Despite business confidence falling to record lows across the sector, untapped export markets remain a huge opportunity for food and drink firms, according to a new report.
The report, published by the Food and Drink Foundation (FDF) and Santander UK, explores the impact COVID-19 has had on food and drink manufacturers. The sector has faced a variety of challenges, including the shutdown of hospitality businesses and rising supply chain costs.
FDF’s latest data shows that business confidence in the sector reached a record low in Q2. Research from Santander also found that just a quarter of food and drink businesses expect to return to normal operating levels by the end of the year.
However, despite the challenging environment, the report highlights increasing export opportunities for UK food and drink. Key export opportunities include:
- Canada: Exports to the UK’s third-largest non-EU trade partner have grown by 5.7 per cent so far in 2020
- USA: Significant investments in e-commerce offerings by US supermarket chains has led to increasing demand for imported products
- China: There has been rapid growth in the Chinese market, with consumers continuing to perceive UK products as safe and high quality
- UAE and the Gulf: An increasing focus on healthier lifestyles in the region has seen increased demands for organic, functional foods and nutritionally-rich products.
Looking forward, the FDF believes that significant headroom for growth remains for UK food and drink exporters, both within the EU and in other international markets.
Andrew Williams, Head of Food and Drink Sector at Santander Corporate and Commercial Banking, commented:
“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.”
The reports follows the announcement of a ‘bounce back’ plan from government to help UK food and drink manufacturers grow their trade activity overseas.
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