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Food and drink companies, like other businesses, have faced a challenging period in the last year, with the Coronavirus pandemic disrupting supply chains and making international travel difficult. For many firms, it has been an inconsistent year for sales, but exporting remains an important way to maintain business resilience. Entering export markets can boost turnover and increase innovation as businesses adapt and create products for new regions.
The good news is that there are opportunities out there. In fact, while the ONS reported that the Covid-19 pandemic has reduced the UK’s total imports and exports, there have been instances in some sectors of a growth in exports in new markets.
For example, in the food and drink sector, in the first quarter of 2020, while the Covid-19 pandemic hit exports from the UK to the EU, non-EU sales of branded goods grew.
So, what are the top reasons for food and drink companies to start exporting now? Once a company has saturated its local market, it can be advantageous to start looking internationally for opportunities, which also encourages companies to innovate.
Business West has recently supported companies across the UK to sell their products on the largest social media platform in China, WeChat. Companies have learnt how to internationalise their product to appeal to the market and grow their sales.
A report published by the Food and Drink Federation (FDF), showed that while exports of food and drink to the UK’s top markets fell in the first half of 2020, value sales increased by 0.3% to China.
It’s important for companies to be aware of markets such as China that have a growing interest in British products. As China’s economy has experienced an upturn, its culinary taste has also become more sophisticated. Instead of consuming fast, cheap Western food, shoppers are looking to use their growing disposable incomes to buy higher quality and more varying food products.
With the new Free Trade Agreements coming into fruition, such as the one signed between the UK and Japan, this is offering greater opportunity for UK food and drink companies to expand overseas.
LittlePod, producer of real vanilla paste, has recently been supported by the Department for International Trade (DIT) to export to Japan, achieving an export deal of over £700,000. The founder, Janet Sawyer, when asked about the advice she would give companies looking to export to the region said:
“Get in touch with DIT, seek an adviser and build a relationship with them. We were lucky enough to find a distributor and importer all in one visit. It can take up to five, so don’t expect to achieve this straight away. But with DIT’s contacts and strategic support, as well as our own hard work, we have achieved great success in Japan.”
Exporting goods can significantly increase profits. This is largely because when overseas buyers order stock they are more likely to do so in large quantities. Research and development (R&D) and other costs can also be offset when sales increase due to international business.
During an economic downturn such as the one triggered by the current pandemic, it is advantageous for companies to look to overseas markets that have not been as severely affected to increase profits. For example, reports have shown that whilst economies around the world have struggled amid lockdown, some Asian economies have grown.
Exporting products can help companies stay resilient through balancing their risk amongst several markets. Research carried out by HSBC has shown that companies who export are more resilient to downturns in the economy and grow more rapidly than those trading domestically.
With customers located in several different markets, companies that export are less likely to feel the impact of economic decline or decrease in product interest. While Brexit has changed the UK’s trading relationship with the EU, looking further afield could offer up new opportunities for expanding food and drink businesses.