So after years of deliberations, discussions & arguments UK has officially left the EU on Friday January 31, 2020. Those who voted ‘for’, celebrated in jubilation. Those who voted ‘to stay’, sadly chased pavements that day, smiling at strangers who showed glimpses of commiserations in their eyes. Question that I pondered then and will continue to ponder, as we trudge through the transition period months, is how Brexit will effect British beauty marketplace. Small & large brands. People who work in the UK beauty industry, as well as UK consumers. Will they be better or worse off in the long-term?
For now UK remains part of the customs union & is governed by existing trading agreements. That is, until December 2020. But what then? Will things start falling off the cliff? Or will this transition period make people and brands resolute in implementing necessary changes in advance, looking for new suppliers, retailers, markets? I have been asking friends, colleagues and brand founders about all this in the last few weeks and replies are as varied, as they are surprising.
Some brands aren’t sure about the changes and say that they are keeping an eye on things, talking to certifiers, tax consultants, logistics companies, suppliers & existing European retailers in order to make decisions. Others slow down the pace of growth, reign in expansion plans and pause new launches. There are also brands that a very worried, because they already see changes in prices of ingredients, packaging, shipping and are on shaky ground with existing European retailers. Some have had their contracts terminated by EU retailers, citing uncertainty. Below are some of the thoughts, experiences and opinions of the brands founders who were happy to go on record and share their views on the subject.
UK Beauty Brand Founders on Beauty and The Brexit
Olivia Thorpe, founder of VANDEROHE:
“For Brexit at the moment there’s no impact, but ultimately it depends on the future trade relationships between the EU and the UK. This hopefully will be decided by the end of the year, but for now we are still on free trade agreement, so there is no impact at present”.
“We’re hoping the new trade deal will continue the free trade agreement, so that there is no impact. Fingers crossed.”
Kerry Moore, co-founder of AMLY Botanicals:
“I think we will know more in the coming months. It has had a huge impact to date on all costs – we have had big price increases on almost everything. Ingredients, packaging, transportation. Not positive so far, but will will see how it all develops!”
Amanda Saurin, founder of A.S Apothecary:
Brexit will have a significant effect on small beauty brands for the following reasons:
- The most important is that at the moment all beauty brands, who sell in the UK and Europe, have to conform to a common set of standards and regulations. This means that every product has to be approved by an independent cosmetic chemist, who know the standards. These apply to the safety of ingredients, the use of colour, the inclusion of nano particles etc. Once a product has been assessed, there is a labelling system common to all EU countries. All our labels conform to that standard, all products are listed on a European portal, so any member state can confirm that all the procedures have been followed. In a year when all arrangements with the EU cease, we will have to conform to the directives of each individual country. Every EU country has different requirements for skincare and cosmetics from non-EU countries. This applies to testing, formulation and labelling. So, for example, a cream I have been happily selling in Portugal will need to have a huge amount more testing, government approvals regarding our workshop and manufacturing, ingredients and labelling. This is for two reasons: 1) they want to protect the EU market from non-EU products, so they make it harder to sell there 2) There is an assumption that no EU products are inferior and therefore require more oversight.
- Currently we don’t charge our EU stockists VAT – there is an inter EU agreement to deal with this. So all our prices will now be 20% higher, reducing our viability in the EU.
- Exporting – the customs arrangments will change. Currently with frictionless borders all our products pass into Europe with no problem. We send them and they arrive without customs interference. After we leave the customs union, we will have to provide the same level of paperwork that we do to sell in the USA for example. This means that every product will need to have the correct documentation, permissions etc. It will be buraucratic and challenging and confer additional costs.
- Ingredients and bottles – any ingredients and bottles that we buy in the EU will be subject to an import tax. With the USA it is 20% that we are charged. This will add to the costs of production.
- There is also the perception of our brand in the EU – we have already lost stockists, because buying British is no longer “cool”. The idea that the UK brand cache will survive the revolting displays of jingoism that our EU friends have seen from Farage, Johnson et al is unlikely. We have isolated ourselves and alienated our friends. And that’s me saying it politely!
- The idea that small brands can simply find new markets is a fantasy – with the additional costs we will be incurring, it will be very difficult to offer products at viable prices. China is a much talked about huge market, but for us and many others, their requirement for animal testing makes it unacceptable.
I wish I had a single positive thought, but I don’t! This year may be ok because of the arrangments to mainly maintain the “status quo”, whilst the trade deals are brokered, but 2021 will be shocking and I expect a lot of small brands (and some larger) to go under.
At A.S Apothecary I have deliberately diversified into drinks, the cafe and a seaweed company, which is much more UK-based. The partnership with the Isle of Harris Distillery is both enduring and lovely and they buy whatever I make. I hope that this diversification will help support A.S Apothecary in the coming years, until we find a way of negotiating our way through this particular episode of national self-harm.
I also moved to Scoland because I can see the break up of the UK on the horizon and if it happens, Scotland will rejoin the EU and I want to have that as a possibility.
Arabella Preston & Charlotte Semler, Votary co-founders
“At the moment we still don’t know what the impact will be. So far we are continuing to grow Votary’s distribution in the EU – because we’re seeing strong demand there.
Long term we may have to consider servicing our EU clients from an EU based warehouse and fulfilment partner, but it’s too soon to tell.
We’re really grateful that the uncertainty over Brexit has not had any noticeable effect on our growth there. In 2019 and 2020 so far we have successfully launched in key continental department stores and are looking forward to our imminent launch in Galeries Lafayette Paris.”
A Perspective of a US brand founder on Beauty and The Brexit
Katie Hess, founder of US brand Lotus Wei
“I was actually happy about UK breaking away from EU. I thought perhaps it meant we could go back to good, old days when Lotus Wei could be sold at UK retailers, like Content Beauty & Wellbeing, without us as a brand having to shell out thousands of dollars for regulations.”
Beauty & the Brexit Postscript: Only time will tell the true cost of Brexit for businesses, depending in big part on the pragmatism and good will (or lack of) when it comes to trade negotiations between UK and the EU. But it does look like it will impact UK-based beauty brands, as well as consumers, in a variety of ways. The sense of the fight for survival will become more wide-reaching within the beauty industry in the UK. In my opinion, customer service and genuine engagement with customers and followers on social media will become more important than ever. It is undeniable that consumers will feel the pinch on their wallets, becoming even more frugal when it comes to their purchases, including beauty products. As the saying goes, stay calm, but keep on peddling forward with the eye on the prize, as well as the focus on what truly matters.