What US Exporters Need To Know About The UK Market

The U.S‭. ‬has a long history of supplying a range of fruit products to the U.K‭. ‬market‭, ‬especially for items such as apples‭, ‬pears‭, ‬grapes‭, ‬soft fruit and berries‭. ‬While for some time the U.S‭. ‬produce industry has been looking at other growth markets in emerging countries‭ (‬in the likes of India‭, ‬China and parts of Latin America to add to the overall export portfolio‭), ‬it is worth noting what is happening in the U.K‭. ‬This is may be an indicator as to what might happen in other markets around the world too‭.‬

The structure of the U.K‭. ‬fruit supply chain has altered significantly during the past few years‭, ‬with increasing consolidation‭.‬‭ ‬The key points to note are as follows‭:‬

The sale of fruit in the U.K‭. ‬is still dominated by the‭ ‬“Big Four”‭ ‬retailers‭ (‬Tesco‭, ‬Asda‭, ‬Sainsbury’s and Morrisons‭). ‬But widespread change is taking place with the growth of the German-based discount chains‭ (‬Aldi and Lidl‭), ‬online shopping‭, ‬and developments in the foodservice sector‭, ‬which all put pressure on the leading established supermarkets‭.‬

Major U.K‭. ‬retailers are now investing more in direct-supply relationships to ensure the integrity of the supply chain‭. ‬This maneuver is seen as critical to ensure‭, ‬and while different retailers all have their own business models to achieve this‭, ‬the basic‭ ‬aim is the same‭ ‬‮—‬‭ ‬more efficient supply chains‭, ‬removing costs and getting closer to the grower base‭.‬

A relatively small number of highly influential importers and distributors is responsible for supplying the leading retailers‭. ‬They are often specialists on certain products and geographical sourcing areas‭. ‬They normally supply only two to three key retail‭ ‬customers‭. ‬U.S‭. (‬and other‭) ‬growers and exporters need to develop close working relationships with these key businesses to be successful in the UK‭.‬

The U.S‭. ‬is still a highly regarded fresh produce supplier to the U.K‭. ‬and has largely overcome some technical concerns amongst‭ ‬some importers in the past‭ (‬e.g‭. ‬water usage and labour issues‭). ‬There is increasing attention to factors‭, ‬such as Corporate Social Responsibility‭ (‬CSR‭) ‬and the protection of the environment‭, ‬but the U.S‭. ‬should now see these as an opportunity area rather‭ ‬than a threat‭.‬

Even if U.S‭. businesses are not marketing fruit‭ direct to the U.K‭., ‬it is well worth keeping a close watch on key structural changes‭.

It is clear that the U.S‭. ‬has also developed other international markets in the past few years‭. ‬One of the concerns of the U.K‭. ‬trade is that U.S‭. ‬growers and exporters pay more attention to markets in the likes of Southeast Asia and China than the U.K‭. ‬This is understandable from both sides and is just as much about perception as reality‭. ‬The U.S‭. ‬could still strengthen its promotional position in the U.K‭. ‬over the next few years by participating in major trade shows and other trade-based events‭. ‬As good examples‭, ‬Chile and South Africa both continued to invest significant sums of money in this sort of activity and were funded by a‭ ‬combination of government‭, ‬growers/exporters and trade associations‭.‬

U.K‭. ‬retailers are renowned for having some of the highest quality standards and technical specifications in the world‭. ‬However‭,‬‭ ‬the long-term impact of the economic downturn has seen growth of the discount sector and caused retailers to be far more cost-conscious than in the past‭. ‬High-quality standards and systems of full traceability are key factors for all suppliers to be successful in the U.K‭., ‬to ensure they meet the requirements of U.K‭./‬EU food standards as well as specific additional retailer requirements‭.‬

There is extensive U.K‭. ‬and EU legislation‭, ‬and further commercial requirements‭, ‬in areas such as pesticide usage‭, ‬traceability‭ ‬of produce etc‭., ‬but these should not act as disincentive to serious U.S‭. ‬growers/exporters‭. ‬Accreditations such as the British‭ ‬Retail Consortium‭ (‬BRC‭) ‬and GLOBAGAP are seen as minimum standards to achieve‭.‬

The traditional system of wholesale markets has been under pressure for a long period of time‭, ‬but has been rejuvenated by the growth of the foodservice and catering sectors‭. ‬The leading foodservice businesses in the U.K‭. ‬now operate to the same technical‭ ‬and commercial standards as the leading retailers‭. ‬The catering sector is still quite fragmented when compared to the retail sector‭, ‬but is also beginning to consolidate‭.‬

The U.S‭. ‬sector should look at what is happening in the U.K‭. ‬as an indication of what might happen in the future in other international markets‭. ‬While most U.K‭. ‬retailers have a fairly modest international footprint compared to some of the U.S‭. ‬and other EU retail chains‭, ‬their influence on how supply chains develop around the world is strong‭.

Conversely‭, ‬the U.K‭. ‬remains a key import market for many suppliers‭. ‬The U.K‭. ‬is roughly a 3‭ ‬million tonne import market for all‭ ‬fruit‭. ‬Key suppliers include the likes of Spain‭, ‬the Netherlands‭, ‬South Africa‭, ‬Chile‭, ‬Central Americans and increasingly new suppliers‭, ‬such as Peru‭. ‬Many exporters in these countries use the fact that they supply the U.K‭., ‬with its exacting technical and commercial standards‭, ‬as an indicator as to the strength of their offer and ability to do business in one of the most demanding markets in the world‭.‬

Even if U.S‭. ‬businesses are not marketing fruit direct to the U.K‭., ‬it is well worth keeping a close watch on key structural changes‭. ‬They act as an indicator as to what might happen elsewhere at some stage in the future‭.‬

John Giles is a Divisional Director with Promar International, a leading agricultural and horticultural value chain consulting company and a subsidiary of Genus plc. He has been involved in a wide range of produce related assignments in the UK, the rest of the EU, Latin America, SE Asia and China.