Brexit Ensnares Percy Pig as U.K.-EU Trade Headaches Multiply
Marks & Spencer Says Brexit Complicating Irish, Czech Operations
(Bloomberg) -- Marks & Spencer Group Plc’s supply of beloved candies such as Percy Pig sweets to Ireland is under threat, as evidence mounts of the strain Brexit is placing on U.K. retailers.
Deliveries to M&S stores in the European Union are facing red tape and about a third of food products it sells in Ireland may be complicated by new trade rules, Marks & Spencer said Friday. Percy Pigs pose a conundrum because they are made in Germany and the retailer receives the deliveries in the U.K. Sending them on to Ireland without any further processing or alteration may trigger tariffs.
The huge “scope and complexity” of the rules-of-origin regulations means that big businesses, like M&S, will have to “find an expensive workaround” to avoid paying new duties, Marks & Spencer Chief Executive Officer Steve Rowe said on a call with reporters.
Brexit has already become a headache for several U.K. retailers just as the country’s new lockdown weighs on their domestic business. Delivery firm DPD said Friday it would pause and review its road service to the EU, including Ireland, as it grapples with new rules. Debenhams temporarily switched off its Irish e-commerce site as uncertainty about trade rules snarled operations. John Lewis, Asos Plc, and Fortnum & Mason, grocer to the Queen, are among other retailers that have suspended deliveries to Ireland.
“The government’s bluster that it will be alright on the night leaves those on the ground to seek to make their way through the bureaucratic morass,” wrote Clive Black, a retail analyst at Shore Capital. “EU-U.K. matters are a clear irritation for M&S.”
Marks & Spencer’s Irish stores recently have also suffered some food shortages. Furniture retailer Made.com said it’s unclear what additional paperwork is needed and so it stopped supplying Northern Ireland as well.
Fears are growing among British businesses that the burdens of additional customs paperwork, coupled with the difficulties of navigating highly complex rules of origin, could not only make selling to EU markets potentially uneconomic but also damage overall U.K. competitiveness.
Rowe said that while big businesses will probably find their way around complex rules, it will be much harder for smaller operations with less resources. M&S Chairman Archie Norman said that understanding the rules of origin makes unraveling the genome sequence of Covid-19 “look simple.”
Marks & Spencer has been selling Percy Pig sweets for almost three decades. The gummy candies, in the form of pink pig heads, are made by a company called Katjes in Germany. Marks & Spencer’s international business also includes stores in the Czech Republic and franchises in France.
In other evidence of mounting disruptions, Irish authorities eased some customs arrangements on arrivals from the U.K., to try and smooth the flow of goods, the Irish Times reported on Friday.
Stena Lines canceled 12 sailings between Ireland and the U.K. due to take place in coming days, citing travel restrictions and a fall in freight volumes during the first week of Brexit proper. Over 1 billion euros of trade ($1.2 billion) usually goes between Ireland and the U.K. every week, with about 20% of Irish imports coming from its nearest neighbor.
“Problems in the supply chain have resulted in a significant fall in freight numbers this week at our Holyhead and Fishguard ports,” Stena said.
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