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Nestle warns of ‘very severe’ no-deal Brexit

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KitKat to Nescafe maker Nestle has warned of the “very severe” consequences of a no-deal Brexit – as it was revealed that warehouses for frozen and chilled food are nearly full.

Nestle executive Ian Rayson told MPs that it was stockpiling products in the UK and on the continent in case it faces a cliff-edge divorce next March.

But he told the business select committee that the ability to build up stock was limited by factory capacity and storage space as well as the fact some ingredients have a limited shelf life.

Ian Wright, the chief executive of the Food and Drink Federation, told the same hearing that warehouses around the UK for frozen and chilled food were “for all practical purposes booked out at the moment”.

Nestle has been trying to trademark the Kit Kat shape
Image:
Nestle’s products include KitKat

Companies are worried about a chaotic no-deal scenario that they fear could mean border delays, slowing delivery times that currently rely on frictionless trade.

Swiss-owned food and drinks giant Nestle became the latest to set out contingency plans on the same day retailers Pets at Home and Topps Tiles said how they were planning to cope.

It comes as research sets out the likely hit to the economy as a result of Theresa May’s Brexit agreement – with a worse outcome expected if there is no deal.

Mr Rayson, Nestle UK’s communications director, told MPs the withdrawal agreement was welcome as it provided more clarity for businesses in the run-up to Brexit, though it was “less clear what the end of that journey is”.

He said Nestle had been stock building products that the company needs to import in the UK while in Europe the company had been stock building products it expected to import from the UK.

“We are stock building at both ends, but these are only for periods of weeks,” he said.

Nestle, which employs 7,500 people in the UK, did not reveal which products it was stockpiling, or in what quantity.

It makes products in this country for export including KitKat and Nescafe Dolce Gusto. It imports brands including Maggi and Sanpellegrino from the continent.

Mr Rayson said: “You can prepare almost in crisis management terms for a no-deal exit and you can do certain things around that but you cannot mitigate the risks of no-deal Brexit.

“The consequences of it would be very severe and should be avoided and that’s the honest truth.”

The comments came as Pets at Home chief executive Peter Pritchard said on Wednesday the company had already imported goods worth a “couple of million pounds” as part of no-deal contingency plans.

He said 17% of its goods come from outside the UK.

Mr Pritchard said: “We don’t want families to run out of food for their pets.”

Meanwhile tile specialist Topps Tiles revealed it was building up stocks ahead of March.

It said Brexit could result in “disruption to the flow of imported goods resulting in supply issues, a reduction in consumer confidence resulting in lower sales and a reduced labour pool resulting in staffing issues”.

Last week, catering giant Compass said it could change menus and use alternative ingredients in the event of a no-deal divorce.

Previously, engine maker Rolls-Royce and Mr Kipling maker Premier Foods have revealed stockpiling contingency plans.

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