What’s next for the food and drink industry’s trade after Brexit?
Date: August 14, 2017
Category: Industry news
A recent report, FDF Economic contribution and growth opportunities, published by Grant Thornton and commissioned by FDF, presented a range of evidence around the positive economic contribution the sector has made to the UK. And it also looked at the possible impact of Brexit – and the opportunities that may arise from it.
Trade, both imports and exports, plays a critical role in the success of economic contribution that the sector can make. It is an area that is likely to change significantly over the next decade and as such it is critical that the industry understands its current position and is clear on its priorities for the future.”
Grant Thornton report
After the unexpected results of the EU Referendum back in 2016, it became very unclear for the food and drink industry as to what would happen next in terms of imports and exports.
The growing reliance on imports
The UK as a whole is not self-sufficient. We cannot make all the food we need – so imports fill the gap, providing at least 40% of the food we eat. The report highlighted that during the past decade (1997-2016), the UK has actually increased its dependence on imports. It’s expected that the UK will run a trade deficit in food products; the largest being fruit and vegetables as the UK does not have the climate to ensure plentiful production for a growing population. And the industry also relies heavily on imports to deliver the wide variation of products that consumers now demand – all year round.
But one of the biggest issues with imports is the safety, provenance and origin of all the food we import. Not only is it important for retailers and suppliers to understand where food and drink is coming from, but shoppers often now see it equally as important as price and quality. The industry needs to constantly reassure shoppers that we’re getting healthy nutritional food from a reliable source.
There’s an important role for government and industry to work together to ensure the provenance of products is accurate. And one way of achieving this would be for all companies growing, processing, moving and trading in food to fully adopt the widely used GS1 standards for identification – and also the GS1 traceability standard.
While the need for imports is clear, there is also a massive opportunity for British food and drink producers to increase exports. While it’s still unclear as to what trade will look like with the EU after Brexit, that shouldn’t stop food producers from becoming more active in pursuing opportunities within the EU – and in new export markets. The good news is that from 2010-2015, the industry enjoyed higher growth than any other industry.
GS1 UK recently conducted a cross-border trade report, surveying 1,000 of our members to understand their views on the potential impact of Brexit. 31% of our members saw themselves exporting more to the Anglosphere (US, Canada, Australia, New Zealand) in 5 years’ time, while 46% saw themselves exporting more to the EU.
Wherever we export, the UK has one great advantage – we carry the ‘Made in Britain’ stamp. According to the Grant Thornton report, this is seen as a marque of quality and heritage, which drives the growing awareness of British food and drink – and in fact, all our manufactured goods. From an international perspective, events like the Queen’s Diamond Jubilee and the London Olympics 2012, also demonstrated our modern capabilities.
“Made in Britain represents a hallmark of safety to the international marketplace both in terms of manufacturing processes and end product,” states the report.
And it’s not only those abroad who have taken an interest in the British brand, but UK consumers too. GS1 carried out further research on our ‘Buying British report’ – and 55% of British shoppers said they preferred buying British to support local businesses.
Trading with efficiency
While there will be many more opportunities to export after Brexit, for it to be efficient, there needs to be collaboration within and across the industry to ensure the frictionless movement of goods between markets.
The physical movement of products through the supply chain, from source through to the point of purchase, relies on speed and accuracy. While trade agreements are of course essential for this, there are two key enablers that industry can work on now.
- Product and supply chain data that is 100% accurate, timely and well maintained by the supplier at source
- Electronic messaging, to ensure the rapid exchange of logistics information between partners through the ‘order-to-cash’ process
Although great progress has been made in both these areas, the UK food and drink industry still has a long way to go. We’ve been working with industry to drive greater supply chain efficiency. In the next year, we will be focusing on two programmes that will progress things further.
- Our Digital DNA programme will finally ensure that the retail industry solves the problem of inaccurate and inconsistent product data
- Our Perfect Order programme will see more retailers and their suppliers adopting Electronic Data Interchange (EDI) and GS1 standards, by implementing the use of Advanced Shipping Notices (ASNs) and Electronic Proof of Delivery (EPOD) messages