The UK food and drink sector, valued at more than £100 billion, has a golden opportunity to expand into new markets around the world, according to a report by the UK Food and Drink Federation (FDF) and Santander.
The food industry is the largest manufacturing sector in the country, employing 4 million people and generating around £121 billion annually. The study stresses that growth in the sector is key to overcoming the economic consequences that Brexit may bring.
A key moment
Uncertainty about Brexit and the United Kingdom’s future trade relationship with the European Union means that food and beverage companies will face challenges such as pressure on margins, sustainability, regulatory compliance and the imperative to invest in innovation and technology.
However, the potential of the sector and its projection show a promising future. The sector has an excellent international reputation and the numbers are on its side: in 2018, the food industry had sales abroad of over £23 billion, and by 2020, it expects to increase exports by a third.
In the first half of 2019, overseas sales of UK food and drink increased by 5.1% compared to the same period in 2018. Exports to EU countries followed this trend, while those to non-EU markets grew up to four times faster. As a result, there is enormous scope for expansion in markets around the world.
Growth opportunities
The sector is optimistic as it has opportunities for expansion in two particularly relevant markets: The United States, which is already the third largest food exporter, and China, which has already become one of its top ten markets. Sales to these countries during the first half of 2019 increased by 11% and 16%, respectively. FDF is looking optimistically at expanding markets, including India, the United Arab Emirates (UAE) and Japan, mainly because of the increase in the middle classes it sees as potential customers. In all these markets, premium products are increasing in popularity. The international population is a consumer of a huge variety of products made in Britain. These are therefore important markets in which to expand exports.
However, the complexity of the individual markets highlights the need for measures to support the expansion of these products abroad.
We are here to help
Banco Santander is committed to providing support through a dedicated industry and specialist relations team. Working together, we believe the future is bright for food and beverage manufacturing in the UK.