UK chocolate export sales to EU suffer major drop amid Brexit and pandemic challenges

A significant drop in UK chocolate confectionery exports to the EU of 18.5% in the first half of 2021 compared to the same period in 2019, has been recorded, impacted by continued Brexit trading complexities and the coronavirus pandemic, according to Food and Drink Federation (FDF), analysis, reports Neill Barston.

The British-based trade organisation’s latest analysis revealed sales to the continent within the category now stood at £217.9 million for the first six months of this year, as the majority of other food segments also saw notable losses including cheese (down 34%), milk and cream (down 19%) and beef (down 37%).

While there was an uplift in sales to non EU markets, which were up 13% in first half of the year (to £4.3 billion) including growth in China, Singapore, Australia and the Gulf region, this did not make up for the major losses to the UK’s nearest neighbours on the continent.

Consequently, Britain’s overall global food and drink exports reduced 4.5% in the first half of 2021 (down from £11.1 billion to £9.2 billion), compared to pre-pandemic figures for the same period in 2019. Among the worst hit were exports to Ireland (down 27% from two years ago, Germany (down 49% and Spain, down 53%).

Despite the concerning losses, trade to the EU still made up the majority of total exports (representing 53% of all sales), which were down from £6.7 billion to £4.9billion comparing the first half of 2021 against the first six months of 2019.

As a result, the FDF noted that the loss of UK exports to the EU contributed to reduced demand for EU ingredients for use in UK manufacturing, while import substitution by UK manufacturers and retailers also had an impact. Imports from the EU are likely to deteriorate further in 2022 after the UK’s full border controls are in place.

This was confirmed earlier this week, as Confectionery Production reported that Germany’s BDSI confectionery trade association noted a concerning drop in exports of sweets to Britain, with figures down by 11.8% for the first quarter sales.

There have been widespread concerns expressed by businesses within the UK and across Europe at the additional administrative and logistics burdens now being placed on them under post Brexit trading rules – which many have labelled as threatening the future viability of their operations.

Dominic Goudie, Head of International Trade, the FDF, labelled the EU trading results as ‘disastrous,’ against a backdrop of continued logistics and trading issues including a major shortage of HGV goods drivers totalling 100,000 in the UK.

This has already impacted on a number of businesses across the sector, with confectionery group Haribo experiencing delivery delays, as well as major restaurant chains running out of key product lines including McDonald’s and Nando’s, with warnings of supermarkets facing broader lack of supplies moving into the autumn period.

“The return to growth in exports to non-EU markets is welcome news, but it doesn’t make up for the disastrous loss of £2bn in sales to the EU. It clearly demonstrates the serious difficulties manufacturers in our industry continue to face and the urgent need for additional specialist support, said Dominic Goudie.

“At the same time, we are seeing labour shortages across the UK’s farm-to-fork food and drink supply chain, resulting in empty spaces on UK shop shelves, disruptions to deliveries and decreased production. Unless steps are taken to address these issues, the ability of businesses to fulfil vital export orders will be impacted.”

Meanwhile, John Whitehead, Food & Drink Exporters Association (FDEA), also expressed concern over the situation, which has been further complicated as the EU Commission confirmed it had launched legal action against the UK government in March. This concerned what it believed amounted to a British breach of the withdrawal protocol agreement relating to how goods are traded between Great Britain and Northern Ireland, with checks now expected between Northern Ireland and Ireland, which remains within the EU.

“So many factors continue to impact on the drop in value of UK food and drink exports, with supply chain challenges and the inability to connect face to face with customers adding to the difficulties. FDEA’s bespoke support to its member community is a valuable resource to identify new opportunities and accelerate new market entry, explained Whitehead.

He added: “It is therefore pleasing to see growth in sales to non-EU countries. However, this in no way replaces the loss of £2.2 billion sales to the EU since 2019.  There is growing evidence that the complexity of trading with the EU has led to businesses moving operations into Europe and of importers looking for alternative suppliers, contributing to the ongoing decline in both UK exports and UK jobs.”

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