UK food and drink businesses are getting to grips with Brexit

The UK food and drink sector remains strategically important to our economy and to many consumers globally. This appetite is driven by the industry's focus on quality and provenance of products along with an entrepreneurial flair which is helping the sector navigate around the twin challenges of Brexit and COVID.  

The EU remains a key market for UK food and drink

It’s disappointing, but not surprising, to see that food and drink exports to the EU are down by 26 per cent when compared to the same period last year. Since the initial Brexit-shock in January (where UK export of food and drink fell by around 63 per cent on the previous year), the level of EU market deficit has become less pronounced every month, highlighting that food and drink businesses have adapted to the new regulations. It also indicates that the EU remains an important market. Businesses are not turning their back on the EU as a destination for our food and drink products, they are finding ways of dealing with the challenges they face. That monthly 63 per cent deficit in January has now transformed to a 4 per cent deficit in April. 

New international markets are here to stay

As many have grappled with Brexit related issues, others have looked beyond the EU, some for the first time. Some of our clients have pivoted products into new international markets to maximise growth opportunities as consumers look to buy high quality produce - particularly where markets have opened up following lockdowns. Export of UK food and drink to Latin America and the Caribbean was up 107 per cent in April and Sub-Saharan Africa and Eastern Europe saw a 47 per cent uplift too. 

Clarity on US tariffs on single malt will further accelerate exports

The export of whisky continues to be one of the UK food and drink industry’s crown jewels and the latest data suggests that it remains in high demand, particularly in the US. In April 2021, food and drink exports into the US increased by 20 per cent on April the previous year following the decision to pause US tariffs on single malt Scotch whisky in March. Distillers have clearly re-entered the market, and now some further clarity has been provided with the tariff suspension being announced for the next 5 years. We anticipate further acceleration in exports to the states in the coming months.

What next?

The sector was in general rude health pre Covid and with lockdown restrictions gradually easing I expect acceleration in both international trade and also within the UK market as a whole.  Now the EU market is showing resilience, can UK food and drink businesses maintain the new international relationships gained over the past year whilst also meeting pent up demand from within the UK itself? With people becoming a scarce commodity across the sector, I think there will be an increasing appreciation of the benefits of using technology and data analysis to find growth over the coming months.