Cadbury prepares for Brexit recipe of currency devaluation and price inflation

Cadbury’s owner Mondelez International has warned about the risks of a hard Brexit to its business, and the wider economy, as it prepares for the impact of a currency devaluation it believes would follow.

It also plans to repeat the Brexit plan it rolled out in the first quarter of 2019, ahead of the initial deadline of March 29, when it stockpiled raw ingredients, took on extra warehousing space to store its products and increased the number of trucks it could get on the roads.

The UK is one of Mondelez’s “powerhouse businesses”, said chief executive Dirk Van de Put, but a hard Brexit would create “implications” for the company.

He expects prices would rise and the company would have to make changes to how it sourced some products.

“We are ready to deal with these challenges as you can imagine,” he said. “We are running scenarios and we are ready to implement.

“We do believe that over the long-term this is a very strong market. It’s a business that we want to protect and we are sure that if we have to deal with any short-term or even a little bit longer-term disruption that in the end we will be back stronger than before.”

Van de Put also believes that Mondelez would be “capable in the end to supply the UK from the UK if [we] need to”.

Mondelez’s chief financial officer Luca Zaramella spelled out some of the expected consequences for the food manufacturer if the UK left the EU on October 31 without an agreement in place.

He said: “A hard Brexit might hamper consumer confidence. There will be most likely an immediate currency devaluation on top of what we have seen these last couple of days.”

He warned that higher inflation might be “detrimental not only to our business, but to the overall economy…that’s really what we need to watch for”.