Tesco: Brexit disruption ‘is a challenge, not a crisis’

Tesco says it has seen some disruption of food supplies in Northern Ireland since trade deals with the EU changed on January 1.

“We see it as a challenge at the moment, but not as a crisis,” said boss Ken Murphy.

But he said the retailer was working closely with government on both sides of the Irish Sea to “smooth the flow.”

As of December 31, Northern Ireland has been the only part of the UK to remain in the EU’s single goods market.

Mr Murphy said some food items had suffered a supply chain disruption in Northern Ireland and the Republic of Ireland.

“Ready meals have been hit the hardest because they have an eight day shelf life, so any wait is more likely to have an impact,” he said.

“Some processed meats and some citrus fruits have also been affected, but it is important to stress that our availability in the Republic and Northern Ireland is strong and very strong on the British mainland.

Last week all the major grocers wrote to Cabinet Minister Michael Gove asking him to take urgent action.

But Tesco said its “comprehensive preparations and … strong supplier relationships” have enabled it to maintain strong levels of availability during the Brexit transition period.

‘Bedding in problems’

A customer outside of Tesco

Mr Murphy said he was confident Tesco would have the right measures in place to supply Northern Ireland after a three-month grace period on certain rules and regulations with the EU ended on March 31.

He also said there had also been “start-up issues” with supply flows from mainland Europe to Britain.

“Inevitably there are some basic issues, some startup issues, that you would expect with any new process that was put in place in a relatively short period of time,” he said.

“We’re working on these and hope that over the coming weeks and months we’ll end up with a much smoother product flow.”

Under new trade agreements, food products entering Northern Ireland from Great Britain must be professionally certified and are subject to new checks and controls at ports.

Empty shelves in Belfast Marks and Spencer Monday
Marks & Spencer has temporarily reduced its range of food products in Northern Ireland

A three-month ‘grace period’ means supermarkets currently do not need to comply with all the usual EU certification requirements until April 1 – but there has always been disruption.

M&S temporarily reduced its food product line and Sainsbury’s was sourcing Spar brand products from an NI wholesaler.

This week, the bosses of Tesco, Sainsbury’s, Asda, Iceland, Co-Op and Marks & Spencer warned that trade with Northern Ireland would become “unworkable” if new certification requirements were introduced in April.

The government said a new dedicated team has already been put in place and will work with supermarkets, the food industry and the Northern Ireland executive to develop ways to streamline the flow of goods.

‘Christmas record sales’

Tesco’s comments came as the supermarket giant reported record sales for the Christmas season, after customers sought to ‘treat themselves’ amid strict Covid restrictions in most of the UK.

In the UK, like-for-like sales rose 8.1% in the six weeks to January 9, as the supermarket saw increased demand for products from its Tesco Finest line.

Large grocers have benefited at a time when most non-essential stores and restaurants are closed, prompting consumers to spend more on their weekly store. But they have also been criticized.

Last month Tesco said he would to reimburse £ 585m in reduction in professional fees after being criticized for paying dividends to shareholders during the crisis. Most of the major grocers have followed suit.

Tesco was later criticized for keeping its stores open on Boxing Day despite calls from unions to give staff a day off.

In his results, the grocer said he gave all frontline staff a 10% bonus over Christmas. He also said he protected vulnerable staff and hired nearly 35,000 additional temporary staff for the season.

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