“I’m still determined to see our sector get support it deserves” – Bielby
First impressions of the restart of the hospitality sector? Not bad, but not enough.
The three-month shutdown has arguably hit the distributors who supply restaurants, pubs and hotels harder than those customers themselves, who have had the assistance of grants and business rates relief to tide them over. Their wholesalers, who went into lockdown with stock unsold and invoices unpaid, have only had the option to take out unsuitable loans or furlough staff – and that scheme starts to taper next month.
Wholesalers were unable to mothball their businesses as they had to fulfil vital contracts to services that could not close, such as care homes, hospitals, prisons and schools. Kitchens offering takeaway still needed to be supplied and the surge in demand for home delivery created a temporary opportunity for distributors with fleets of vans standing idle.
This week’s launch of money-off vouchers, alongside the VAT cut, is aimed at foodservice operators, in an attempt to get the public back into the habit of eating out and stimulate the market from the bottom up. The Chancellor has made it clear his preference is to encourage economic growth from the pocket of the consumer upwards, rather than in the form of sector-specific support for supply chains.
But in the unique and uniquely important case of food distribution, he needs to intervene more directly. Hospitality, so dependent on consumer confidence and international tourism, will recover very gradually, with potential setbacks along the way, and ‘trickle-up’ isn’t a helpful strategy for wholesalers with high overheads, depleted reserves and a reliance on steady cashflow.
In this we are supported by the EFRA Select Committee and its investigation into food supply and Covid-19, to which we gave oral evidence. Its report, published last week, calls on government to produce a clear plan of support for wholesalers and suppliers over the next 18 months of what it calls “these turbulent times”.
It says the government could have done more to anticipate the supply chain impacts of its decision to shut down the hospitality sector and says it must work with smaller wholesalers to “understand their concerns and monitor their health” as the sector restarts.
FWD will be standing by – as we have been every day since the start of this crisis – to assist the government in delivering the committee’s recommendations. We have a good working relationship with Defra, with Secretary of State George Eustice specifically acknowledging the concerns of wholesalers in his own evidence to the MPs.
We may have to wait until the Budget in the autumn, but I’m still determined to see our sector get the direct support it needs and deserves. It will be a fight. With the exception of hospitality, the arts, fishing and dairy, no sector of any industry can claim to have secured itself special treatment from the Treasury.
Our case therefore depends on the Chancellor accepting that financial stimulus of hospitality must extend to the businesses that supply it because one cannot thrive without the other.
As we go into Parliament’s summer recess, we have to prepare for the Covid situation to share the stage with an equally disruptive threat when MPs return in September. The end of the transition out of the EU and carving out our future trading relationship once seemed like they would be the biggest challenge our sector would face in decades. Now it looks like only the second biggest threat in nine months.
All the more astonishing, then, that the government should choose this moment to consult on the formulation, promotion, location and pricing of products that underpin the profitability of the local shops our members supply.
Looking ahead, there are changes in every aspect of food distribution as we currently perceive it: availability, formulation, packaging, distribution, and the structure of both our supply chain and the customers it serves. Consumer expectations and behaviours are changing too in a new economic environment.
As the representative voice of the wholesale sector, FWD relies on the support and advice of wholesalers, suppliers and service providers within our membership. So it’s with great disappointment that we have had to postpone the face-to-face element of FWD’s offer to members, but we like to think this has been made up for with a huge increase in two-way communication through our online panel discussions and lively WhatsApp groups.
We will extend our online networking programme from September, bringing wholesale together in spirit, if not in person.chancellor coronavirus covid-19 Defra EFRA FWD Government hospitality James Bielby retail Rishi Sunak Support