The United Kingdom was the fifth largest coffee consumer market in Europe in 2018 with an estimated coffee consumption of over 120 thousand tonnes. The coffee shop market also had an estimated value of £10.1 billion across 25,483 outlets in 2018, which was half a billion more than the previous year.
Domestic consumption of instant coffee still dominates the UK market but coffee pods and ground coffee are also becoming more popular. However, like with any other commodities, coffee can be traded and prices may fluctuate based on supply and demand.
With Brexit underway, how will this affect the coffee industry? In this article, we explain how coffee may be affected by Brexit.
The United Kingdom is no longer a member of the European Union as of 31st January 2020. We are currently in a transition period until the 31st December 2020 and until then, the rules and trading relationships with the EU still apply.
Although the impact of Brexit on the UK’s coffee industry is largely uncertain, it’s likely that there will be an impact on the value of the Pound which may affect the disposable income of UK coffee consumers. The coffee market may also see a slower growth rate within the coffee shops and specialty coffee segments.
Importing and Exporting Coffee
It’s also predicted that with a weaker Pound Sterling, coffee will be more expensive to import into the UK, especially with the additional import duties and taxes. However, this can depend on where the coffee has been imported from. Businesses might also pass these costs on to customers which means it could cost more to buy coffee. Whilst some consumers are willing to pay more for the same coffee, some may not. This could impact smaller businesses, especially if larger companies have ways of keeping their prices down.
In order for UK importers and exporters of coffee to continue their trade operations with EU countries, there are key requirements to meet such as:
- Traceability – Operators need to be able to trace and identify where the coffee products came from and where they are going to.
- Contaminants – Meeting the specific limits for Ochratoxin A contaminants, depending on if the coffee is roasted or soluble.
- Pesticide Residue – Complying with the exact amount of allowable residue for each type of pesticide.
- Labelling – Labelling must be clear, legible, and clearly worded in language that is easily understood by consumers.
- Type of Coffee Extract – Depending on the type of coffee extract whether it’s solid, paste, or liquid, specific percentages of dry matter content must be met.
You can read more about the key areas here.
Coffee Shop Workers & Baristas
There have also been concerns about the amount of people that are from the EU who are employed as baristas and servers in coffee shops. The UK relies on the inward migration of EU workers and Brexit may have an impact on this.
The UK’s new migrant visa system will only allow skilled EU workers to permanently live in the country which can cause problems for smaller companies that are looking to fill specific positions within their coffee business. The possible lack of EU labour could leave skill gaps for companies and particularly for chains.
The British Coffee Association is working closely with the government and partners to focus on a few key areas to ensure that the UK coffee industry continues to thrive. One of the key areas they are focusing on is the continuation of free movement of labour. They recognise that the coffee industry is reliant on migrant workers within businesses.
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