The downturn has prompted more suppliers to look overseas, but exporting is not as easy as it sounds. So who’s getting it right - and how are they doing it?
Sometimes the grass really is greener. The UK has long been an active exporter and ever since the economy took a nosedive in 2008, the focus on exports has intensified as British companies look for better growth rates abroad - which is a great idea on paper.
But there is a world of difference between wanting to tap into overseas growth markets and actually doing it. So exactly how exactly are British food and drinks companies getting their products listed in foreign supermarkets? And what persuades overseas buyers to add British wares to their mix?
For many British suppliers, the foundations of export success are laid at home. The UK has a reputation for having some of the most demanding retailers in the world, so a strong track record of supplying British supermarkets often goes a long way towards convincing overseas buyers that the Brits can cope with the local demands of foreign markets. “Our experience of working with world-leading retailers in the UK undoubtedly gives us a competitive edge in new markets,” says Charlotte Lawson, director of membership services at the Food and Drink Federation.
In fact, for some British food and drinks brands, experience with UK retailers cannot merely open doors abroad it can sometimes be the very vehicle that gets them into foreign markets in the first place. Take Warburtons. The bread giant’s long-standing relationship with Tesco in the UK recently turned into a launch pad into Eastern Europe, when Tesco asked the company to start supplying its stores in the Czech Republic, Slovakia, Hungary and Poland. Warburtons now sells seven products across the region, with 400g Toastie loaves the biggest seller.
Red tape challenge
The relationship has proved mutually beneficial, says Warburtons. Going into Eastern Europe with a big retailer at its side has enabled the company to better understand the local market and local consumers, while Tesco is benefiting from Warburtons’ UK category experience. “Our presence in these markets is enabling Tesco to improve the quality of the bakery category, using our high-quality standards as a benchmark and catalyst for local producers,” a spokeswoman says.
But what about suppliers that don’t get the chance to enter foreign markets hand-in-hand with a friendly retailer? All too often, companies that try to break into foreign countries on their own still face a long slog of paperwork and red tape before they can gain access to overseas consumers, especially in markets outside of the European Union.
Singleton’s Dairy, for example, has long been keen to break into Russia. The company already sells its cheeses all over the world, but to date its Russian ambitions have been foiled by red tape. After more than 18 months of to-ing and fro-ing with Defra, the company now hopes to be one of several British suppliers to receive a visit during a Russian trade mission later this year. “We hope this will lead to us being added to an approved list of UK suppliers,” says sales manager John Carr.
Streamlining the export process for British companies - particularly small and medium-sized businesses - is at last moving up the government’s agenda, not least because Westminster hopes exports will help boost overall growth in UK food and drink manufacturing. In January, Defra launched the Export Action Plan with the FDF, with the aim of providing practical support to manufacturers by removing some of the bureaucratic barriers, and holding regional trade shows.
Despite the bureaucracy that currently dogs the process, there are plenty of examples of British suppliers that are already successfully exporting, however. Northern Irish cheesemaker Fivemiletown Creamery scored a coup when it secured a listing for its soft cheeses with pan-Asian retailer Dairy Farm International earlier this year.
It was a hard-fought deal, though. Fivemiletown’s export ambitions go back to 2008, when it first formulated an export strategy and decided to contact UK Trade and Industry. This led to a visit to Fivemiletown by then UK trade commissioner Ian Bailey. However, it wasn’t until Dairy Farm proactively contacted the British consulate general in Hong Kong last year - asking to be put in touch with Fivemiletown - that Bailey’s visit started to pay off. Because of the visit, the consulate already had Fivemiletown’s details to hand, and the assistant trade commissioner for food at the consulate was able to introduce the two companies via email.
Things progressed quickly from thereon in, with Dairy Farm suggesting Fivemiletown partner with wholesaler Smylie, which already had an established relationship with Dairy Farm’s Wellcome supermarket chain. The retailer is now selling Fivemiletown’s cheeses in Hong Kong, with a view to potentially rolling them out to its other Asian markets.
When Dairy Farm decided to stock soft cheeses from Fivemiletown, marketing and packaging helped seal the deal. “We were attracted to Fivemiletown’s artisan credentials and the rich flavour of its cheeses, but also its attractive packaging,” says a spokesman for Dairy Farm. In addition, the many awards Fivemiletown has won will help Dairy Farm market the range to its Chinese customers, who are increasingly looking for new and different food products to try, he adds.
Opportunities in mature markets too
It is this ability to brand and market products, as well as tailor them to specific consumer needs - that foreign buyers value so highly, especially those operating in fast-changing emerging economies. “Our consumer tastes and demand for products that are convenient and high quality put us in pole position to capitalise on the emergence of the cash-rich, time-poor generations in newer, high-growth markets,” believes Lawson.
British NPD and branding skills aren’t just winning fans in emerging markets. Seafood supplier Seachill recently secured listings for The Saucy Fish Co in France’s Monoprix and is about to break into the US. Sales and marketing director Simon Smith believes the “blend of category and consumer marketing” that British food companies are starting to become known for internationally has been key to the export success of Saucy Fish and other British brands. “Those tend to be the things the UK’s best at in terms of food,” he says. “They shine out in other markets.”
Strong branding also paid off for Greene King’s Old Speckled Hen, which has been sold in the US for more than seven years. Tom Rose, vice president of marketing for Total Beverage Solutions, says he was attracted to the brand’s quirkiness, but warns that not all UK brands are equal - to stand out, they have to be innovative and offer a clear point of difference, he says.
“Other British beer brands have a very traditional personality, but Old Speckled Hen has a more edgy, interesting and quirky image.”
Any British brand moving into export will at some point have to decide how big a part its “Britishness” should play in its pitch. Whether to adorn products with Union Jacks and other British iconography depends on the products and markets in question.
Seachill’s Smith, for example, argues making products too “UK-centric” can limit their appeal overseas. Although the company doesn’t “shy away” from The Saucy Fish Co’s British origins, it has decided to restrict itself to playful references and has, in the past, marketed under the slogan “the smash hit from the UK is now available in the USA” to US buyers.
In some markets, however, clear British provenance can be an important asset, says Stephen Winterhalder, MD of exporter Foods of Europe. “In Hong Kong, the PoS in front of a British product will have a big Union Jack on it, so they’re actively pushing that British connection,” he says. “It speaks of quality, reliability and food safety, and is a key selling point for retailers.”
So once British brands have made the jump abroad, how do they take their export business to the next level?
For some, setting up shop on foreign soil is a logical progression. Warburtons says it is currently considering launching a partnership with a local manufacturer in Eastern Europe to produce bread for Tesco, while the UK’s biggest goats dairy supplier, Delamere, recently created a Hong Kong office to sell its UHT goats milk and pet milk to customers in the Far East.
Setting up a local office requires a considerable investment, so companies are understandably cautious about taking the plunge. “This is a long-term project for our family business, and we are taking a measured approach to managing the risk,” says a spokeswoman for Warburtons.
Export success no blip
Regardless of whether brands decide they need an overseas office or not, the FDF believes the future for British food and drinks export is bright. It rejects suggestions that the UK’s growing food exports are just a short-term blip, driven by favourable exchange rates. HMRC figures show that even when currency rates were less favourable, exports continued to grow - in fact, food and non-alcoholic drinks exports from the UK have grown consistently since 2004, says Lawson. “It is therefore reasonable to assume that factors other than exchange rates are behind the growth we’ve experienced,” she adds.
The days when UK food exports were dominated by Scottish whisky and shortbread are long gone. Bread, bake-in-the-bag fish and soft cheese are among the many new products now finding fans overseas. As exports continue to grow in importance to UK food and drink, expect many others to follow their lead.
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