UK eyes US$300m growth in F&B exports to LATAM by 2020

By Kacey Culliney

- Last updated on GMT

Alcoholic beverages would be a strong focus for export, including Scotch whisky, like Lagavulin, which is distilled in Islay.   Images © Getty Images / MartinM303
Alcoholic beverages would be a strong focus for export, including Scotch whisky, like Lagavulin, which is distilled in Islay. Images © Getty Images / MartinM303
The United Kingdom wants to drive up food and beverage exports to Latin America but high tariffs and complex trade barriers may make market penetration hard, says UK industry head.

The UK – through its Department for Environment, Food and Rural Affairs and the Department for International Trade –  is two years into international growth plans outlined in the UK Food and Drink – International Action Plan 2016-2020. ​In the report, 'Mexico and Latin America' was touted an area of opportunity thanks to “good government to retailer relationships” ​in the region and the government outlined its target to increase food and drink exports to LATAM by £215m (US$300m) by 2020.

Speaking to FoodNavigator-LATAM, Elsa Fairbanks, director of the UK's Food and Drink Exporters Association (FDEA), said whilst such export growth was achievable given the size of the LATAM region, it would be no easy task for British exporters.

“The opportunities are there but so are the challenges – it's a huge market,” ​she said.

The challenges weren't “insurmountable”,​ she said, because British exporters were extremely robust, but help would be needed if the UK wanted to reach such targets within two years.

'It's not a region that has had our attention, compared to Asia'

“There is an opportunity in Latin America but the [UK] government needs to quantify its commitment to the region with research that helps exporters understand consumers and opportunities and help them to get to the market; it takes an enormous amount of effort,” ​Fairbanks said.

“...We need to understand these countries more; it's not a region that has had our attention, compared to Asia. Markets like South Korea are soaring – it had 22% growth of [UK] food and drink exports in 2017 and Singapore saw 27% growth​.”

In 2017, Mexico represented the UK's 22nd​ largest export market with food and beverage manufacturers exporting £175.9m (US$248m) worth of goods, according to FDEA data. Brazil, by comparison, was the 37th​ largest export market for 2017 with exports at £89m (US$126m).

Fairbanks said the challenge in Brazil, for example, was overcoming “hidden barriers”​ that made it frustratingly hard for British exporters to enter the market.

“They have a very protectionist food industry, so export growth will be about getting good food deals in place and market access... There are British food products out there but when you talk to British food companies, they say it's a long process and even getting samples through is tough.”

High tariffs were also a factor to consider, she said, as it meant a higher end cost for consumers in Latin America, bringing down the competitive edge. EU duties on exports of sugar confectionery to Mexico, for example, were currently around 16% and tariffs on breakfast cereals around 10%.

From Asia to Latin America...

Asked if LATAM could ever be as promising as Asia in export terms for UK manufacturers, she said: “The prize for food and drink exports is Asia, and with limited resources [exporters] are seeing growth, but it doesn't mean the growth couldn't be the same in Latin America without effort.”

Manufacturers, she said, just needed tangible evidence that the opportunities were there and achievable.

“Exporters don't turn their backs on markets for any other reason other than when barriers are there. They look for where they can succeed and where products are accepted.

“...We will support any initiatives that government makes that can help exporters to realise opportunity, as they have in Asia where we can see a result.”

Will Mexico be interested?

The US remains Mexico's principal trade partner – bolstered by the NAFTA bilateral trade agreement signed in 1994 – with dairy products the most significant consumer-orientated item imported from the US into Mexico each year.

In 2016, Mexico imported from the US: US$2.5bn of corn; $US1.3bn of soybeans; US$1.2bn of dairy products; US$941m of poultry meat and products; US$421.7m of processed fruit and vegetables; US$291.9m of snack foods; and US$143.4m of wine and beer, according to the US Foreign Agricultural Service's Global Agricultural Trade System (BICO Report).

Fairbanks said traditional UK exports such as biscuits, bakery and snacks, would likely be the best products to export to Mexico, particularly items focused on health and wellbeing and free-from.

The UK International Action Plan report​ suggested premium grocery, traditional grocery and alcoholic beverages as key sectors to focus on when driving up exports to the region.

Fairbanks agreed alcoholic beverages would be a strong focus: “Things like whisky and gin will also be interesting. Gin is growing rapidly – it had phenomenal success last year as an export.”

In 2016, British gin exports pulled in £500m (US$706m) and had risen 32% between 2012 and 2017, according to the Wine and Spirit Trade Association.

According to the Scotch Whisky Association, Scotch Whisky accounts for around 20% of all UK food and drink exports each year and is the world's number one internationally traded spirit drink.

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