The Brexit effect: What are the challenges for FMCG in 2018, and how will soft power play its part?



On 29 March, 2019, Britain will leave the EU. Whether that’s a hard Brexit, a no-deal Brexit, or the increasingly unlikely ‘soft Brexit’ remains to be seen.


In the worst case scenario, the Treasury predicts unemployment to rise by 820,000, sterling to fall by 15% in value, and inflation to rise by 2.7% by 2021. Prices are likely to rise, particularly in FMCG. In fact, Market Inspector predicts food and drink manufacturers will have to raise prices by 20% to compensate for inflation and increased production costs. UK markets are therefore likely to shrink: after all, tighter budgets mean tighter belts.


The export picture is similarly bleak. Without clear UK-EU trade deals, World Trade Organisation rules will apply - which means tariffs will be imposed on almost all trade with the EU, including a 30-40% tariff on most farmed goods.


For FMCG brands, the battle for the UK’s shrinking wallets is on. But while Brexit represents a fiscal challenge, could soft power provide some answers and opportunities?


Challenge vs. opportunity


The FT reports that Britain is the only EU nation where the economy is growing while wages shrink; the Guardian claims that reduced unemployment rates indicate more people in low wage jobs or self-employment; the Times that food prices are rising at their fastest rate in four years. Connecting with a marketplace that’s struggling to make ends meet isn’t easy - but it’s possible for brands that can pull off the right kind of mass appeal.


It’s an opportunity for brands who can position themselves in the middle ground. Not own-brand - bottom shelf, perceived as a cheap and nasty refuge - but also not top shelf tier premium products either. Brands like Heinz and Kellogg’s occupy - and target - the ‘squeezed middle’; those consumers who will feel the Brexit pinch and may have to adjust down from the Finest and Extra Special tier.


Playing on brand heritage


The Brexit referendum was heavily influenced by nostalgia for Britain as a powerful global force. Brexit comes, in part, from a backlash against the future and a tinted view of Britain’s past. Iconic symbols like blue passports and steam trains represent something about a strong, stable and defiantly independent Britain - the kind of Britain we had in the good old days.


Some brands can adopt nostalgia - the likes of The English Shaving Co assume an Edwardian aesthetic to give themselves an authentic pedigree they don’t actually have. This steampunkish faux-history plays well with Millennials, and chimes with the pre-World-War-II aesthetic of Brexit nostalgia - and it’s pulled off by a business that started in 1999! A genuine, heavyweight heritage brand, with a pedigree reaching well back into the twentieth century, can play into this nostalgia for post-war pre-EEC England without faking it.


Brands with an authentic and rich heritage, if handled adeptly, can tap into the values of old, where families ate breakfast together, and mealtimes were an essential part of the day. It’s a tack adopted by Cadbury’s for Christmas 2017 with their retro selection box -  a harking back to a simpler time.


Tone of voice


For good or ill, Brexit made a virtue of straight-talking.


Michael Gove told the country it was “bored of experts”, while the Leave campaign branded Nigel Farage - a self-made millionaire with a background in City trading - into an everyday bloke who likes a pint and tells it like it is. Working-class, anti-metropolitan, EU negative, and quite prepared to accept a ‘no deal’ on principle.


The campaign was a masterpiece in soft power - choices in tone, symbolism, partnership and content that aligned Farage’s brand to an audience with whom he had little to nothing in common.


Again, this is a wave that smart brands can ride, by creating clear dividing lines between the pretension of craft/artisanal brands and what ‘normal’ people want to eat, positioning themselves squarely on the ‘normal’ side.


Budweiser’s 2016 Super Bowl ad, for example, took a swing at the whole culture of craft beer, defining itself as ‘not small, not sipped, not soft, not fruity, not imported, not for everyone’. McDonald's recently did the same for fussy hipsterish coffee culture. Marketing manager Michelle Graham-Clare describes them as ‘a challenger brand, making coffee accessible to everyone’ and ‘the antithesis to the complication.’


Regardless of your stance on Brexit, its effect on branding and marketing is clear. Metropolitan fussiness is out - straight-talking, patriotic traditionalism is in. To thrive in Brexit Britain, brands will have to align themselves with the situations and values of the times - tighter belts, an emphasis on heritage, and an unpretentious, down-to-earth tone.


Then again, it might not happen at all...


#Brexit #SoftPower