Supply chain fears return amid Omicron

With Covid-19 case numbers rising in the UK, the food and drink industry is once again facing disruption to its supply chain.

While independent retailers have some protection thanks to their shorter supply chains and flexibility with stocking decisions, the reintroduction of restrictions and the impact of Omicron infections on staff and customers alike could ultimately impact sales.

Action urged by distributors

Wholesalers are calling on the Government to open up the £1.5bn in business rates relief offered to food wholesalers nine months ago, or else face potential supply chain failures. 

“Our members have endured their customers being closed on three separate occasions, including at one day’s notice earlier this year,” said the Federation of Wholesale Distributors (FWD) chief executive James Bielby. “With the new restrictions now in place, Christmas isn’t going to be the boost they desperately needed and the New Year could be very challenging indeed if demand is restricted again. The money that could keep some wholesalers’ doors open through the winter is available – but they can’t access it,” he continued.

The Federation of Small Businesses (FSB) has joined these calls, saying that food suppliers are still not receiving funding that was announced in March 2021. “Central Government guidance on this fund should be released before the New Year so that Local Authorities can action this promised support,” the FSB said.

Retailers hit by Omicron fears

With consumers hoping to keep their Christmas plans intact, footfall at retail establishments has fallen during the sector’s busiest weekend. Springboard’s latest figures show that footfall on Saturday the 18th and Sunday the 19th was up by 0.8% and down by 1.8%, respectively. The number of overall visits was 18.1% lower across all retail sites on Sunday compared with 2019 levels.

“Shoppers are clearly cautious about venturing out and are self-censoring,” said Springboard’s insights director, Diane Wehrle. “All of this drop has been driven by fewer trips being made to high streets and shopping centres, with high streets particularly hard hit.”

Helen Dickinson, chief executive of the British Retail Consortium, added that the Omicron variant in tandem with the Government’s work-from-home advice has resulted in fewer people venturing out to shops, but retailers are still working hard to offer the best service for their customers. “There has already been a gargantuan effort to ensure that essential food and gifts are ready for the festive season, despite ongoing challenges in the supply chain,” Helen said. “We are confident it can be a great Christmas for consumers, and retailers are pulling out the stops to keep staff and customers as safe as possible during these difficult times.”

Priority access to tests

For small shops, one of the biggest issues could be staff catching Covid themselves. As supply issues impact the availability of lateral flow test kits, the Trade Union Congress (TUC) has said that workers who cannot work from home should have priority access. 

“Supply problems with lateral flow tests are putting workers at risk. And it increases the danger of Omicron outbreaks in workplaces shutting down vital services,” said TUC general secretary Frances O’Grady. “The government must give priority access to test kits for anyone who is required to work outside the home, to help protect workers and the community.” A number of food and drink manufacturers have also reintroduced mass testing in order to curb any disruptions to Christmas suppliers.

Calls for ‘meaningful action’ to solve supply chain issues

Amid this recent round of disruption, the NFU has said the Government must take “urgent and meaningful action to fix the structural issues” facing the food and farming industries. President Minette Batters has called for a commitment to maintaining Britain’s food production self-sufficiency level at 60% and creating an environment where farm and food businesses can thrive.

“Britain’s farmers are world-leaders in producing climate friendly food and, over the past 18 months, have been working hard to keep shelves and fridges full despite many being impacted by severe supply chain issues, particularly worker shortages,” Minette said. “Government has tried to paper over the cracks with short-term fixes, but if we want to avoid this crisis continuing, long-term solutions are urgently needed to ensure a resilient supply chain that enables us to continue supplying everyone at home with fantastic produce, as well as leading on the global stage.”