Heineken is stockpiling beer ahead of Brexit. The Dutch brewer tries to anticipate and mitigate the negative impacts of a hard Brexit if the United Kingdom is not able to reach an agreement with the European Union (EU) before UK’s planned exit of the EU on 29 March.
According to a report by Bloomberg, Heineken has already started storing higher volumes of its tequila-flavored beer Desperados and Strongbow apple cider, and plans to build them up over the coming weeks and months.
“Heineken is looking to stockpile thousands of pallets worth of goods,” said Wincanton Chief Executive Officer Adrian Colman on Thursday. The U.K. logistics company is working with the world’s second largest brewer to find additional storage space. Also other alcoholic beverage companies that Wincanton declined to name “want to build some stock ahead of the March deadline,” Colman said.
When asked about the stockpiling, a spokesman of Heineken replied that about 10 percent of all volume sold by Heineken in the UK is imported. “We always build additional buffer stock in the first quarter of the year to manage peak demand in the summer,” Heineken said. “We have taken a small amount of additional warehousing space to give us greater flexibility to meet customer demands.”
The Centre for Economics and Business Research (CEBR) estimated in a briefing note two months ago that UK businesses will stockpile goods worth £38 billion (US$49.3bn) ahead of the Brexit deadline at the end of March.
But finished goods like beer will be not the major problem for the UK in case of a disordered retreat from the EU. £100 billion (US$130bn) of all £260 billion (US$337bn) of goods imported from the EU last year fall into the categories of raw materials and semi-manufactures. If these will not flow without restrictions into the UK, "this makes a post-Brexit mini-recession almost inevitable," said Douglas McWilliams, founder of the CEBR.
There is not much time left for an agreement. The EU leaders were aiming for a mid-November summit to sign a Brexit treaty with the government in London. But such a meeting is not very likely given the fact that still important questions are left and the British government does not seem to make any step forward. "The clock is ticking," says EU chief negotiator Michel Barnier.
It’s not the first time that Heineken has to suffer from the effects of Brexit. Already in March last year, UK biggest supermarket chain Tesco delisted 31 out of a total of 53 Heineken products, including such popular brands as Amstel, Sol, Tiger Beer, Birra Moretti, Kingfisher, Fosters Gold, Fosters Radler, Rocks and Blind Pig Cider , when Heineken announced a price hike by an average of 6p a pint across its brands, due to increased costs after a weaker British pound increased costs of imported goods after the announcement of Brexit. (inside.beer, 23.3.2017)