It’s the first time that international trade of UK food and drink products fall since 2015
UK exports of food and drink products in the first half of the year fell for the first time since 2015, the UK’s Food and Drink Federation (FDF) has revealed. The trade association said export fell 13.8% compared with the same period last year, to £9.7 billion.
Exports to all but three of the UK’s top 20 export markets fell, with sales to China, Canada, and Norway seeing a growth of 0.3%, 6.7%, and 46.9%, respectively.
Of the UK’s top ten export product categories, only pork saw positive value growth of 17.5% with sales of £300 million, largely driven by exports to China, which purchased £132 million of UK pork in this period.
The FDF report shows that while overall exports of branded products fell by 7.1% in H1, sales of branded products to non-EU markets grew by 1.9%.
Dominic Goudie, head of international trade at FDF, said: “A fall in exports in the first half of 2020 demonstrates the huge challenge currently facing UK food and drink exporters. We also have serious concerns about our access to existing EU trade agreements, with more than £1.7 billion of UK exports at risk where continuity deals haven’t been agreed.”
Goudie noted that there remain many opportunities overseas as the UK navigates its way through economic recovery, strengthen its resilience as an industry, and build relationships through new future trade agreements such as with Japan – the world’s biggest net importer of food and drink.
Covid-19 knock-on effect
The FDF argued that the fall in exports is clearly linked to the global impact of Covid-19, however, the analysis by KPMG as part of the report, highlights that different markets are at varying stages of the Covid-19 lifecycle. China is currently experiencing a period of growth, whereas other nations are in a recession.
Linda Ellett, UK head of consumer markets at KPMG, said: “While the world may be facing Covid-19 collectively, consumers across the world haven’t been behaving equally. For consumer businesses, the real challenge is keeping a finger on the pulse of change, knowing how consumers feel and behave, while also adapting to the various opportunities and threats presented in various markets globally.”
KPMG identified brand trust as a key driver of consumer purchasing decisions across all markets and an opportunity for exporters throughout the remainder of the year.
Japanese market potential
The FDF said the UK-Japan preferential trade agreement announced in September presents a key opportunity for exporters, with Japan currently the world’s largest net importer of agrifood and drink, and the UK’s 19th biggest market in H1, worth £124.5 million.
Demand for imported food and drink in Japan is growing because of its ageing population and a continued shift toward Western consumption patterns.
To support the recovery of UK exports post-Covid-19, the FDF, Food and Drink Exporters Association (FDEA) and the Agriculture and Horticulture Development Board (AHDB), have produced an export guide to help businesses successfully navigate the export process.
The guide signposts a range of support that can help exporters that have been impacted by Covid-19, and support for businesses post EU Exit transition.
“Business growth – or at least resilience – remains vital despite the challenging climate. KPMG’s recent consumer insights research clearly shows that trust in brands is a key factor shaping purchasing decision. No consumer business can afford to lose sight of that,” Ellett concluded.
Date published: 2 October 2020