CEO of multi-award winning St Peter’s Brewery, Steve Magnall, tells Pound Sterling Live he is confident any tariffs to exporting into the European Union will be limited following Brexit.
Magnall works in an industry that is both reliant on foreign workers, and exports predominantly in to Europe.
So what repercussions have there been on St Peter’s since the vote on the 23rd June?
“So far our business is the same. We export nearly 50% of our beer to over 40 countries worldwide so obviously the devaluation of the Pound against other currencies should help for export. Currently we are seeing exports to Europe in around a 10% growth, but the rest of the world is slightly down,” says Magnall.
St Peter’s is a relatively new brewery, founded in Suffolk in 1996.
It uses a combination of excellent quality water from its own bore-hole combined with locally produced malted barley and Kentish hops.
The result is a range of classical English cask-conditioned ales.
Since it began producing the awards and accolades have kept coming, from medals at the World Beer Awards to the number one Gluten-Free beer in the UK.
English ale is becoming very attractive to drink on the continent and capitalising on this St Peter’s have recently released a new range of smaller, 330ml bottles to fit in with the continental offering.
It makes the brand much more appealing to the European market, add in the backstory about its roots in the agricultural buildings next to St Peter’s Hall and the appealing looking oval bottles they come in and you’re talking about a very successful exported product.
The current favourites appear to be the more traditional and ‘British’ name selection such as Ruby Red and Golden Ale, alongside their award winning Without, alcohol free beer.
It has put St Peter’s in a prominent position to export, and it’s something Magnall believes will continue for the foreseeable future:
“I am very confident about our business and the future. I do not believe there will be loads of tariffs applied, because whilst Europe is a big customer of the UK, it works both ways. It took seven years for Canada to negotiate a free trade deal with Europe. People will point to that as how bad it is going to be. I point to that and say that's why the EU doesn’t work as it is.”
Euro Hedge will Run Out
But Magnall is keen to open our eyes to a wider concern, and that is to stop focussing on Europe and start thinking about other external factors when it comes to tariffs and pricing strategy.
He tells Poundsterlinglive that we need to look wider when it comes to currency issues.
Magnall says, “Other countries have their own problems and we play on a World stage, not just Europe. Look at Russia for example, the drop in rouble and oil has a greater impact upon us than Brexit. Our glass comes from Spain and will become more expensive once our Euro hedge finishes (we hedged at 1.4 euro to the £), but I see that as a normal part of business. Things go up and down all the time.”
UK Can Negotiate a Strong Brexit Deal
For Magnall the way forward is to ask the government to become more transparent, although for Brexit in principle he is happy for MPs to have more of a role in the discussions surrounding Article 50, as long as the exit still occurs.
With regards to Prime Minister May’s next moves Magnall says, “I think following the latest ruling, she needs to call an election. She has to lay out what she wants from the exit (and appreciate it is not all clear at present) and hopefully with a majority government she can then get things moving. We need Free Trade and some free movement of people, but it can be structured like other non EU countries, who manage quite well.”
For St Peter’s, they are understanding that there will be up and downs along the road to leaving the EU, but they are prepared for dealing with the bumps.
With exports to Europe currently on a high, catering to such a market could only bring benefits when negotiating tariff charges, especially if it is a scenario being replicated by other SMEs around the UK.
Certainly purchasing power from the EU was one of the reasons cited why Brexit should indeed happen by the Leave campaign.
“They need us more than we need them,” said Jon Moynihan from the Vote Leave board to BBC Radio 4 back in January.
Indeed, “on a par with the UK, the US is the most important export destination for the Euro-area,” says Holger Sandte at Nordea Markets confirming the massive importance of the UK as an export market to the Eurozone.
Magnall is optimistic, despite caution that Brexit will ultimately effect the brewery.
He says, “I am sure as we work our way out of Europe and are in negotiations, it will impact the business, but really that’s no different to the myriad of issues that we face.”