UK food and drink exports shrink, though international chocolate sales remain buoyant
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Exports within the food and drink sector for the UK have shown an overall downturn of 10.2% for the first nine months of 2024, though chocolate sales are up by 9.6% to £656 million, reports Neill Barston.
The figures, released as part of the Food and Drink Federation’s Q3 snapshot have revealed a concerning pattern, mirroring wider financial challenges that have seen the overall British economy shrink by 0.1% for the autumn period amid wider international inflationary and trading headwinds.
While the drop in overall year-to-date export trade of £16.3bn was largely attributed to falls in alcohol sales, continuing market tests felt in many global markets has dampened demand for many product segments.
But chocolate was among several categories including salmon, beef and cheese offering a bright spark of positivity amid challenging figures, with Ireland remaining our top export market (3bn overall), followed by France (2bn) and the US (1.6bn) for all food categories.
Significantly, as a number of smaller and medium-sized confectionery and snacks companies have expressed to Confectionery Production, exports of their produce to Europe in particular has in many instances become prohibitively expensive in the wake of Brexit trading conditions that have significantly added to the cost of logistics, as well as additional paperwork, that has severely dented their overseas operations.
Trading partners
As the FDF noted, the EU remains the UK’s biggest trading partner for food and drink. While exports to Ireland and Germany rose slightly by 3.0% and 1.4% respectively, these were the exceptions. Overall, exports to the EU have fallen 5.3% in the first nine months of the year, with the persistent administrative burdens that continuing to create barriers to trade with Europe. Targeted export support and a concerted focus on removing unnecessary paperwork, particularly for small and medium sized businesses, would be invaluable in helping the sector to recover this lost trade.
The US is the UK’s third largest customer, with over 10% of all our food and drink exports destined for the country as American consumers continue to enjoy iconic British products. The UK exported 460 million cups of tea and 436 million biscuits to the US in the first nine months of 2024. There has been a note of optimism sounded as the UK signed the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP) opening up new potential trade routes.
Notably, the UK has a trade surplus with the US (though exports are down 7.9% against last year’s results), meaning that while we received £1.0bn of food and drink so far this year – ranging from nuts and condiments to wine and vodka – we exported £1.6bn of products – though the incoming new Republican administration has raised the prospect of trade tariffs with many nations around the world, potentially including British items.
On 15th December the UK officially joined the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP) – a trade agreement of 12 nations, predominantly in the Asia-Pacific region. In joining the bloc, the UK will now have tariff-free access when trading many products with Malaysia; improved export terms for several markets; and quicker border processes, which is particularly important for shorter shelf-life products. As more countries join the Partnership, the UK will have the opportunity to develop new trading relationships.
CPTPP countries are the UK’s second biggest supplier of ingredients to the UK after the EU, with imports from the bloc rising 9.7% so far this year. After joining the CPTPP, manufacturers will be able to import products like soy sauce, sesame oil, and cocoa butter tariff-free. As well as removing tariffs, UK businesses will benefit from more generous Rules of Origin, including cumulation provisions. This means that manufacturers can use ingredients sourced from any of the CPTPP nations and their product can still be traded without tariffs among the bloc. With a greater choice of suppliers, the UK industry will be able to create more competitive exports, as well as build a more resilient sector that is able to respond quicker to product shortages or price rises.
Balwinder Dhoot, Director of Industry Growth and Sustainability, The Food and Drink Federation, commented: “These figures highlight the challenges that UK food and drink continue to face when selling their products abroad. This is particularly true for the 12,000 SMEs in our industry, who struggle to overcome the administrative burdens of exporting. Providing more support for these businesses will help the UK strengthen its international trade and maintain its position on the global stage.
“However, there are many exciting opportunities beyond Europe. With millions of American consumers continuing to enjoy the iconic British tea and biscuits, it’s important that we maintain our positive trading relationship with this high value market. Meanwhile, in joining the Comprehensive and Progressive agreement for Trans-Pacific Partnership, CPTPP, we’ve strengthened our relationship with 11 new countries. By gaining these better terms for trading and removing friction at borders, food and drink manufacturers can access more markets and create more resilient supply chains.”
