Food industry warns Brexit could cut its margins and sales

The strength of the euro in the face of the pound, the loss of confidence of the British consumer and the decrease in margins for tariffs, could lead to a drop in sales of Spanish companies, according to a report by KPMG.

The Food and Beverage industry in Spain, which is a fundamental pillar for the Spanish economy, now faces significant challenges such as the possible impact on Brexit's short term on the income statements of Spanish companies, according to from the II Study on the Food and Beverage Industry in Spain, prepared by KPMG, which analyses various challenges faced by the sector to maintain its strength.

According to the report, the strength of the euro against the pound or the loss of confidence of the British consumer, as well as the decrease in margins due to the introduction of entry tariffs, could result in a drop in sales of Spanish companies. One in five euros in exports from Spain to the United Kingdom is in the food and beverage sector.

Internationalization
With 25,422 million euros in exports in 2015, Spain is the sixth largest food and beverage exporting country in Europe and tenth in the world.

Internationalization has made it the priority for 25% of the entrepreneurs consulted and the main lever for growth, the report reveals. To achieve this, more than half of the companies surveyed cite the importance of cooperating with other companies. The European Union, China and the United States stand as the main markets to target.

To increase competitiveness in the short term, the need to maintain margins is first for 36% of entrepreneurs, followed by cost reduction (29%).

On the other hand, 30% of the managers of the sector believe that online commerce will mark the evolution of consumer behavior. To address this, they emphasize the importance of improving communication with the customer through social networks and adapting logistics to their needs.

With a turnover of 94,935 million, the Food and Beverage sector contributes 2.7% of the total Gross Value Added Value (VaB) of the national economy and generates some 470,000 direct jobs.

Source: Expansion

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