Route to recovery: Increasing export sales to China, US, UAE is “golden opportunity,” flags UK industry
04 Sep 2020 --- “Untapped” export opportunities to key international markets could be the potential “route to recovery” for UK food and drink manufacturers suffering from the impacts of the COVID-19 pandemic and the increasing uncertainty associated with Brexit and the consequent lack of trade deals. By increasing export sales to countries like China, Canada, the US and UAE, the UK industry could get back on track after Food and Drink Federation data shows that net business confidence among manufacturers reached a record low of -65.2 percent in Q2.
As the dust begins to settle, industry is beginning to see how the pandemic has had a seriously damaging impact on 2020 's overseas sales of UK food and drink, notes Ian Wright, FDF Chief Executive. “These were worth over £23 billion (US$30.6 billion) in 2019. While that figure is certain to fall for this year, there are still plenty of opportunities in foreign markets for UK food and drink manufacturers to seize in what remains of this year and as we look to 2021,” he says.
In collaboration with Santander UK, FDF has issued a new report detailing the most viable growth avenues for exports this year. It details export opportunities in key market regions, backed by insights from Santander’s sector and international specialists who support businesses looking to explore overseas opportunities:
Canada: Exports to the UK’s third largest non-EU preferential trade partner have grown by 5.7 percent so far in 2020, led by exports of gin, beef and salmon.
US: Closures to the hospitality sector due to COVID-19 have led to an increase in demand for ready to consume alcoholic drinks. UK exports of beer to the US have increased by 5.8 percent (year-over-year) from January to May, this year. There has also been significant investment in home delivery as US supermarket chains have sought to increase their e-commerce offerings in recent months.
China: China has seen rapid growth in demand as consumers continue to “perceive UK products to be safe and of high quality,” with a sense of heritage. Beef and pork exports have risen by over £60 million (US$79.8 million) so far this year compared with the same period in 2019.
UAE and the Gulf: The COVID-19 crisis has seen an increase in expected UK export sales from retail in this region – up to 90 percent from 70 percent in 2019. The increasing focus on healthier lifestyles in the region has seen increased demand for organic, functional foods and nutritionally rich products.
Reaffirming global aspirations
The FDF flags that there remains “significant headroom for growth” for UK F&B exporters, both within the EU27 nations and other international markets. Working with and encouraging more businesses to identify and overcome trade barriers is pegged as a high priority for the FDF and Santander.
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FDF consumer confidence tracker.The UK’s departure from the EU reaffirms the need for global aspirations. “As Europe will remain a key trade partner for the UK, businesses need to understand the changing regulatory environment to ensure a smooth transition,” flags the FDF.
The UK government recently announced an investment of £705 million (US$889 million) for the GB-EU border to fund new infrastructure, jobs and technology.
“Now is the time for companies to reassess their strategic approach to international expansion. By building understanding of regional markets and developing relationships with local partners, companies can respond to changing consumer needs – which is key to strong and sustainable international growth,” stresses Andrew Williams, Head of Food & Drink Sector at Santander.
“The impacts of COVID-19 swiftly reverberated across the food and drink manufacturing industry. We quickly saw that over-reliance on any single market, sales channel or customer leaves businesses vulnerable to increased risk. Understandably, confidence was knocked – but the resilience of our industry is evident in these findings,” the FDF concludes.
COVID-19, Brexit and beyond
In the UK, exacerbated market conditions have been flagged due to Brexit and foodservice closures, in addition to COVID-19. The local industry has seen a reduction in domestic turnover by 8.6 percent in Q1 compared with Q4 2019, and a further 4.0 percent decline in Q2.
Despite these figures, certain industry segments have remained robust throughout the pandemic. Domestic sales of animal-based produce rose in recent months, for instance – a contrast to the nation’s burgeoning trend for meatless consumption, according to recent reports by the UK’s Agriculture and Horticulture Development Board (AHDB).
Santander carried out research into the impact of COVID-19 on small and medium-sized enterprises (SMEs). The results found that 24 percent of food and drink businesses expect to return to normal operating levels by the end of 2020.
By Benjamin Ferrer
