Monday 06/09/21

  1. In UK LABOUR/SUPPLY CHAIN NEWS, the CBI reckons the labour shortage could drag on, UK hotels face staff shortages, Wagamama’s can’t find enough chefs, logistics boss calls for the shortening of driver training, M&S worries about an import crisis and fireworks might run out
  2. In M&A/IPO NEWS, global deal-making continues apace, leisure companies jockey for IPOs and BrewDog teams up with Asahi
  3. In MISCELLANEOUS NEWS, Brazil stops beef exports to China, UK private schools face China problems and vaccine passports are up next for large English venues
  4. AND FINALLY, I bring you news of a very cushy job…

1

UK LABOUR/SUPPLY CHAIN NEWS

So the labour shortage may continue, UK hotels and Wagamama can’t find the staff, calls increase for quicker truck driver approval, M&S worries about imports and fireworks could run out…

UK labour crunch could last up to two years, CBI warns (The Guardian, Richard Partington) cites the opinion of Britain’s leading business lobby group which, funnily enough, is calling for ministers to relent on their position on visas for foreign workers and to cease “waiting for shortages to solve themselves”. The CBI represents 190,000 businesses with over 7 million employees. Bed linen and staff shortages force UK hotels to cut back services (Financial Times, Alice Hancock) shows that Intercontinental Hotel Group, owner of Holiday Inn and Crowne Plaza brands, is the latest leisure/hospitality company to highlight the knock-on effect of staff shortages, Wagamama struggling to find chefs at a fifth of its UK sites (The Guardian, Jasper Jolly) is yet another example and Logistics boss demands quicker truck driver training to ease shortages (The Guardian, Russell Lynch) cites the chief exec of logistics company Wincanton, James Wroath, calling for lorry driver training to be shortened in order to ease some of the “intense pressure” on supply chains. He said that paying more won’t really solve the problem and that the industry needs some kind of fast-track to take the current 12 months it takes to qualify to 3 months.

In Import crisis is looming, warns M&S (The Times, Tom Howard) we see that M&S held an emergency meeting last Friday with its European food suppliers about what the implications will be of new strict borders controls coming into effect next month. The conclusion was that there will be “significant disruption” to food imports that will be made worse by some EU countries which have offices that only issue export health certificates during office hours from Monday to Friday. M&S has called for the government and the EU to take action on rules that it argues neither side are ready for and to digitise processes. As things stand, 25% of all of Britain’s food comes from Europe. Will the threat of another spoiled Christmas be enough to jolt ministers into action??

Then in Fireworks supplies risk running out before New Year (Daily Telegraph, Hannah Boland) we see that Bonfire Night and/or New Year celebrations are looking a bit iffy as well because importers are battling with sky-rocketing fireworks prices – a large crate of them will now cost $30,000 versus the $8,000 it used to cost them – as well as supply shortages and production shutdowns. * SO WHAT? * I think that the sum total of all the doom-mongering about supply chains and empty shelves will be that consumers are going to spend more in the run-up to Christmas – and that they will start spending earlier in order to have as good a Christmas as they can. I also think that if they start spending earlier, they will spend more because I just can’t imagine people stopping spending in, say, November. I would also imagine that leisure venues (pubs, restaurants etc.) will be doing a roaring trade as consumers may decide to take the opportunity to socialise while they can as many will probably be wary about potential lockdowns/tighter restrictions again.

2

M&A/IPO NEWS

Global deal-making continues, UK leisure companies ready themselves to float and BrewDog teams up with Asahi…

Global dealmaking set to break records after frenzied summer (Financial Times, James Fontanella-Khan) highlights the ongoing momentum of M&A activity and IPOs around the world. Current figures suggest that almost $4tn of deals have already been agreed so far this year, with $500bn of transactions done in the usually quiet month of August alone! Refinitiv data shows that global M&A levels are at record levels and are almost double the amount from the equivalent period last year and significantly higher than the $2.6bn in 2019. Activity, which has been strong across the board, is currently on track to overtake the previous all-time high of 2007, just before the financial crisis.

Talking of which, Pure Gym leads the race to float in leisure sector flexing its muscles (The Times, Dominic Walsh) does a good job of bringing attention to a number of leisure sector deals in the offing. Britain’s biggest gym operator Pure Gym seems to be closest to pressing the button on an IPO as it seeks funds to help it expand abroad but companies like the Travel Chapter (which owns Holidaycottages.co.uk), Hawksmoor (small restaurant chain which does the most amazing triple-cooked duck fat chips 👍), Tortilla (the Mexican burrito specialist), Snowfox Group (which owns the highly over-rated Yo! Sushi chain), Giggling Squid (Thai restaurant chain – excellent lunch menu) and Fridays (The-Restaurant-Formerly-Known-As-TGI-Fridays) are also looking at flotations. * SO WHAT? * I think that now is an excellent time for such companies to

float as they are now up-and-running after lockdown and seeing a surge in popularity. The market is hot and there are a lot of investors out there looking for places to park their cash. Given the number of potential candidates, though, I would expect investors to be picky so I suspect that some will do a lot better than others. I personally think that smaller chains might fare better than larger chains because I think that consumers are seeking out more personal-feeling experiences and you don’t really get that with massive chains that churn out the same food all over the place.

Then in BrewDog agrees tie-up with Japan’s Asahi to boost sales (Financial Times, Judith Evans and Alice Hancock) we see that the Scottish craft brewer has just established its first international joint venture in a bid to increase sales ahead of a widely-expected London IPO. It is aiming to boost sales in Japan sixfold over the next five years and the partnership will market and distribute beers such as PunkIPA, Hazy Jane and Elvis Juice (my personal favourite). * SO WHAT? * I think that this is a solid move by the brewer and an important part of its expansion. It will be interesting to see how this goes down in Japan as it seems to me that Japanese tend to like “lighter” tasting beers – but maybe I am wrong. Elvis Juice is very strong and I know for a fact that, generally speaking, Japanese are not known for being able to cope well with a lot of alcohol (apparently it is an enzyme thing – and I have personal experience from seeing drunk Japanese regularly going fire-engine red once they’ve had a few!). Also, there is SOOOOO much competition in beer in Japan particularly because they are used to seeing new brews being introduced all the time generally at the beginning of every season (they have winter beers, spring beers, summer beers etc.). Anyway, it’s a start…

3

MISCELLANEOUS NEWS

Brazil stops beef exports to China, UK private schools face China problems and vaccine passports are up next for large English venues…

Brazil suspends beef exports to China after cases of mad cow disease (Financial Times, Bryan Harris) highlights a rather concerning development as Brazil said it stopped beef exports to its biggest market after confirming two “atypical” cases of mad cow disease over the weekend. Brazil is the world’s biggest beef exporter and Brazilian companies involved, such as JBS and Marfrig, have benefited greatly from Chinese business. * SO WHAT? * This is definitely worth watching as more cases could spell potentially long-lasting disaster for this industry just as Brazil tries to get its economy back on track. An outbreak would also make President Jair “Tropical Trump” Bolsonaro’s re-election that much harder when Brazilians go to the polls next year.

UK private schools face curbs on China links in Beijing’s education crackdown (Financial Times, Sun Yu and Andrew Jack) puts the spotlight on another aspect of China’s current crackdown, this time on British independent schools – such as Harrow, Wellington, Dulwich College and Charterhouse – who have been trying to make inroads into the country by having schools there. The government is trying to decrease the influence that foreigners may have

on its education system and are looking to halve the number of children who are privately educated. The central government stopped approving new private schools for the first nine years of education and some local authorities are limiting the use of foreign textbooks. * SO WHAT? * I just wonder whether this is going to mean that rich Chinese send their kids to be educated overseas at an earlier age and for longer. It will be interesting, though, to see whether British schools will want to see an influx of high-fee-paying foreign students (who could suddenly disappear if there’s a Covid outbreak along with their fees) or whether they will have more of a preference for locals, among whom demand for private education has risen due to patchy teaching in state schools under lockdown.

Then in Large English venues to bring in Covid vaccine passports (Financial Times, Jim Pickard) we see that major indoor venues in England will start to use vaccine passports this autumn in a bid to avoid another lockdown. The government has already got an “NHS Covid Pass” in operation, so I guess this is just an extension of that. This comes just days after Scotland announced something similar, but Wales is not expected to go down the same road. * SO WHAT? * This will no doubt come under fire from anti-vaxxers and freedom campaigners, but I have always said that this is the ONLY way to go to get people out there spending in the economy en masse in the short term. Yes, it’s discriminatory, but what is the viable – and monitorable – alternative?

4

...AND FINALLY...

…in other news…

I thought I’d leave you today with news of a rather cushy job in Restaurant seeks Sunday lunch tester – and they’ll pay you £500 to eat roast potatoes (The Mirror, Courtney Pochin). It’s a tough job, but someone’s got to do it!

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Some of today’s market, commodity & currency moves (as at 0759hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
7,142 (-0.31%)35,369.09 (-0.21%)4,535.43 (-0.03%)15,363.52 (+0.21%)15,761 (-0.50%)6,680 (-1.23%)29,660 (+1.83%)3,623 (+1.15%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$68.41$71.69$1,826.571.384521.18719109.831.1663051,885.00

(markets with an * are at yesterday’s close, ** are at today’s close)