Food and Drink Federation ■ 6 Catherine Street ■ London WC2B 5JJ Tel: +44 (0)20 7836 2460 ■ Fax: +44 (0)20 7836 0580 ■ Web: www.fdf.org.uk

Registered office as above. Registered in London with limited liability. Certificate of Incorporation no. 210572. VAT number: 761253541. The Food and Drink Federation seeks to ensure that information and guidance it provides are correct but accepts no liability in respect thereof. Such information and guidance are not substitutes for specific legal or other professional advice.

UK Food & Drink Export Performance First Half 2013 Update

Executive Summary

The export of food and non-alcoholic drink in the first half of 2013 grew by 2.5% to £6.1bn. Growth was much stronger in non-EU markets (up 7.5%) versus the EU 27 (up 1%).

A poor start in Q1 (-3.4%) was more than offset by strong growth seen in Q2 (+9%). In June alone exports grew by over 13%.

The Eurozone and EU27 both pulled out of recession in Q2 2013 and consumer confidence in the EU recovered strongly by over 10 points since the start of 2013. Exports to the EU subsequently turned around from -4.8% in Q1 to +7.2% in Q2.

Including alcoholic drinks, total food and drink exports were £9.3bn, 5% up on 2012 with the key whisky sector growing by over 11% on 2012. The export of all UK products fell by 3.3% on 2012 worth £152bn.

What has been happening with exchange rates?

UK exports to the Eurozone were more competitive in H1 as sterling weakened from an average of €1.22 in 2012 to €1.18 in 2013.

UK exports to those markets using the US dollar became marginally more competitive in the first half as sterling weakened from $1.58 in 2012 to $1.54 in 2013.

The weaker pound is likely to have had some impact on the growth in exports to the Eurozone, but growth in Q2 was driven mainly by improved economic conditions as the EU came out of recession.

Value added continues to outperform

Growth was inhibited by sharp falls in the export of cereals and grains following the poor harvests seen in late 2012. The falls detailed below represent 6% of the overall value of food and non-alcoholic drinks exports.

o Cereals -59% falling by almost £150m with wheat down 73% and barley down 67%.

o Grains and seeds -35% falling by over £100m with rapeseed down 49% and flaxseed down 50%.

The export of value added foods (+4.9%) outperformed total food and non-alcoholic drinks exports (+2.5%) in H1 2013.

This was true in both the EU (+3.7%) and the non-EU (+8.2%). Most of the value added categories were in growth apart from those five ‘going down’ in the table below:

Going Up Going Down

Chocolate (+5.4% to £249m) Prepared meat (-11.5% to £95m)

Cheese (+3.8% to £210m) Ice cream (-4.3% to £49m)

Soft drinks (+5.5% to £187m) Smoked fish (-5.2% to £26m)

Sweet biscuits (+14.2% to £136m) Jams and preserves (-2.4% to £16m)

Sugar confectionery (+6.8% to £86m) Sausages (-6.4% to £8m)

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Regional Summary

Within the EU 27 there were several markets in decline, five of which positioned in the top 10. However, the top three markets (Ireland, France and the Netherlands) performed strongly adding almost £200m to the total export figure in H1. There were also 8 markets in double digit growth most of which are smaller Eastern European members of the EU.

Asia (+30.1%) and Oceania (+22.4%) were the best performing non-EU regions. Whilst Other Western Europe (-5.1%, made up chiefly of Norway, Switzerland and Turkey) and the Middle East (-1.6%) were the only regions in decline.

UK Exports of Food & Non-alcoholic Drinks by EU / Non-EU,

Jan-June 2012-2013 (£ million)

2012 2013 % change

Total Food & Non-alcoholic drinks exports

5,969 6,119 2.5

Total EU 4,563 4,608 1.0

Total Non-EU 1,406 1,511 7.5

EU % share 76.4 75.3

Non-EU % share 23.6 24.7

Source: HMRC Trade Info

Notes for comparison:

– Including alcoholic drinks, total food and drink exports were £9.3bn, 5% up on the same period in 2012 (including 11.2% growth in whisky exports, the lead category by value)

– All UK product exports at £152bn fell by 3.3% on 2012.

i.e. the food/non-alcoholic drinks sector has outperformed the total of all export sectors for the first half of 2013, and food/non-alcoholic drinks share of total UK product exports has increased to 4% compared to 3.8% in the first half of 2013.

– Imports of food and non-alcoholic drinks were £18.5bn in the first half of 2013, up 8.6% on 2012.

– The food and non-alcoholic drinks trade gap increased from a deficit of £11.1bn in 2012, to a deficit of £12.4bn in 2013.

UK Exports of Food and Non-alcoholic Drinks by Sector,

Jan-June 2012-2013 (£ million)

Sector 2012 2013 % change

Other prepared foods* 1,458 1,663 14.0

Cereals & bakery 1,058 958 -9.4

Meat & animal products 827 853 3.2

Fish & seafood 631 661 4.7

Dairy 585 624 6.7

Fruit & vegetables 638 531 -16.7

Tea, coffee, cocoa & spices 396 451 13.7

Non-alcoholic drinks 191 201 5.3

Sugar & sugar confectionery 185 177 -4.1

Total 5,969 6,119 2.2

*Inc. fats oils, preserved fruit/veg, fruit juice, soups, sauce & condiments, ice cream, vinegar, animal feeds and other miscellaneous products

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Top Markets

The ranking of the top 8 markets remains unchanged on 2012. Denmark is the only EU country to move up the table, the other climbers were China, Hong Kong, Australia and South Africa. The major fallers in terms of rankings were Norway, Sweden and Russia. Japan has moved out of the top 20 after exports fell by 3.5%.

The highest growth markets in the top 20 included:

o China, +126% to £102m and now moving up from 20th to 10

th in the table in one year.

The gains are largely due to the increases in UK pork and animal fat exports responsible for adding £45m in the first 6 months. British pork (+591%) and frozen pork offal (+280%) alone increased exports by £11m.

o Australia, +25.9% to £55m with gains made across the board including coffee +518%, sauces and condiments +15% and soups +44.6%.

o South Africa, +25.4% to £50m with a 143% increase in fresh fish, 39% increase in breakfast cereals and 36% increase in meat.

o Hong Kong, +14.8% to £73m driven by growth in tea exports +745% (adding £5m) and 102% increase in buttermilk.

o Denmark, +10.8% including a 58% increase in pork, 16% increase in prepared meat and a 30% increase in jams and preserves.

UK Exports of Food & Non-alcoholic Drinks: Top 20 Countries,

Jan-June 2012-2013 (£ million)

2012 2013 % change

1(-) Ireland 1,473 1,570 6.6

2(-) France 637 684 7.4

3(-) Netherlands 601 652 8.6

4(-) Germany 580 511 -11.9

5(-) Belgium 273 252 -7.6

6(-) United States 247 249 0.7

7(-) Spain 242 185 -23.5

8(-) Italy 189 179 -5.2

9(+1) Denmark 97 108 10.8

10(+10) China 45 102 126.3

11(-) Poland 87 96 10.2

12(-3) Sweden 99 94 -4.6

13(-1) United Arab Emirates 80 77 -3.6

14(+1) Hong Kong 64 73 14.8

15(-1) Saudi Arabia 66 68 3.0

16(-) Canada 63 64 1.3

17(-4) Norway 79 64 -19.6

18(+3) Australia 44 55 25.9

19(+4) South Africa 40 50 25.4

20(-2) Russia 47 49 5.3

Source: HMRC Trade Info

Changes in ranking position are versus the first six months of 2012

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Regional Analysis

EU

UK food and non-alcoholic drink exports to the EU in the first half 2013 grew by 1%.

The export of some key commodity categories rebounded back in to growth in 2013 including meat (+5.2%) and dairy (+7.2%). Fish and seafood remains in decline (-3.3%) but grew in Q2 alone. Cereals (-53%) and grain/seeds (-36.6%) were the biggest fallers, down £210m on 2012.

Many value added products performed well up 6% to the EU. Butter/spreads (+41.9%), coffee (+34.7%), soups (+26.1%), pasta (+19.5%), fruit juices (+16.2%), tea (+14.3), chocolate (+11.3%) and sauces/condiments (+11%) were amongst some of the categories seeing double digit growth to the EU. Collectively growth of these products resulted in gains of over £78m on 2012.

Exports to the Eurozone were up 0.6% almost in line with all EU markets.

UK Exports of Food & Non-alcoholic Drinks to the EU,

Jan-June 2012-2013 (£ million)

2012 2013 % change

TOTAL EU 4,563 4,608 1.0

1(-) Ireland 1,473 1,570 6.6

2(-) France 637 684 7.4

3(-) Netherlands 601 652 8.6

4(-) Germany 580 511 -11.9

5(-) Belgium 273 252 -7.6

6(-) Spain 242 185 -23.5

7(-) Italy 189 179 -5.2

8(+1) Denmark 97 108 10.8

9(+1) Poland 87 96 10.2

10(-2) Sweden 99 94 -4.6

11(+1) Czech Republic 39 39 1.9

12(+1) Finland 36 38 5.1

13(-2) Portugal 54 34 -36.9

14(-) Greece 28 28 -0.7

15(-) Austria 25 26 5.0

16(-) Cyprus 24 23 -4.8

17(-) Malta 21 22 3.3

18(-) Hungary 18 21 15.5

19(+1) Romania 6 8 25.6

20(-1) Bulgaria 10 7 -27.5

21(-) Latvia 5 7 38.6

22(-) Estonia 5 6 22.7

23(+1) Slovakia 4 6 30.5

24(-1) Lithuania 4 5 10.4

25(-) Slovenia 4 4 -6.7

26(-) Luxembourg 2 3 8.5

Source: HMRC Trade Info

Note: Eurozone members in bold

Changes in ranking positions are versus the first six months of 2012

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Non-EU

Exports to non-EU markets continued to perform strongly, growing 7.5% overall. Exports to Other Western Europe fell (-5.1%) due to poor performance in Norway as did exports to the Middle East (-1.6%) following a slow-down in the UAE and a negative growth in Israel. All other regions grew including:

o Asia +30.1%, led by strong growth seen in China up 126% and Hong Kong +48% but also gains seen in some of the smaller markets including South Korea up 12.3% (+39% chocolate and +19.9% sweet biscuits).

o Oceania +22.4%, due to double digit growth in both Australia up 25.9% (+518% coffee, +94% sugar confectionery, +90% chocolate and +82% cheese) and New Zealand up 12% (+112% sauces/condiments, +92% tea).

o Latin America & the Caribbean +14.4% led by growth in Brazil up 19.5% due mainly to strong demand for UK food preparations (+2406% adding over £2m).

UK Exports of Food & Non-alcoholic Drinks to the Non-EU,

Jan-June 2013 (£ million)

2012 2013 % Change

North America 311 314 1.1 United States 247 249 0.7 Canada 63 64 1.3 Asia 292 380 30.1 Hong Kong 64 73 14.8 China 45 102 126.3 Japan 47 45 -3.5 Singapore 16 18 13.2 Korea South 23 25 12.3 Middle East 237 233 -1.6 United Arab Emirates 80 77 -3.6 Saudi Arabia 66 68 3.0 Israel 23 17 -23.5 Kuwait 15 15 0.0 Africa 227 227 0.3 Egypt 33 28 -15.3 South Africa 40 50 25.4 Nigeria 35 48 36.9 Algeria 29 11 -60.1 Ghana 15 20 37.9 Other Western Europe 167 158 -5.1 Norway 79 64 -19.6 Switzerland 43 44 2.5 Turkey 16 21 30.8 Eastern Europe 66 71 8.2 Russia 47 49 5.3 Ukraine 12 13 11.4 Oceania 52 64 22.4 Australia 44 55 25.9 New Zealand 7 8 12.0 Latin America & the Caribbean 54 61 14.4 Brazil 10 12 19.5 Chile 4 4 18.9 Mexico 5 4 -11.5

Source: HMRC Trade Info

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*Inc. fats oils, preserved fruit/veg, fruit juice, soups, sauces & condiments, ice cream, vinegar, animal feeds and other miscellaneous products

Other prepared foods* (+14% to £1,663m)

Appendix 1 – Top sectors

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Cereals & bakery products (-9.4% to £958m)

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Meat and related animal products (+3.2% to £853m)

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Fish and seafood (+4.7% to £661m)

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Dairy (+6.7% to £624m)

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Fruit and vegetables (-16.7% to £531m)

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Non-alcoholic drinks (+5.3% to £201m)

Tea, Coffee, Cocoa and Spices (+13.7% to £451m)

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Sugar and sugar confectionery (-4.1% to £178m)