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Bitter Brexit shocks coffee industry

From the October 2016 issue.

The UK’s burgeoning coffee industry could be in for a rocky ride after the historic decision by voters to leave the EU.

Brexit While the opinion polls and months of often caustic debate suggested that the referendum across the water in Britain might be close, most of the participants at June’s World of Coffee event in Dublin were confident of the result.

A gathering laid on by the Specialty Coffee Association of Europe in the Irish capital, it was an international affair that just happened to be on the same day as the momentous June 23 vote in the United Kingdom.

One of Dublin’s highlights, the World Barista Championship, had been won by Berg Wu from Taiwan who was trailed by Yoshikazu Iwase of Japan and a global field of runners up from Canada, the US, France and the Netherlands.

The delegates felt sure that a majority of Britons could not be in favour of reversing the country’s integration with the rest of Europe – not least with the Irish Republic itself, which would be on the wrong side of a hard border with Northern Ireland should the leave vote prevail. But, of course, it did.

Jeffrey Young was in the Dublin throng on the June night and recalls the mood at the time as being “shellshocked”.

The Founder and Managing Director of UK-based research consultants Allegra Strategies found himself, like so many other British businesspeople, struggling to explain to foreign counterparts what had just happened.

“There was total shellshock across the industry,” he says. “If you had polled 100 people at the Dublin event you wouldn’t have gotten more than a few who would have predicted the outcome.”
“People were coming up to me, they could not understand how we had made this decision. Why was it necessary?”

As the world woke to the surprise vote in favour of departure from the European Union (EU), the coffee industry was not alone in asking this question. The campaign had seen an overwhelming proportion of economists, investors, business owners, industry leaders and observers make the case for Britain remaining.

The few business leaders, such as Tim Martin, Chairman of pub chain JD Wetherspoons, who did make the case for leaving, gained prominence precisely because they were so few.

The Organization for Economic Co-operation and Development (OECD), an inter-governmental agency made up of the world’s wealthiest nations – warned before and after Brexit that it “would be akin to a tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU.”

Most informed commentary agreed that the economic argument would be decisive for a majority of Britons and alarm bells had only rung faintly when leading Brexiteer and former conservative government minister Michael Gove famously declared that “Britain has had enough of experts”.

The outburst against experts is now seen as one of the turning points in the campaign where the emotional appeal of the leave argument to a cross section of voters concerned with identity and sovereignty was enough to swing the vote 51-49 against those who argued Britain would be poorer and more insular.

Among the many divides set into relief by the Brexit result was the differing attitudes to the same forces of globalisation that created Britain’s booming coffee market. Once the results were dissected, there was a divide between the confident, internationalist capital and discontented and insecure provinces.

“There’s no doubt that we are better in than out as far as the coffee industry is concerned,” says Young. “The negatives are going to be there in the short term and even more profoundly in the long term.”

Oblivious to the political headwinds of Brexit, Britons consumed some 1.7 billion cups of coffee in 2015, served to them from 18,000 outlets, a total that Allegra Strategies predicted would rise to 21,000 by the end of this decade.

Young, the co-author of the London and New York Coffee Guides, founder of charitable UK Coffee Week, and the London, Amsterdam and New York Coffee festivals, is no longer so confident.

“This is much more than an inconvenience, it’s going to be a structural adjustment,” he warns.

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