The founder of low-calorie vitamin drink VitHit has warned the group would be forced to shift nearly half its UK production to Europe if Brexit leads to higher tariffs and gridlocked borders.
Gary Lavin – a former professional rugby player who launched VitHit in 2000 – told the Press Association the group was already lining up alternative manufacturing sites in Germany or Spain in case Britain crashes out of the EU without a deal.
He said VitHit would probably have to switch around seven million of the 15 million bottles being produced at its factory in Birmingham to Europe as part of moves to get around potential hikes in tariffs and delays at border control.
He called on the UK Government to provide businesses with clarity on plans for tariffs and measures to ease potential border control delays.
The news comes on the first day of the Conservative Party conference, where Brexit will be the dominant theme.
It also comes just days after retail giant Next made a plea for Government action as it laid bare the threats of a no-deal Brexit, alerting over the risk of ports grinding to a halt and price hikes from increased tariffs.
Mr Lavin said: “We are going to continue to produce in the UK, but we have to look at European alternatives.”
He said the factory will stay open, but the production of seven million bottles will “have to go somewhere else if there’s tariffs and problems at borders”.
“We don’t want to do it, but we’re being forced to look for an alternative,” he added.
The Dubliner is highly critical of Brexit, calling it the “worst idea since the underwater hairdryer”.
“I’m hoping all of this will go away – that I’ll wake up and realise it was just a bad dream,” he said.
But given that Brexit clearly is not going away and with no sign of an agreement with the EU yet, he said he has no option but to start planning for the worst-case scenario to ensure exports remain uninterrupted.
Brexit is coming at a crucial stage in VitHit’s expansion, with the firm already growing rapidly across Europe – with strong demand across Belgium, Spain, Portugal, the Netherlands, Norway and Iceland.
Now a mainstream player in the low-sugar soft drinks category, VitHit – with its signature blend of juice, tea, water and vitamins – is increasing its international footprint from 13 markets to 15 this year alone, with aims to conquer 50 by 2022.
Australia and the United Arab Emirates are next on the agenda for launch in the final quarter of this year to help tackle the traditional winter lull in sales across the northern hemisphere.
Mr Lavin is even moving to Sydney with his wife and young daughter in November for a few months to personally launch VitHit Down Under.
He has struck a distribution deal with Coles – Australia’s second biggest supermarket – covering 670 stores, but he has ambitions to “come back with an extra 1,000 stores”.
Entirely self-funded so far, VitHit has been expanding at around 25% each year, but is looking to step this up to 40% next year, with some bank finance on board to help support the growth plans.
Mr Lavin also wants to build on the 64% year-on-year sales growth seen in the UK since 2017 and said there is plenty of room for expansion.
VitHit currently sells in around 3,500 UK stores out of a potential 17,000.
The appetite for low-calorie drinks has also increased since the UK sugar tax came into force in April, which means soft drinks containing large amounts of sugar will have to pay a levy.
It has helped increase awareness of how unhealthy sugary drinks are, although Mr Lavin said the bar for the levy – starting at 5g of sugar per 100ml – has been set too high.
He believes the Government should go further and offer a wider tax exemption for drinks firms that have very low sugar content, say less than 10g of sugar per 500ml.
“If you don’t incentivise people, they’re not going to create better products,” he said.
