News article
3 September 2020
Santander UK and Food and Drink Federation Report: Untapped export potential key for food and drink industry recovery
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FDF has issued the following press notice:
Santander UK and Food and Drink Federation Report: Untapped export potential key
for food
and drink industry recovery
FDF data shows that net business confidence among food and drink manufacturers
reached a
record low of -65.2% in Q2.
Despite a drop in confidence, manufacturers ranked increased domestic demand,
increased
export demand and access to new UK preferential trade agreements as well as
planned investment in
new machinery as key opportunities for the rest of 2020.
The UAE and wider Gulf region, China, and the USA and Canada were identified as
potential
export growth markets for food and drink manufacturers.
Santander UK and the Food and Drink Federation (FDF) have today launched a new report
showing that despite business confidence falling to record lows across the
food and drink industry in
the second quarter of 2020, untapped overseas export markets remain a golden
opportunity for
recovery and growth for businesses across the sector.
The report delves into the impacts Covid-19 has had on food and drink
manufacturers and overall
business confidence. The industry has faced a variety of challenges from the
closure of the hospitality
and out-of-home sectors, to rising costs and a fall in exports. The sector has
also seen a reduction in
domestic turnover by 8.6% in Q1 compared with Q4 2019, and a further 4.0%
decline in Q2.
FDF's latest data shows that net business confidence among food and drink
manufacturers
reached a record low of -65.2% in Q2 due to Covid-19, uncertainty over Brexit
and closure of food
service. Separately, Santander has carried out research into the impact of
Covid-19 on SMEs. The
results found that 24% of food and drink businesses expect to return to normal
operating levels by the
end of 2020.
Despite the challenging environment, food and drink businesses highlighted
increased export
growth and access to new UK preferential trade agreements as a key opportunity
for the rest of the
year.
UK food and drink exports are recognised globally for their quality, provenance,
and heritage, and
are now worth more than £23bn annually. The report highlights export
opportunities in three key
market regions; the UAE and the wider Gulf region, China, and the USA and
Canada
with insights
from Santander's experienced sector and international specialists who support
businesses looking to
explore overseas opportunities:
- Canada: Exports to the UK's third largest non-EU preferential trade
partner have grown by 5.7% so far in 2020, led by exports of gin, beef and
salmon.
- USA: Closures to the hospitality sector due to Covid-19 have led to an
increase in demand for ready to consume alcoholic drinks. UK exports of beer to
the USA have
increased by 5.8% (y-o-y) from January to May this year. There has also been
significant investment
in home delivery as US supermarket chains have sought to increase their
e-commerce offerings in
recent months.
- China: China has seen rapid growth in demand as consumers continue to
perceive UK products to be safe and of high quality, with a sense of heritage.
Beef and pork exports
have risen by over £60 million so far this year compared with the same period
the year before.
- UAE and the Gulf: The Covid-19 crisis has seen an increase in expected
sales from retail – up to 90% from 70% in 2019. The increasing focus on
healthier lifestyles in the
region has seen increased demand for organic, functional foods, and
nutritionally rich products.
Looking forward, there remains significant headroom for growth for UK food and
drink exporters,
both within the EU27 and other international markets. Working with and
encouraging more
businesses to identify and overcome trade barriers is a high priority for the
FDF and Santander.
The FDF has identified seven steps for recovery designed to successfully restart all areas of industry, as part
of its work through the Food and Drink Sector Council. These include protecting
the UK's supply
chain integrity and competitive position and accelerating plans to increase UK
exports.
Ian Wright CBE, Chief Executive, Food and Drink Federation, said:
“Manufacturers and hidden heroes working across the supply chain have ensured
continued
access to essential food and drink for UK consumers, diminishing the impacts of
Covid-19 on
industry. As the dust begins to settle, we can now see how the pandemic has had
a seriously
damaging impact on 2020 's overseas sales of UK food and drink. These were
worth
over £23 billion
in 2019. While that figure is certain to fall for this year, there are still
plenty of opportunities in foreign
markets for UK food and drink manufacturers to seize in what remains of this
year and as we look to
2021.
“As businesses turn toward economic recovery, ensuring a quick return to growth
will be
essential to support resilience in our industry. We will continue to work
closely with Government and
industry partners, like Santander, to safeguard a sector recovery that will
deliver a return to
sustainable export growth right across the UK.”
Andrew Williams, Head of Food & Drink Sector, Santander Corporate & Commercial
Banking, said:
“The impacts of Covid-19 swiftly reverberated across the food and drink
manufacturing industry.
We quickly saw that over-reliance on any single market, sales channel, or
customer leaves
businesses vulnerable to increased risk. Understandably, confidence was knocked
– but the
resilience of our industry is evident in these findings. As the short-term
impacts begin to settle, UK
food and drink businesses have already recognised that increasing export sales
is a potential route to
recovery and offers growth and diversification benefits too. There is much to
be
optimistic about and a
real sense that as a sector we are striving towards a positive future.”
Notes for editors:
The Food and Drink Federation (FDF) is the voice of the food and drink
manufacturing industry –
the UK's largest manufacturing sector. For more information about FDF and the
industry we represent
visit: www.fdf.org.uk
'Branded' goods refer to manufactured products that have had their value
increased through
production. FDF's focus in terms of branded goods is on food and non-alcoholic
drink.
Further information on FDF's export support work
For statistics on the food and drink industry please visit: www.fdf.org.uk/statsataglance.aspx
Research is drawn from a survey conducted by Opinium research between the 10th -
19th June
2020. The base size was 2,050 UK adults who are senior managers and those above
who are
responsible for decision making in SMEs.
Food Navigator Asia article, 17 June 2020
Santander is committed to supporting food and drink manufacturers. Our team of
Sector and
International specialists arrange various events specifically catered for the
UK's food and drink sector,
ranging from industry networking days to overseas trade missions. With business
customers
worldwide, we have both the expertise and the reach that can help food and
drink
manufacturing
businesses with their international expansion. Find out more.
On 15 September, Santander's US market development programme is hosting a
webinar in
association with Total Beverage Solution and the Food and Drink Exporters
Association about
Accessing the US Alcohol Market. Find out more and register.
More Information
Contact Meg Bevan, Corporate Affairs Division, at: Megan.Bevan@fdf.org.uk, or 07946 340 998.
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