UK food & beverage industry does not need any introduction: market players operating in it knows to be part of the biggest manufacturing force in the country.
The sector contributed 2,3% of national GVA in 2018, with a total value of £29 billion. The turnover generated by food & drink companies in 2019 exceeded the one of aerospace and aumotive industries combined: a massive result, as reported by Food & Drink Federation.
The success of British products is proved by the revenues both in the UK market and abroad: domestic sales went up to £73 billion in 2020, while exports reached 20 different countries, exceeding a global value over £23 billion.
What makes this possible is the work of over 444,000 people across the UK – a world where unique skills stand out.
Beyond the numbers: the challenges for British food & beverage
The numbers reported here seem to paint a solid and strongly positive picture.
Without a doubt, the UK food & beverage industry has been able to distinguish itself at international level, obtaining significant recognition.
But there is no shortage of challenges on the horizon, made even greater by a political and economic scenario full of uncertainties.
Brexit has impacted on the trade agreements that until recently bound the UK to the single market: the most immediate consequence has been a reduction in direct exports to the EU.
Dairy products are the most affected, with a 90% drop in exports to Europe: the main causes remain the supply chain disruption caused by the current pandemic situation and the introduction of the new customs regulations.
On top of the overall drop in exports (down 47% compared to Q1 2020), there are other issues: in the long term, UK companies could face a workforce shortage.
Some 130,000 people in the sector are foreign nationals, and it is predicted that 25% of these may leave the country.
Thus, there are many concrete obstacles that could hamper the growth of a market that has always been dynamic.
How should this situation be addressed?
The most immediate answer could be to continue looking beyond Europe’s borders, creating new business opportunities in unexplored areas.
A strategic choice that more and more companies seem ready to adopt in order to continue growing.
Outside the borders: seizing opportunities abroad
While the bureaucratic complexities of Brexit have brought a halt to trade to the EU, it has also stimulated growth in non-European markets.
Santander and the Food and Drink Federation have carried out an analysis of current market trends, revealing that many companies are ready to react.
But which product categories are performing best?
In the US – the UK’s third largest food and drink trading partner in the world – spirits, chocolate and cheese continue to be successful. Encouraging results are emerging for gin, beer and soft drinks in particular, although there is still room for growth.
In North America, Canada is becoming an increasingly attractive destination, with sales up 8% between 2019 and 2020, and trade agreements between the two countries – currently under development – boding well for the future. The ranking of the most popular products is dominated by beef, whisky, gin and beer.
Further business opportunities emerge in Australia and New Zealand: here British exports exceeded £484 million in 2020, and the recent signing of the free trade treaty between the UK and Australia – the first international agreement of the post-Brexit era – could translate into concrete benefits for many companies.
Back in Europe, Norway is an essential partner for UK food & drink industry: with exports up 40% in 2020, the Scandinavian country is confirmed as an essential destination. Consumers in Norway are increasingly focused on food quality and traceability, which is an important issue for UK companies as well.
So there is plenty of opportunities to do better, putting the sector back on the path to growth through innovative strategies and ambitious goals.
A mission that, now more than ever, will require an in-depth analysis of the market and a constant search for opportunities within it.