Credit crunch? What credit crunch? UK grocery products are flying off the shelves in record amounts – shelves abroad, that is. Annual exports from Britain are expected to have exceeded £13bn for the first time in history by the end of 2008, according to exclusive Food from Britain figures.

And the party has only just started for exporters. The weakening pound means British products – prohibitively expensive for much of the past decade – are now affordable commodities for importers looking for value in uncertain times. FFB figures for the first half of 2008 show exports up 15.5% on the same period last year. Although much of this growth has been driven by soaring demand from developing Central and Eastern European markets (albeit from a low base), exports to the UK’s established markets are also growing.

Indeed, exports to Britain’s largest export market, Ireland, are up 12.4%, while even the UK’s most ardent food critic, France, imported 19% more British food and drink between January and June.

So why are exports performing so strongly? Chris Brockman, author of the report and FFB’s head of research and consultancy, says the weakening currency is just one part of the equation.

“The swing in the exchange rate is now extremely favourable, and the weakening of the pound has had a massive impact, particularly in the Eurozone and the US,” he says. “But the reputation of UK exports has been built up over several years, and that’s only been enhanced by the exchange rate. Britain has a very strong reputation with consumers around the world. In the food and drink trade it also has a strong reputation for innovation.”

A key factor in export growth, according to freelance export manager Alan Jack, is increased demand overseas for premium foods, particularly from Britain, which means suppliers are getting a better return on their products .

Jack’s company Epicurean International works on behalf of Tyrrells crisps, Dr Stuart’s teas and Rude Health, among other companies, and he has seen the cream of British products break the French market. “It used to be that we had a sort of battle against the French,” he says. “But actually they like the British product.”

With exports now seen as more profitable than the domestic market there are big wins to be had. Jacks believes smaller companies can gain the most, because they are more flexible and are quicker at making decisions. Upmarket foods are also well placed to thrive, he says. “As the world becomes smaller it’s the premium sector that seems to do the best out of it.”

The largest export categories by value are alcoholic and soft drinks, cereals and dairy. Alcohol is up 17.5% year-on-year to £1.5bn. Brockman attributes this to the strong appeal of British whisky abroad, but Jack also notes the success of Dr Stuart’s ready-to-drink tea. “That has been phenomenally successful,” he says. “In the drinks sector there are definitely opportunities for functional drinks.”

Confidence in British quality
Although cereal exports have jumped 16.8% to £755m, the biggest increase has been in dairy, where exports increased 18.8% to £482m, with cheese exports alone up 23%.

Meat exports have also enjoyed a resurgence as Britain emerges from the shadows of BSE and foot and mouth. Overseas sales are up 15.2% to £507m. “Meat is bouncing back,” says Brockman.

Meat exporter Randall Parker Foods, which supplies France, Belgium, Italy and Germany, has seen a major lift in export sales this year. “Since the lifting of the foot and mouth ban we have been very busy. Bluetongue in Europe and the exchange rate have led to a higher demand for cuts from our Andover plant and carcases from our abattoir in Wales,” says senior sales manager Graham Penny.

He believes the reputation of British meat has recovered to the point where UK produce now enjoys high levels of trust. “Europe has confidence in our husbandry and processing,” Penny says.

The rapid growth in exports to Central and Eastern European countries is another key reason for the UK’s export success – sales to Poland and Hungary are up more than 50% – but exporters should maintain realistic expectations of these markets, particularly when household incomes are smaller than they are in Britain.

The British Curry Company sells its products in the Czech market, where exports rose 45% year-on-year, but accounts director Maria Hellyer believes the Eastern European market will only really open up once salaries align with British pay packets. “The spending power of the population is quite low,” she says.

Brockman, on the other hand, is less circumspect about Eastern Europe. “Consumers in those markets have started to have more income,” he says. “They are starting to become more interested in UK products at the premium end.”

For Randall Parker, gaining a foothold in emerging markets is core to its strategy.

“We have interest from Eastern Europe. Samples have been sent and our first order is leaving this week,” says Penny. “As demand for higher-end quality lamb increases due to emerging stronger markets we will look to supply that demand.”

Penny is also looking further afield. “With the emerging markets such as the Far East we can look to build a market for premium cuts, and also add a unique selling point with our provenance,” he says.

Global trading village
A further downturn in the UK economy could make exploiting export opportunities even more important. Exports of The British Curry Company's Bombay Authentics curry sauces rose 30% this year, which Hellyer puts down to the market becoming more global. The company's biggest market is the US, followed by the Middle East, and it has even started marketing its product in India.

While the case for developing an export business is becoming increasingly persuasive, Brockman says it is not a case of export-to-survive. "Few companies could survive on exports alone. The domestic market is still important," he says.

However, it helps that British food and drink has such a growing cachet abroad.

"The UK economy is fragile, which has a negative impact in many commercial areas but will have a beneficial effect on the food and drink export market. The UK has completely broken free from its island mentality, and in relation to exports is now starting to see the world as a global trading village."