Cost of Tea Set to Increase in UK Following Brexit but KitKat Won’t Shrink

02 Jan 2017 --- The price of a cup of a tea in the UK is likely to increase in the wake of Brexit but Nestlé says it has no plans to cut the size of KitKat to help mitigate increased costs. The fall in value of the pound against other currencies following the UK’s decision to leave the EU is likely to lead to small scale tea price rises, according to the trade body UK Tea and Infusions Association.

Bill Gorman, executive chairman of UK Tea and Infusions, said: “In the UK, prices haven’t really risen for 10 years due to a combination of the major retailers working on extremely small margins and because of an oversupply in the market which has forced down prices.”

“Because the international tea market is in US dollars, you are now having to pay 10 to 15 per cent more as a result of the lower value of sterling.”

“Also, there is concern in the market that tea producers are not getting the kind of remuneration they should be receiving and some of them are starting to suffer a bit.”

“However, tea is still great value, typically costing two to three pence per cup, compared with coffee, which is nine pence per serving.”

Leading tea maker Yorkshire Tea said cost pressures could mean consumers paying out more in supermarkets.

Speaking to the MailOnline, a Yorkshire Tea spokeswoman said: “I can confirm that we’ve recently been re-negotiating prices with our customers”

“Our wholesale prices haven’t increased for five years, although our cost base has gone up significantly over this period, even prior to the significant impact of sterling’s devaluation.”

“Our tea is a blend of teas from Africa and India. It’s blended and packed in Yorkshire and our packaging is sourced mainly from the UK.”

Meanwhile, Dame Fiona Kendrick, Nestlé boss in the UK and Ireland, has eased consumer concerns that the food giant could reduce the size of its confectionery brands to reduce costs after the fall in value of the pound.

Speaking to BBC Radio 4’s Today Program, Kendrick said: “Not while I’m sitting here as chairman and CEO.”

“We want to make sure that Nestlé does everything it can to try and save costs and to ensure that we absorb as much as possible ourselves.” 

“We will look at every single opportunity to try and take costs out before we put pricing through and we will do that in a very responsible way. We’ve got fantastic, iconic brands and we’re not going to obviously do anything short-term to manage the immediate cost issues there.”

Costs for UK manufacturers have increased amid the fall in value of the pound against other currencies, as they buy ingredients and raw materials from abroad.

In November this year, the makers of Toblerone faced a backlash from customers after reducing the size of two of its bars in the UK.

Mondelez International increased the gap between the peaks of the famous chocolate to reduce the weight of its 400g and 170g bars.

The company, which also owns Cadbury, said the move was due to the higher cost of ingredients.