June 2022: The past six months have been turbulent when considering national and global political and economic strains such as; new Brexit regulations, the rising costs of living, international conflicts and of course the post-pandemic economic recovery. As a result, this has made 2022 the most substantial year for social impacts on the food and beverage industry since World War Two. Europe’s first intelligent B2B online wholesale marketplace, ShelfNow, shares unique insight on how SMEs have navigated the past six months, the implications and challenges they faced in light of this, as well as how ShelfNow has supported its partners throughout.
Rising energy costs
ShelfNow predicts that the rising cost of energy prices will inevitably impact the cost of logistics in the autumn. For small and medium-sized businesses there is currently no energy price cap to support trading and the management of increasing costs, this is particularly challenging for SMEs when sourcing raw materials from abroad. With the price of petrol for the average car now amounting to £100, the cost to fuel a heavy goods vehicle for the shipping of food and beverage goods can only be even more disproportionate. ShelfNow’s priority is to champion and support artisan businesses across Europe and in doing so, it has decided to absorb a portion of the financial surcharges for fuel ensuring that its partners can continue to successfully fulfil shipping requirements.
Businesses are still financially and logistically recovering from the restrictions and impact of the global pandemic. Many SMEs were hit hard during the lockdowns, yet ShelfNow suggests that the flip side of this is that more and more consumers felt obliged to shop locally and support independent, artisan businesses, which also acted as a catalyst for the birth of new brands too. Although this was not the case everywhere, ShelfNow entered the digital wholesale market with the goal to provide local businesses with the opportunity to continue to grow and thrive. An especially important focus for ShelfNow was to widen access for local stores to a new range of exciting, unique producers and to better serve the evolving local demand. Furthermore, the impacts of COVID on consumer buying trends seem to be here to stay as there is continued interest in shopping locally.
This year has seen the implementation of numerous regulations which have further complicated trading with the EU. This includes providing proof of origin for EU products, ensuring EU-based producers maintain both a UK VAT number in addition to a UK EORI number, and making sure that this is compliant with the new VAT considerations. The new rules for trading have made it more complex for SMEs in particular as it is a very time-consuming process to navigate. The ShelfNow marketplace has in-house specialists in trade and compliance to assist its partners with this change in trade. In the first instance, the adaptation was slow, but thanks to the additional support many of ShelfNow’s partners better understand what is required at each stage of the supply chain, therefore making the newly adapted import and export process far more accessible for SMEs.
The current conflict between Ukraine and Russia has impacted the global community in many ways including the price of fuel and rising energy prices. In particular, ShelfNow shares how the war has had a knock-on effect on the European food and beverage industry. One key area affected is the shortage of certain ingredients and materials such as glass, which has increased production prices. Glass is also used to package products such as gin, wine and artisan drinks. The Ukraine-based production factory Vertropack has halted production altogether due to the impact of the war, which is disrupting the supply chain.
ShelfNow also shares the opinions of its partners regarding the implications of prolonged conflict. Many fear that food insecurity will continue to rise along with the price of wheat production. Currently, Russia and Ukraine account for 11.5% and 17% of wheat production, which has been heavily disrupted by the war. Although there is currently a manageable amount of impact on shortages in materials and ingredients, the prolonged conflict will inevitably affect food and beverage supply chains and therefore SMEs in the months to come.
Sajid Ghani, Co-founder and COO at ShelfNow said: “At ShelfNow we recognise the importance and celebrate the innovation of SMEs in the food and beverage industry. We are very much aware of the hurdles small businesses often face when launching a new business in this field, and it’s safe to say that recent economic and political challenges have exacerbated the difficulties of building a viable business in 2022. We recognised and preempted areas where our partners would need additional support and adapted accordingly. In particular, we have hired in-house specialists to navigate trading post-Brexit and being on hand to simplify the transition for all of our producers, which has been particularly integral to ensuring that all businesses can run smoothly. As we evolve as a marketplace we continue to look for new ways to support our partners so that they can focus on producing wonderful products, while we endeavour to facilitate the optimum B2B trading relationships for them and provide an option to handle logistics and fulfilment ourselves.”