UK food and drink exports post record Q1 growth

01-Jun-2017 - Last updated on 02-Jun-2017 at 13:52 GMT

Britain's top three export destinations are Ireland, France and the United States. © iStock

Britain’s food and drink exports remain robust thanks to the weaker pound with UK food and drink exports for Q1 2017 valued at £4.9 billion (€5.6 billion), according to the Food and Drink Federation (FDF).

The figure—up 8.3% on 2016—is the largest Q1 exports value on record, helped by the popularity of the UK's top 3 export products, which remain whisky, salmon and chocolate.

Exports of salmon saw the largest value growth, up 52.3% in Q1 to £186.7m (€214.0m). Chocolate’s value growth increased by 6.4% to £155.3m (€178.2m).

Ireland, France and the United States were the top three destinations for UK food and drink in terms of overall value.

All but one of the top 20 markets recorded export growth with Spain recording a 21.6% decrease compared with 2016.

However, the greatest percentage growth during this period occurred in non-EU countries.

Beer was the key driver in export growth to South Korea (+40.3%) and animal feed boosted those to South Africa (+31.2%).

“It is pleasing to see non-EU exports performing beyond expectations,” noted Ian Wright, FDF’s director general.

“As the UK leaves the EU growth in exports is hugely important to our sector. We hope that with the determination of businesses and the assistance of the new government, we can open more channels and provide a further boost to the UK's competitiveness on the world market.”

“We want to work with government to take advantage of increased demand for UK products overseas and the opportunities that leaving the EU is expected to create.

“We would encourage the new government to look to [Irish Food Board] Bord Bia as inspiration in creating an organisation to help turbocharge sales of UK food and drink globally.”

UK trading relations

pounds money sterling financial funding profit iStock.com ljubaphoto — While the fall in the pound has provided a boost to UK export competitiveness, it has also resulted in an increase in the cost of imported ingredients and raw materials. ©iStock/ljubaphoto

With ongoing Brexit negotiations, an upcoming general election and recent currency fluctuations, the UK is approaching significant crossroads in its trading relations with Europe.

The fall in the pound has provided a boost to UK export competitiveness. UK exporters have been able to sell their goods cheaper and/or increase their profit margins as foreign buyers need less currency to buy the same quantity of goods.

However the fall in the currency's value has also resulted in an increase in the cost of imported ingredients and raw materials.

Consequently, the UK's food and drink trade deficit increased by 19% to -£6.2bn (€7.1bn) in Q1 2017.

The third quarter of this year will better reveal the extent of weaker sterling on British exports as companies negotiate new sales agreements with overseas buyers.

Ahead of next week’s general election, the FDF has urged the next government to recognise the strategic importance of UK food and drink and the export potential among UK manufacturers.

Currently only around 20% of food and drink manufacturers actively export.

FDEA response

“We would like to see government further encourage exporting by ensuring producers have the skills and support to enter new, challenging markets post-Brexit,” said the director of the Food and Drink Exporters Association (FDEA), Elsa Fairbanks.

“We must not ignore the importance of existing and very strong EU markets which still represent 65% of food and drink exports and this must be a priority as Brexit negotiations start.

"Ease of access to EU markets will continue to be vital to our industry in future, as many food and drink products are not suited to export to distant markets. Although we recognise the need to explore new opportunities, leaving the EU should not mean ignoring those we already have.”