Britain is running out of food warehousing facilities needed by retailers and manufacturers to stockpile goods before a possible no-deal Brexit – and the shortage may be the result of Amazon booking the space, MPs have been told.
Ian Wright, the director general of the Food and Drink Federation, told the business, Energy and industrial strategy committee (BEIS) on Tuesday that a shortage of space had driven up the cost of chilled warehouse space, even though the shelves may be empty.
He said: “What we don’t know is whether there is actual product in those places. There is some gossip … that quite a lot of this [space] has been booked by Amazon for their entry into the food market at some point in the next few months.”
But he added: “Every retailer is inevitably terrified of that prospect and will talk it up.” Wright told the MPs it would be a useful question to ask Amazon.
It emerged this month that demand for frozen and chilled food warehouses had increased as food producers and retailers started to put their no-deal Brexit plans into action. For many, that means stockpiling.
Warehouses storing everything from garden peas to half-cooked supermarket bread and cold-store potatoes, were fully booked for the next six months, with customers being turned away, industry representatives said.
Appearing alongside Wright at the BEIS session, the Nestlé director, Ian Rayson, said the food group had accelerated its Brexit planning in the UK and in Europe since the summer and had been in discussions with the Department for Environment, Food and Rural Affairs.
- Tesco: 26.8
- Sainsbury’s: 14.9
- Asda: 14.5
- Morrisons: 10.1
- Aldi: 8.0
- Co-op: 6.8
- Lidl: 6.0
- Waitrose: 4.9
- Iceland: 2.4
- Ocado: 1.7
- Others: 4.0
Market share (% in the 12 weeks to 6 September 2020)
“We have been stock-building some products that we import into the UK, and we are stock-building in other other European markets, some products that we would export from the UK to there. So we are stock-building at both ends, but this is only for a period of weeks.
“There are limits to how much stock you can build for lots of different reasons. Warehousing is one issue and certain ingredients have a fairly limited shelf life so there are some limitations from that point of view.”
MPs were told the cost of packaging had increased, on the back of rising demand before Brexit.
Wright said: “There are some significant challenges, in relation particularly to cardboard and paper-based packaging. If I remember my figures correctly, 600,000 tonnes of that [is] used every year, 90% of it imported, 80% of it imported from the EU, so any blockage in the supply chain as a consequence of a no-deal Brexit would be pretty calamitous because you only hold – typically in the whole of the industry – somewhere between eight and 10 weeks of stock.
“What we have seen in the last few months is prices rising because there is some scarcity and people are forward-buying.”
Amazon declined to comment on its warehouse bookings.
