Kreglinger Specialties stockpiles on “no deal” Brexit threat: “We have prepared for the worst,” says CEO

04 Mar 2019 --- Kreglinger Specialties is stockpiling enough product in the UK for the first 3 months after March 29, in preparation of a “no deal” Brexit. The European CEO of the ingredient distributor has warned about the high level of uncertainty that still exists with just weeks to go.

Kreglinger, which is responsible for distributing all of Beneo’s product into the UK, is planning to have 1,800 tons of product physically in the UK before the country’s date of exit from the EU, which would roughly equate to 3 months of stock. The UK accounts for 30-35 percent of Kreglinger’s business with the rest of product mainly destined for the Benelux and France.

“We have a pretty good idea of all of the possible ways out and we have prepared for the worst,” Wim Arnouts tells FoodIngredientsFirst. “Customers are counting on us to supply them without any hassle, so that the products are delivered to their doorsteps. We are gearing up for making that happen by ensuring that we have sufficient stock to at least cover the first 3 months after March 29. Hopefully by then the situation will have become clearer.”

Wim Arnouts, CEO of Kreglinger SpecialtiesHe did warn that March will be a bit of a difficult month logistically, however, “as a lot of people are trying to get trucks and they are fully booked.”

Of Kreglinger’s distribution portfolio, it is the Beneo product that will be most affected by Brexit, as the rest mainly comes from the US and other non-EU markets, which would not have fallen under the free-trade zone anyway. “Brexit has a big level of uncertainty for us, but also for our customers, as people will have questions about what the future will bring and we don’t have any answers on that,” he says.

Kreglinger started building up stock in the UK, including rice derivatives, inulin and specialty sugars, at the end of 2018. However, while some products have long shelf-lives, some of the others do not, which means that last minute shipments are necessary. “Some of the liquid inulin products have a shelf-life of just 16 weeks. So this is a certain factor. The only way to overcome this is to bring in as much stock as possible at the last week of March, to ensure that we cover the first months,” he adds.

One of the biggest questions post-Brexit will be around tariffs, with WTO rules coming into effect in the event of a “no deal” scenario. “The UK is not a producer of rice or inulin products, so it will be a question of how they treat these products tariff wise. If it goes according to current WTO tariff rates, all of these products will become more expensive. On our products it would probably differ between 6-12 percent,” he says.

While the impact would be lower than on sugar, for example, it would still mean a major hit on non-specialty products in particular. “When you talk about rice flours and rice starches, these are commodity products that are not really high priced. So it will definitely have an impact,” he adds.

Arnouts reiterated the company’s commitment to the UK, regardless of the outcome. “We have been active in the UK since 1974. The UK is still a very big market for us and we will stay present,” he notes.

He is hopeful that even at this late hour, some rational deal can still be secured. “I still hope that reason will triumph over a certain level of fanaticism. I don’t think that anybody has much to gain from Brexit, so the question is now how can we can keep the impact as limited as possible,” Arnouts concludes.

Wim Arnouts was speaking to FoodIngredientsFirst at the opening of a new Beneo texturized wheat protein facility in Belgium. You can read the full article here. 

By Robin Wyers