predict the outcome of even simple processes can leave one removing albumen from stubble.

The economics of the hospitality sector, however, are easier to get to grips with, and forward-thinking operators and workers need to be planning now.

Most of the leave votes on the blue side of Brexit were from people with capital, looking to profit from misfortune. The period of upheaval is a time of opportunity for big gains and redistributions.

Looming large in the thoughts of our many European brethren are the changes to residency laws and shifts in the currency market, altering the pool of available staff. The wise will already be working out how to capture and train British staff. Potential hospitality workers might recognise that, if recession bites, a nationally recognised qualification would help them stand out amid a selection of newly-redundant financial-services workers – barrister to barista could become the norm.

Squashed between Deliveroo and people’s tightening purse strings, the casual dining sector could well implode. National chains are closing or revising forecasts downwards. Many are trying, without success, to shift underperforming parts of their estate.

Only the best will survive, perhaps relying on foreign investment as disaster capitalists snap up concepts with promise to ride through the downturn. The rest will fold.

The canny independent will be looking at how to deliver genuinely different experiences that people are willing to save for, others will be jettisoning the expense of kitchens to concentrate on wet sales. People drink to forget, not just celebrate.

These changes are already affecting where we drink, and household economics will define how much we drink, but could Brexit also change what we drink?

Changes are already affecting where we drink. But will Brexit also affect what we drink?

Scotch, made with UK-grown barley, will continue to be reasonably priced. But as an important export commodity to emerging markets and, therefore, a supply of foreign currency, the amount allocated to the UK will probably diminish. Could you blame Scotch producers if they choose to sell more of what they make abroad, much in the manner of Peruvian quinoa farmers today?

The future of Irish whiskey is much less assured. Oh, we’ll still be drinking it, but with a tariff border somewhere between distillery and consumer we can expect it to have taken a bit of a swim.

Cognac, armagnac and calvados may well be subject to tariffs too, though their premium nature may insulate them from loss of customers. Still wines, however, will likely suffer more, particularly at the lower end, leaving producers with grape surplus that could probably end up as neutral spirit.

Imported premium vodka will become even more of a status symbol, while UK-produced standard brands will enjoy increased sales to compensate. The gin market will continue to thrive, perhaps with different, UK-grown botanicals becoming more prevalent and a resurgence of local juniper grown in the Lake District.

The only thing that is definite is that competition is going to become fiercer, for brands, bars and bartenders. Our motto should be one borrowed from the Scouts. Brexit: be prepared.

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