UK exports gain footholds in new markets

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The UK's food and drink exporters are gaining footholds in emerging
markets, while sales of meat and dairy exports are beginning to
pick up, according to market consultancy, Food from Britain (FBB).

The UK's food and drink exporters should be cautiously optimistic this year despite the downturn in 2004, the market consultancy stated in releasing export figures for last year.

Last year the UK's overseas sales of food and drink fell 1.8 per cent to £9.7bn, but increases in meat exports and entry into emerging markets are a sign business is beginning to pick up, the FFBstated.

The decline was mainly due to a fall off in the drinks sector.

The FFB said the strong upturn noted at the end of last year is so far continuing in 2005.

The FFB, a body funded by industry and government, forecasts UK exporters will break the £10bnbarrier this year for the first time in a decade.

The forecast is backed by the on-going recovery of meat and dairy exports, which took off in 2004.

Increased exports to emerging markets such as Dubai, China, Hong Kong, Singapore, Poland andRussia also bodes well for the medium to long-term health of the industry, the FFB stated.

Such diversification could reduces the UK's reliance on the more traditional and established EU and worldwide markets that may be experiencing economic difficulties or declines in their currenciesversus the pound.

Such exchange rate declines raises the cost of UK exports for overseas companies.

The UK's exports were also held up by a nine percent increase in meat sales, which accounted for £670m of food exports in 2004.

Poultry sales rose by 13 per cent while pork sales increased by 42per cent.

Beef sales rose 1.5 per cent to £20m, an encouraging sign given the UK's problems with bovine spongiform encephalopathy (BSE) in cattle.

Before the UK's problems with BSE in 1986, beef exportswere worth about £1bn.

David McNair, the FFB's chief executive, said the UK still has a lot of work to do in rebuilding lost markets and confidence in UK meat and especially beef.

"However, meat exports over the last four years have risen by 62 per cent as the doors start to reopen in markets, the most recent being the welcome return of beef to menus inBelgium," he stated.

"Despite the well publicised troubles, the British meat industry still has a good reputation for premium products in key markets.

Exporters are having to fighthard to regain those lost listings, but progress is being made and this will develop pace in the medium term."

In the dairy sector, which again experienced import restrictions over the last three years due to an outbreak of foot and mouth disease, another strong performer in 2004.

Dairy exports rose six per cent, with cheese accounting for a large proportion of the gain.

Cheese exports rose by 13 per cent in 2004.

The overall drinks export market dropped five per cent during the year.

However, within the category exports of beer grew by 40 per cent to £312m. Beer exports gained in markets such as the US andFrance.

Beer exports to the US rose by 43 per cent and to France by 86 per cent.

Overall, food and drink exports to other EU countries remained stable while exports to non-EU markets fell.

Exports to the EU rose one per cent to £6.3bn.

Ireland and France are the UK's top markets for food and drink exports.

Exports to Ireland rose by eight per cent and to France by four per cent.

However exports to Germany declined by 10 per cent, mainly due to a fall in spirits exports.

Exports to the Netherlands plunged by 21 per cent, mainly due to a decline in dairy commodities.

Inaddition retailer price wars are having a negative impact on branded exports in those countries, the FFB. Exports to non-EU markets fell by six per cent, driven by losses in North America and the Asia Oceania region.

The strong growth in emerging markets provides a glimmer of hope to exporters, the FFBstated.

Exports to Dubai rose 25 per cent in 2004, and is one of the top consumers per head of British food and drink, behind Ireland and Malta.

The rise is being driven by increased tourism and expatriate workers in the country.

Other emerging markets include China, which increased its imports from the UK by 46 per cent n 2004 to £59m.

Exports to Russia rose by eight per cent to £121m and to Singapore by 20 per cent to £73m. Exports to Poland rose by eight per cent to £41m, to Cyprus by 10 per cent (£32 million) and to Latvia by59 per cent (£10 million).

McNair said the FFB believes UK companies cannot afford to remain solely as domestic providers.

"There are now more opportunities than ever for UK food and drink manufacturers across the world.

Retailers, such as Tesco, Carrefour and Walmart are increasingly offering a globalproposition, existing markets continue to grow, while new markets are opening up all of the time," McNair stated.

UK Top Ten Food and Drink Export Markets 2004 Market Value (£m) Percentage +/- Ireland 1,701.3 8% France 1,213.7 4% US

867.7 -4% Spain 852.1 0% Germany 551.0 -10% Netherlands 427.6 -21% Italy 374.4 -5% Belgium 322.1 0% Greece 169.8

-11% Japan 161.7 -8%

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