FDF figures show exports, including confectionery, experience half-year drop

The UK’s Food and Drink Federation (FDF) has released its latest first half-year analysis revealing exports, including confectionery, have fallen during the period for the first time since 2015, reports Neill Barston

According to the organisation’s figures, results were down by 13.8% as a whole, to a figure of £9.7billion, as the country continues to grapple with the impact of coronavirus and prospect of Brexit trading arrangements.

Notably, export sales for chocolate, which is considered second highest performing product behind whisky, fell 10.7% to £307 million for the first half of 2020.

As the FDF noted, exports to all but three of the UK’s top 20 overseas markets fell, with sales to China (+0.3%), Canada (+6.7%) and Norway (+46.9%) seeing growth during the first half of the year. Within the UK’s top ten export product categories, only pork saw positive value growth (+17.5%) with sales of £300m, largely driven by exports to China.

The organisation said the drop in sales was clearly linked to the global impact of COVID-19, with analysis by KPMG as part of the report, highlights that differing markets are at varying stages of the COVID-19 lifecycle. China is currently experiencing a period of growth, whereas other nations are in recession.

Last month, the FDF projected that despite the present conditions, there remained ‘untapped export potential’ in a number of markets around the world, which it believed would relieve the current pressure caused by coronavirus. It cited growth in exports to Canada, and also in some segments to China, as examples of future opportunities.

Furthermore, 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. While overall exports of branded products fell by 7.1% in H1, sales of branded products to non-EU markets grew by 1.9%.

In addition, the company said that 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 £124.5m. 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.

Dominic Goudie, Head of International Trade, 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. However, there remain many opportunities overseas as we navigate our way through economic recovery, strengthen our 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.

“Looking ahead, it is vital that we continue our work with Government and industry partners to deliver sustainable export growth over the next few months and beyond the end of the transition period in January 2021 to ensure our industry has the support it needs. Our export guide, made in collaboration with other industry bodies, aims to help navigate businesses through the export process with a range of practical support and advice.”

Linda Ellett, UK head of consumer markets at KPMG, added that there has been some considerable disparity between how consumers were behaving around the world. She said the real challenge was in attempting to keep a finger on the pulse of such changes, which would bring opportunities in global markets.

She added: “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.” The FDF study can be seen here.

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