By: Emma Lewis from Tax Cloud and Myriad Associates
“The entire food supply chain looks set to be aided by significant shifts in customer behaviour this year. In most years, many shoppers leave their Christmas shopping until the last minute, meaning sales often grow by around a third in the fortnight before 25 December… So far, this year appears a bit different.” – The Grocer
Eat, drink, snooze, repeat. Throw in some chocs and socks and a fight over the last roast spud and you’ve pretty much got Christmas in a nutshell.
Christmas 2020 was a washout for many, with last-minute Covid restrictions throwing festive plans into instant disarray. Since then, there have been high hopes for Christmas 2021 -but there could still be a spanner in the works (and we don’t just mean Omicron).
Supply chain struggles and supermarket shortages have dominated the media over recent months. With December having rolled around and the demand for festive treats soaring, a lack of HGV drivers is adding to creeping scarcity. Then there’s the ramifications of Brexit alongside self-isolating staff and high Covid rates – the perfect Christmas-dampening storm. But will it really be that bad?
Despite the challenges it’s not all doom and gloom, but supply chains are clearly struggling.So what kinds of things might be trickier to get hold of this year and why?
A Christmas dinner staple for years, but a shortage of workers in processing plants means producers will have raised around 1 million fewer birds than usual. Even goose isn’t a safe bet, thanks to the recent closure of the UK’s last two hatcheries, plus an avian flu outbreak.
On a positive note, Paul Kelly, managing director of KellyBronze, doesn’t believe the shortages will be severe thanks to additional imports and the government’s temporary seasonal worker visa. However, with wage bills, overheads, packaging and the cost of feed all rising sharply, consumers can expect to pay between 5% and 10% more than last year.
“You will get whole birds and crowns, that will be fine, but there will be a smaller range of stuffed joints with bacon lattices and so on because there aren’t enough people in factories to make them,” Kelly explained.
The take away message for consumers is really one of early birds and worms – order in as soon as possible,or buy a frozen one.
The perfect accompaniment to a succulent slice of turkey – those little plump sausages wrapped in salty bacon. But even these simple bites of Christmassy pleasure may be at risk.
Part of the problem is that rearing and slaughtering pigs follows a different timescale to poultry. Production begins much earlier, typically by the start of July. A lack of staff right along the chain, again due to Covid and fewer EU workers, means that this year production has run late. So although there’s no shortage of pigs per se, it’s getting them from farm to fork that’s the issue.
All is not lost though. To help make the flow of deliveries into distribution centres smoother, supermarkets have relaxed many of their policies over delivery times. For instance, chilled deliveries are no longer expected on a day-one for day-one basis. Instead, a day-one for day-two or day-three basis is becoming normal.HGVs will also no longer be turned away if they arrive outside their allotted hours.
According to Tesco’s 2021 Christmas Report, 87% of the British population think a fluffy, crispy potato is the holy grail of essential roast veg. But with floods across Europe earlier in the year there was concern that damage to the crop would be severe, limiting UK availability. However, at the moment spuds seem to be in good supply (crisis averted).
A cocktail of chaos could also be on the not-too-distant horizon when it comes to alcoholic drink supplies.
Amid Brexit and Covid-related staff shortages, border paperwork and the ever-worrying lack of HGV drivers, various tipples of choice could be under threat.
A group of 49 wine and spirits companies recently wrote a letter to transport secretary Grant Shapps, highlighting supply chain misery that could see prices rising and shelves empty.
Chief executive of the Wine and Spirit Trade Association Miles Beale,has said there’s been major issues in getting deliveries to supermarkets, pubs and restaurants in particular.This is due to sheer and unprecedented logistical challenges in getting stock from European vineyards into the UK. Shipping time in many cases has doubled, with pressure only building as December 25th approaches. Where families are also (hopefully) set to enjoy larger Christmas gatherings following the low-key affair of last year, demand is particularly high for larger cases and magnums. Whether this demand will actually be met is yet to be seen.
Okay so it’s not food but Christmas without a Christmas tree is a pretty depressing thought.
Yep, the faithful fir also hasn’t escaped the Brexit/Covid madness with increased paperwork slowing up imports from the EU. Add to that the same old story of HGV driver shortages and a lack of warehouse labour, and getting your hands on fragrant, fresh spruces just got more difficult.
Many wholesalers are also wary about buying from abroad simply because stock can take so long to arrive. Local growers and producers are working hard to fill the gap, but keeping up with feverish demand is going to be tough. You obviously can’t just magic up a whole batch of perfectly sizedChristmas trees overnight either – they take around 12 years to grow. And of course, with any shortage will come the inevitable rise in prices for consumers.
Innovation is key
There’s no escaping it – supply chains are under huge pressure and that won’t change any time soon. The only way we’ll get round these challenges is through innovation.
The good news is, companies across the UK are working hard on tackling supply chain problems to make shortages a thing of the past. And the even better news is that they can actually claim back as much as 33.35 pence for every pound spent, thanks to the R&D Tax Credits scheme.
Myriad Associates, aleading UK R&D tax consultancy, describes this particularly generous tax rebate on their website:
“The research & development (R&D) tax credit is designed to encourage innovation and increase spending on R&D activities for companies operating in the UK.
It’s one of the UK government’s top incentives for encouraging investment in research and development and allows up to 33.35% of a company’s R&D spend to be recovered either as a reduction in Corporation Tax or a cash repayment.” – Myriad Associates
With this in mind, innovative companies are strongly being advised to find out more about R&D Tax Creditsand see if they can apply. Any money recouped can be spent exactly as companies see fit, with many reinvesting it back into innovative activities.
But for this year…
Even with Christmas only a few weeks away, the full impact of any shortages still remains unclear. Covid is back in the forefront of our minds with the festive season stillexpected to be rather different from those of yesteryear.
However, one thing we do know is that Christmas will be just fine whatever happens. Fun, family and some hard-earned downtime – with or without the trimmings.