Gracefruit Ltd, a cosmetic chemical company based in Longcroft in Falkirk, does the majority of its business with the EU.
Founded by New Scot Elizabeth Carnahan in 2005, the firm started off selling soap fragrances to small firms and hobbyists before quickly growing into a larger cosmetics firm with a turnover of up to £1,000,000 a year.
The US-born businesswoman said Gracefruit is one of the largest providers of fragrance oils in the EU for firms that can’t afford the large purchase minimums often required from big manufacturers.
But despite its rise, three of its six staff are to be let go, with sales in its biggest market declining dramatically.
Carnahan told The National: “Up until 2020 we were exporting a lot. About 75% of our sales were to the EU. We expanded as soon as we realised that we had a large customer base, selling about 350 different cosmetics ingredients.”
Originally from Alabama, Carnahan moved to Scotland after meeting her Scottish husband online in 1998. The New Scot lived in Glasgow before moving to Longcroft in 2004 and setting up her business.
Gracefruit is one of the EU’s largest exporters of fragrance oils to firms who can’t afford large purchase minimums
The 54-year-old said: “We were a small business focusing on one line of products that expanded into a fully-fledged cosmetic chemical exporter that then had to shrink back down because of these rules of origin in this stupid trade deal.”
“We didn’t know what was happening. We didn’t get a deal with the EU until about five days before the end of the year, before it went into effect.
“It meant that we could no longer export anything that wasn’t made in the UK as anything made outside the UK incurred a tariff.”
Carnahan said delivering to the EU used to be as easy as delivering within the UK, adding that there was “no EU country we didn’t sell to”.
Like other Scottish firms, Gracefruit has been severely limited by delivery issues, including long delays and higher costs.
She said her business had sent “many” parcels to the EU following Brexit but that all had come back following newly-imposed post-Brexit trading restrictions.
Carnahan then moved over to a different courier but said they were taking between three and six months to deliver small parcels to the EU.
“Our reputation was quite badly damaged because we were able to ship so fast when we were in the single market and customs union. Shipping to Munich was no different than shipping to Manchester.
“Now we have to do customs paperwork and the person receiving the goods has to pay fees and taxes and duties on all this.
“Before I’d send something to somebody in Germany and it would go to their house. Now it goes to a customs facility, that person has to be contacted, that person then has to pay fees in advance and then their parcel is released for delivery.”
Gracefruit survived Covid, losing just under 5% from January 1, 2020 until the end of the calendar year. In 2021, when Brexit took effect in the UK, it lost 65% of its sales.
Brexit has caused a successful Scottish business to fire half of its staff, its owner said
Following 2021 sales fell a further 25%. Customers are now giving up, Carnahan said.
“A lot of customers have determined it’s not worth it,” she said. “It’s just not worth the time, it’s not worth the effort and it’s not worth the expense.
“The first year after Brexit, quite a few of our customers did try their best to stick with us. But because of all the red tape and delays they just began to go to other places.
“If you could buy your fragrance from within the EU, why wouldn’t you just do that?
“We went from working within the mechanism of the EU to competing with it. Now I am a competitor of the EU, and I am a competitor of the market, which obviously puts me at a massive disadvantage because they are huge and the UK is not.”
Looking forward, Carnahan said she struggles to plan ahead and fears a trade war with the EU over the Northern Ireland protocol disputes.
“We’ve been really hard hit,” she said. “My business is now much less competitive.
“I don’t know how much longer we will carry on.”
The UK Government has been approached for comment.