UK sector trade with EU falls amid pandemic, yet records increases in other world markets

The UK’s Food and Drink Federation (FDF) has released its latest quarterly industry figures, which reveal that sales for the sector fell £700 million during the first period of 2020 amid the coronavirus pandemic.

According to its results, which include confectionery and bakery segments, sales to the EU were hit the hardest, with total value falling by 17.4% compared to 2019. This decrease was largely driven by the immediate impacts of COVID-19, including the closure of hospitality and travel sectors, which has meant a loss of sales into restaurants, cafés, bars and the out-of-home sector across Europe.

While sales to the majority of the UK’s top markets declined, demand has been more resilient from others nations, including Singapore, Canada and Norway, which each saw sales growth of more than 10%. Declines were reported among the UK’s top ten products, with whisky, chocolate, cheese, salmon and gin seeing export value drops of over £20m in Q1.

The first quarter of the year also saw a fall in the value of branded food and non-alcoholic drinks exports of 9.1%. Sales to all EU nations among the UK’s top ten branded goods export markets decreased in Q1 2020; almost one third of branded exports are now going to non-EU countries, a 4.5pp increase on Q1 2019.

Last week, the government confirmed that retail stores would begin reopening this month after 10 weeks of being closed in most instances, with hospitality sector businesses expected to follow in returning to carefully managed trading from July.

Despite the downturn in results for the EU, there was more positive news in relation to exports elsewhere in the world. Branded exports to Australia increased by 3.5% in Q1 2020, driven by a rise in sales of cakes and baked goods, including tarts, pastries, wafers, pizzas and quiches, which saw a 12% increase on Q1 2019. Increased sales of beer and soft drinks helped drive growth to the US by 6.9%. Trade with China also saw increases in other segments of the food market.

As the FDF notes, the Q1 figures demonstrate the initial impacts of COVID-19, especially within markets that first experienced the pandemic, such as China, or those most affected, including many of our key EU trade partners. Exports of UK food and drink have a critical role to play in supporting the sector, during these challenging times, and driving the UK’s wider economic recovery. To achieve this, it is important that industry and Government work in close partnership through the Food and Drink Sector Council to address critical gaps in sector-specific export support that is urgently required.

Dominic Goudie, Head of International Trade, FDF said: “Manufacturers and the other hidden heroes working across the supply chain have ensured continued access to essential food and drink for UK shoppers during this crisis. But we can now see how COVID-19 has impacted valuable overseas sales of UK food and drink that were worth over £23 billion in 2019.

“The closure of the hospitality sector in high-value export markets in the EU and further afield has been devastating for many exporters. However, we can also see that opportunities do remain in retail channels in many markets.

“Ensuring a quick return to growth will be essential to support resilience in our industry and also the UK’s economic recovery. We are working closely with Government and industry partners to set out a recovery plan that will deliver a return to sustainable export growth right across the UK.”

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