Exporter Guide

FOOD & BEVERAGE IN THE UNITED KINGDOM

Market Profile May 2011

This document is one of a series of free information tools for exporters produced by New Zealand Trade and Enterprise. New Zealand Trade and Enterprise provides a wide range of standard services and sophisticated solutions that assist businesses through every stage of the export process. For information or advice, phone New Zealand Trade and Enterprise on 0800 555 888, visit www.nzte.govt.nz, or contact your New Zealand Trade and Enterprise client manager.

CONTENTS
1 MARKET STRUCTURE 1.1 Market Overview 1.2 1.3 1.4 1.5 1.6 2 Market Drivers Import Trends Key Players in the Market Regulatory Sustainability 3 3 4 5 8 10 12 12 14 14 15 15 16 17

MARKET ENTRY AND DEVELOPMENT 2.1 Market Entry Strategies 2.2 2.3 2.4 2.5 Points of Differentiation Long Term Strategic Issues for Exporters to Consider Distribution Channels Pricing

MARKET RESOURCES AND CONTACTS

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Exporter Guide | UNITED KINGDOM | Food & Beverage| May 2011

1 MARKET STRUCTURE
All figures are in $US unless otherwise specified

1.1 Market Overview

According to the Economist Intelligence Unit, the United Kingdom has a substantial demand for imported food and beverage products. It is estimated that about 20 percent of the United Kingdom's agricultural imports consist of unprocessed products. Consumerready products account for around 50 percent of agricultural imports, one-third of which are not produced in the United Kingdom. Of the remaining 30 percent of agricultural imports (highly processed products), around one-half are not native to the United Kingdom.i The United Kingdom food and beverage market is mature and intensely competitive, with large multi-national food and beverage companies dominating the market. New Zealand companies will need to carefully consider ways to make their product attractive. Innovative, niche and specialist New Zealand products with a unique selling point have the best prospect of doing well in this market. New Zealand companies also need to consider that products from the European Union have the advantage logistically and benefit from preferential trading agreements. Food Retailii The United Kingdom food retail industry had total revenue of $186.1 billion in 2009, representing a compound annual growth rate (CAGR) of 4.2 percent for the period spanning 2005-2009. The performance of the industry is forecast to slow somewhat, with an anticipated CAGR of 3.4 percent for the five year period 2009-2014, which is expected to drive the industry to a value of $219.4 billion by the end of 2014. Foodserviceiii The United Kingdom foodservice market had total revenue of $28 billion in 2009, representing a CAGR of 3.3 percent for the period spanning 2005-2009. The performance of the market is forecast to accelerate, with an anticipated CAGR of 3.4 percent for the five year period 2009-2014, which is expected to drive the market to a value of $33 billion by the end of 2014. Caf and restaurant sales proved the most lucrative for the United Kingdom foodservice market in 2009, with total revenues of $13.6 billion, equivalent to 48.9 percent of the market's overall value. In comparison, sales of fast food generated revenues of $7.8 billion in 2009, equating to 27.9 percent of the market's aggregate revenues.

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Food Processing The United Kingdoms agricultural sector accounts for less than 1% of GDP. More than two-thirds of agricultural output is bought by the United Kingdom's food and drinks industry, which is the third largest in the European Union after France and Germany. The largest sub-sector is the meat-processing industry, which accounts for just over 20 percent of the total food industry in value terms. Other important sectors are dairy, fruit and vegetable processing, and the cereal and grain-milling industry.iv Beverages Non-alcoholic It is predicted that demand will continue to show a swing from carbonates to stills (fruit/vegetable juices, smoothies, bottled water), as consumers recognise the value in healthy alternatives. As a result, carbonates are switching their focus increasingly to diet, sugar-free and holistic substitutes.v Despite rapid growth in the last decade bottled water has suffered from an increasingly bad image in recent years owing to environmental concerns over the processing and packaging of bottled water. Consumers also have concern over value for money as claims that bottled water is no better for you than tap water have increased. The outlook for this product is uncertain. Alcoholic According the Economist Intelligence Unit, the alcoholic drinks market has seen a steady fall in volume and value sales in recent years. Growth in the wine, spirits, and cider/perry sectors has not been enough to counter the ongoing decline in demand for beer (still the largest sector in the UK market). Sales of lighter imported beers and niche beers from microbreweries are expected to hold up better than those of heavier domestic ales.vi For information on the wine market in the United Kingdom, see the NZTE publication Wine in the United Kingdom.

1.2 Market Drivers

Private Label The United Kingdom has one of the most advanced private label markets in the world (valued at around $100 billion). The United Kingdom's major supermarket chains dominate the private label market and on average 40-50 percent of products in their stores are private label. Originally, private label goods were a copy of a branded product, but today they are often innovative. They give UK retailers the opportunity to diversify their product ranges and develop new revenue streams.vii International The UK population is increasingly diverse and well-travelled and this has lead to an interest and increased demand for international ethnic food products and beverages. UK consumers are eager to try new products and flavours and this means that there is a growing range of such products available in supermarkets.

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Convenience There has been a long-term rise in the number of women working outside the home, and also single-person households are becoming increasingly common. This has lead to a rising consumer demand for convenience foods, such as ready meals, and on-the-go snacking products. It should also be noted that some 40 percent of all meals are consumed outside the home, and the UK has one of the most sophisticated food-service sectors in the world.viii Food safety / Health consciousness Consumers in the United Kingdom are becoming increasingly concerned with food safety and more health conscious in the decisions that they make around food choice. This means that there is a growing demand for organic, locally grown and ethically produced food. Consumers are also looking for brands with reduced fat, sugar, and salt. A trend noted by the Economist Intelligence Unit is that consumers are becoming more willing to pay a premium for food products that are perceived to be higher quality and healthier. They note that this has prompted many private label brands to compete at the premium level and introduce their own lines of organic and fair trade products in competition with the more established branded products.ix Ethical / Sustainability Consumers in the United Kingdom place a high level of importance on ethical issues and sustainability. Large supermarket chains such as Tesco and Sainburys expect their suppliers to have addressed these issues and have a clear and through sustainability proposition. Sustainability is now a given and products that do not adequately address this will be at a distinct disadvantage in the United Kingdom market. For more information on sustainability in the United Kingdom see section 1.6 of this profile.

1.3 Import Trendsx

The United Kingdom is New Zealands fifth largest export market for food and beverage products. In the year ended December 2010 New Zealand exported over $NZ 1.15 billion worth of food and beverage products to the United Kingdom. This was a decrease of 13.6 percent from the previous year, though it should be noted that much of this overall decrease reflects the drop in exports of sheepmeat. However, it must be noted that New Zealands exports to the United Kingdom, for most key food and beverage products, have decreased over the past 12 months. It can be seen that New Zealand faces stiff competition for market share from the European Union and Australia.

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New Zealands Top Ten Food & Beverage Exports to the United Kingdom ($NZ millions)
% Change 10/09 -16.2 Competition (% share of UKs imports in 2009) NZ (78%), Australia (11%), Ireland (4%) France (34%), Italy (14%), Australia (14%), Spain (8%), Chile (7%), South Africa (5%), NZ (4%) France (26%), South Africa (22%), NZ (12%), Chile (7%), USA (6%) Ireland (27%), France (21%), Italy (11%), Germany (10%), Netherlands (7%), Belgium (7%), (NZ 2%) NZ (18%), China (15%), Germany (11%), Mexico (10%) NZ (27%), Denmark (19%), Netherlands (15%), Ireland (13%), Australia (12%) Netherlands (35%), Spain (21%), NZ (9%), Poland (8%), Mexico (7%), Egypt (6%) Ireland (38%), Uruguay (21%), Germany (8%), Netherlands (8%), NZ (7%) Ireland (71%), Netherlands (8%), Australia (4%), (NZ less than 1%) Germany (21%), France (17%), Ireland (14%), Belgium (14%), (NZ less than 1%)

Product Sheepmeat

2008 634.4

2009 723.4

2010 606.6

Wine

249.3

285.1

300.6

5.4

Apples

57.3

58.6

40.3

-31.2

Cheese

55.4

58.2

37.6

-35.3

Honey, Natural Edible Offal

29.1 20.9

30.8 29.0

31.7 27.0

3.0 -6.9

Onions, Shallots, Garlic

27.2

20.2

18.7

-7.8

Beef (Frozen)

25.8

27.0

17.6

-34.7

Beef ( Fresh or Chilled)

12.8

10.8

10.3

-4.5

Bread, Pastry, etc.

11.6

11.1

9.7

-12.3

Source of data: Statistics NZ, via The World Trade Atlas

Kiwifruit and butter are also large export earners for New Zealand in the United Kingdom market. Butter enters the United Kingdom via Belgium and Denmark. Because the Continental preference is not for Anchor style butter the majority of New Zealand butter imports to the European Union are destined for the United Kingdom. In 2010 the United Kingdom imported approximately $US 52.7 billion of food and beverage products.

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The United Kingdoms Top Ten Supplying Markets for Food and Beverage Imports (2010) $US Billions

Source: International Trade Centre, Trade Map

NB: New Zealand ranked 13th and supplied approximately 2 percent of the United Kingdoms food and beverage imports.

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1.4 Key Players in the Market

United Kingdom Retail Grocery Market Share 2010
Tesco Asda Sainsburys Morrisons Co-operative Waitrose Aldi Lidl Iceland Netto Other Multiples Independents 2008 30.7% 16.8% 15.8% 11.4% 5.2% 3.8% 2.9% 2.3% 1.80% 0.70% 2009 30.6% 17.1% 16.1% 11.8% 5.4% 3.9% 3.0% 2.3% 1.80% 0.70% 2010 30.6% 16.9% 16.3% 11.9% 6.4% 4.2% 3.0% 2.4% 1.80% 0.70%

2.50%

2.30%

2.20%

Source: IGD Retail Analytics, United Kingdom Country Presentation, March 2011

The Big 5xi The United Kingdoms grocery retail market is dominated by the big five supermarkets. Together they control over 80 percent of the market share. They are: Tesco (market share 30.6 percent), Asda (market share 16.9 percent), Sainsburys (market share 16.3 percent), Morrisons (market share 11.9 percent), and Co-operative (market share 6.4 percent). Tesco targets the middle market, offering both economy and premium products. Asda and The Co-operative pitch themselves slightly below Tesco and Sainsburys slightly above. Discountersxii Discounters are price-focused and usually offer a more limited range of products than supermarkets. They also tend to carry a larger percentage of private label products. It is estimated that discounters account for approximately 4 percent of the total United Kingdom grocery retail market. Examples are: Lidl (580 stores), Aldi (485 stores), Netto (197 stores), Iceland, Budgens The convenience sectorxiii The United Kingdom convenience store market is highly fragmented, with a large number of operators. According to the International Grocery Distributors (IGD) the convenience sector has a 21 percent share of the United Kingdom grocery market. Store operators may be divided into several types. Multiples (stores with 10+ company owned stores, non-affiliated) These stores account for approximately 13 percent of the convenience sector.

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Co-operatives (co-operative society convenience stores) UK food co-operatives are moving away from their traditional supermarket-type operations and towards convenience retailing. The largest co-op is The Cooperative Group (1703 stores), followed by Mid Counties (152 stores) and Southern Cooperative (95 stores). Petrol Stations / Forecourt This format accounts for approximately 15 percent of the convenience sector in the United Kingdom. United Kingdom supermarkets are key players in this sector along with the main petrol companies. Major players: Esso (592 stores), Shell (582 stores), Total (505 stores), Tesco (450 stores), BP (351 stores), Morrisons (292), Sainsburys (254 stores), The Cooperative (208 stores), Asda (179 stores), Murco (172 stores), Waitrose (14 stores). Convenience outlets at supermarkets Major supermarket chains are moving into the convenience format. For example Tesco has 1162 convenience stores (Tesco Express, Tesco Metro), Sainburys has 342 (Sainburys Local). Other key players are Martin McColl, the Simply Food format of Marks & Spencer, Whistlestop (SSP), and Mills. Symbols groups and franchises (stores affiliating to a symbol group, branded fascia retail club or franchise). This format comprises approximately 37 percent of the convenience sector.Major players in this sector are Spar UK (2,580 stores), Premier/Booker (2,507 stores), Bestway (2,164 stores), Landmark (2,051 stores), Musgrove (1,963 stores), Costcutter (1,580 stores), and Nisa Todays (1,480 stores). Non-affiliated independents (organisations with less than 10 stores, non-affiliated) There are 20,860 unbranded independent grocery retailers in the United Kingdom. Independent store numbers are in decline, down 5 percent on 2009.

Food hallsxiv Food halls are usually situated within large department stores such as Harrods. Most customers are shopping for premium and specialist food and beverage products for gifting or special occasions and these food halls are well-known for this type of product. Key Players: Harrods, Harvey Nichols, Fortnum & Mason, Selfridges, House of Fraser, Whole Foods Market, Partridges, Lewis & Cooper, Holland & Barrett.

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1.5 Regulatory
Information provided in this section is for reference only. When negotiating supply contracts and before beginning actual export, companies are advised to consult closely with their importer or distributor. General Food Law The United Kingdom is a member of the European Union and follows all European Union Directives, regulations and obligations. The two major regulatory authorities are the Department for Environment, Food and Rural Affairs (DEFRA), and the Food Standards Agency (FSA). DEFRA has responsibility for animal and horticultural product import regulations, and agricultural policy. www.defra.gov.uk The FSA has responsibility for food standards, regulations, quality, and health and consumer protection: www.food.govt.uk British Retail Consortium (BRC) Standards The BRC is a trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores. The BRC Global Standards are a suite of four industry-leading Technical Standards that specify requirements to be met by an organisation to enable the production, packaging, storage and distribution of safe food and consumer products. Originally developed in response to the needs of UK members of the British Retail Consortium, the Standards have gained usage world-wide and are specified by growing numbers of retailers and branded manufacturers in the EU, North America and further afield. BRC certification is not mandatory or legally required though certification is a pre-requisite for supplying to most of the major retailers in the United Kingdom. For more information on the standards see the BRC Global standards website: www.brcglobalstandards.com. Labelling requirements The FSA is responsible for the implementation of European Union labelling requirements in the United Kingdom and for any additional national requirements. Advice on food labelling may be found on the FSA's website at: www.food.gov.uk. The Food Labelling Regulations 1996 contain the main set of rules governing the labelling of foods. For a copy of the regulations see: www.england-legislation.hmso.gov.uk. The FSA provides a useful guidance note on the Regulations at www.food.gov.uk. Food labelling is also subject to certain acts and regulations which have wider application, and brief descriptions of these are given in the notes.

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Some types of foods and beverages (such as: bottled water, milk products, meat products, honey) have specific labelling requirements. More information on this can be found on the DEFRA website at this link: ww2.defra.gov.uk Registration All food products of animal origin must come from European Union approved premises. A list of European Union approved premises is available at: ec.europa.eu Licensing Some food and beverage products are subject to import licence restrictions. Information about these licensing requirements is available on the website of the Rural Payments Agency www.rpa.gov.uk (under RPA Schemes > External Trade). Health Claims Regulations The Regulations cover voluntary nutrition and health claims made on foods; labelling, presentation and advertising; trademarks and brand names. In this context, examples of nutrition claims are: low fat, no added sugar, high in fibre. The European Food Safety Authority (EFSA) has the lead role in implementing the legislation and the Food Standards Agency is the UKs relevant competent authority. On the FSA website, you will find links and tables which show the final version of the United Kingdom list of health claims which was submitted to the European Commission on 30 January 2008 - see www.food.gov.uk. Genetically Modified (GM) Foods Genetically modified (GM) foods and other types of novel foods can only be marketed in the European Union if they have passed a rigorous safety assessment. For further information see: food.gov.uk/gmfoods. Novel Foods A novel food is defined as a food or food ingredient that does not have a significant history of consumption within the European Union before 15 May 1997. More information about safety assessments under the Novel Food Regulation (EC) 258/97 can be found this link: food.gov.uk/gmfoods. Organic products The European Commission has recognised that some countries operate production rules and systems of inspection equivalent to that operating within the European Union. New Zealand is one of the European Union recognised third countries. Imports of organic products into the United Kingdom and European Union from these countries are permitted without prior approval from DEFRA provided that: the conditions of their equivalence agreement under Commission Regulation (EEC) No 94/92 are met; and Certificate of Inspection (CoI) is produced for each consignment entering the European Union by one of the approved third country inspection bodies listed in the Annex to Regulation (EEC) 94/92, as amended. The CoI needs to be checked and endorsed by the

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relevant Port Health Authority in the United Kingdom or Customs Official for most other parts of the European Union, and the importer is registered with one of the United Kingdom organic certifying authorities approved by DEFRA, such as the Soil Association More detailed information is available on the DEFRA website: www.defra.gov.uk. Duties and tariffs Value Added Tax (VAT) The standard rate of VAT is 20 percent. However, most food and some drinks which are sold through retail channels are zero-rated, though food service outlets must still charge the standard rate of VAT on everything they serve. Further information about VAT is available on the United Kingdom Governments website: www.direct.gov.uk. Tariffs Tariffs vary depending on the product being imported. For more information on United Kingdom tariffs and a tool that allows you to search for tariff rates by product see the following link at the United Kingdom Business Link website: www.businesslink.gov.uk. Quotas Quotas are applicable for several categories of foods such as beef, sheep meat and dairy products. To establish if a quota applies it is important to check the UK tariff commodity code for the product. See the United Kingdom Customs website customs.hmrc.gov.uk for more detail.

1.6 Sustainability
In the United Kingdom there has been growth in the number of ethical consumers who are increasingly concerned about the environment, food provenance, and wasteful packaging of food and beverage products even during a recession. Food miles and Buy Local movements The Food miles issue is no longer as prominent in the media as it was, with a growing understanding that it is the carbon footprint or sustainability that is key. However, media coverage has raised consumer awareness of the issue and it is easily grasped by consumers so many British companies are pushing the buy local stance. According to research conducted by the International Grocery Distributors (IGD), 38 percent of British shoppers expect to be buying more locally produced foods in the coming year.xv Several United Kingdom supermarkets have made commitments to buy locally. An example of a major retailer addressing the buy local trend is the announcement by supermarket chain Morrisons that it is now sourcing of all of its fresh meat (beef, lamb, pork and poultry) from within the United Kingdom.xvi

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Carbon footprint The concept of the carbon footprint has become increasingly popular over the past year with consumers, and is likely to be one of the key indicators that consumers will use to measure their own contribution to climate change. As a result, a number of companies are taking steps to measure and reduce the carbon footprint of their products. The PAS 2050 specification is now the main reference standard that retailers draw on when determining their own approaches to the carbon footprint, including labelling. Information about PAS 2050 is available at the BSI British Standards website. Food provenance Food provenance is gaining ground as an issue for both consumers and retailers, and particular attention is being paid to animal welfare issues. For example, high-profile campaigns to raise the awareness of standards in the poultry farming industry has seen a number of major United Kingdom supermarkets commit to phasing out battery farmed poultry. The International Grocery Distributors recent research showed that 32 percent of British shoppers claimed to be changing their purchasing behaviour as a result of concern over animal welfare issues.xvii Packaging The United Kingdom has implemented the European Directive on Packaging and Packaging Waste (94/62/EC) through two sets of regulations. Responsibility for these is shared between the Department for Environment, Food & Rural Affairs (DEFRA) and the Department for Business, Enterprise & Regulatory Reform (BERR). BERR leads on European Union single market aspects of the EC Packaging and Packaging Waste Directive, European Union negotiations, and has responsibility over the United Kingdoms domestic Packaging (Essential Requirements) Regulations 2003, as amended. At a local level, enforcement is through Trading Standards Departments of local councils. Further information is available at the BERR website. DEFRA leads on the United Kingdom waste policy and all other aspects of domestic implementation of the Packaging Directive, including the setting of recycling and recovery targets, through the Producer Responsibility Obligation (Packaging Waste) Regulations. Further information is available at the DEFRA website.

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2 MARKET ENTRY AND DEVELOPMENT

2.1 Market Entry Strategies
Access to buyers Access to supermarket buyers can be very difficult. For example Tesco insists on receiving a written proposal before they will consent to any discussion. Some retailers can be more forthcoming but their buyers and technologists can be hard to reach. The process of obtaining a listing In order to maximise the chance of getting a meeting, New Zealand companies should prepare a short presentation highlighting their unique point of difference and why this is relevant to the retailers customers needs. Buyers are interested in price; but also in real product differentiation; marketing or promotion to pull stock though; market or consumer research you have done; how well you understand the consumer; how you will guarantee top quality customer service and your ethical code. The lead time to get a meeting with a buyer can be several weeks or even months. It is more productive to arrange meeting timings before travelling to the United Kingdom, rather than trying to set up high level meetings at short notice. Samples Samples are often difficult to import without an import licence. However they are often crucial to getting a listing. New Zealand companies may need to employ specialist export companies to help them with this vital element. Buyers need demonstrable proof of any claim, especially if they have to convince other people within their own organisation. Need for an importer New direct suppliers are not encouraged by supermarket chains as the cost and inconvenience of adding another supplier to their stock management, food safety and logistical systems is high. They much prefer to simplify and rationalise their supplier base. One route to minimise this potential difficulty is to conform to British Retail Consortium (BRC) standards (see section 1.5 of this profile for more information on BRC standards), so that product safety and quality are assured, and to use an existing supplier to the supermarket as your distributor. Alternatively some companies act as consolidators of products to minimise the number of deliveries to their central warehouses. Importers are key to doing business in the United Kingdom. Food importing is a specialist business, and the importer plays an important role in navigating the hurdles of United Kingdom/European Union food law. The importer is very useful in keeping up to date with United Kingdom and European Union law, especially in specialist areas. It is essential that a New Zealand company has an importer/distributor, at least in the frame if not actually appointed, before making a pitch for a listing. Without this the company may not be considered seriously.

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In-market resource It is not impossible to supply United Kingdom retailers direct. However there are few instances where this is a viable option. A United Kingdom importer or sales agent / broker is often vital to ensure prompt clearance of customs and to meet customer service standards. Most retailers expect to be able to speak to someone in the same time zone. A competent local contact is therefore very important to good customer service. This person must be responsive and have some executive authority.

2.2 Points of Differentiation

The United Kingdom is already well supplied from across the globe; therefore a relevant innovation or a unique selling point (USP) is necessary. Historically being from New Zealand might have been enough of a USP but this is no longer the case. One New Zealand company has been successful because they developed an innovative tasty product with a relevant consumer benefit (of being a traditional pudding but individually sized and microwavable) and they also offered exemplary customer service. One New Zealand wine has succeeded because its innovation was to offer consumers the chance to enjoy carbon neutral Sauvignon Blanc. Residue free apples for example would therefore be a logical proposition for New Zealand fruit growers because it capitalises on a consumer concern about pesticides. Retailers private label is a route that could be worth exploring for New Zealand companies, especially one that cannot afford the cost, duration and risk for branding investment. Retailers can be very loyal to their suppliers if they continue to offer innovation and excellent service. As New Zealand is perceived as logistically difficult they will probably insist on a buffer stock being held in the United Kingdom, especially at launch when demand is unpredictable. This cost will be borne by the supplier. If the own brand route is being considered then ideally an experienced own label manager should be employed as this is likely to save the company a lot of money in negotiations as well as helping customer service.

2.3 Long Term Strategic Issues for Exporters to Consider

The United Kingdom consumer is becoming increasingly ethically driven. Despite the pressures from belt tightening ethics are here to stay; as exemplified by Fair Trade or animal welfare. Sustainability is essential, and increasingly thorough provenance is expected. Supermarkets will not even list products they consider to be unethical and consumers rely upon them to ensure this. A sustainability communication strategy is important, as well as a continuous sustainability improvement process. Exporters cannot afford to sit on their laurels but must be seen to be constantly striving to improve their sustainability. Social media is growing and this enables rapid mass communication and also micro communication. A good tweet could yield substantial dividends but an ethical gaffe could reach millions. For exporters wanting to target the iPhone generation social media is essential. It also promotes direct communication with the consumer, which can yield many

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benefits such as better understanding of consumers needs, the opportunity to take a larger share of the profit chain and at the same time to protect the brands route to market. Exporters must pull their products through, not just push them into distribution. Many retailers have sophisticated algorithms to determine if a product will be retained or delisted. Frequently they track the first 12 weeks of a products sales and if they are inadequate it will be delisted. A marketing and PR campaign may be essential to ensure survival.

2.4 Distribution Channels

Exporters need to decide if they want to supply an ingredient to targeted industrial food processors, an ingredient to food service outlets, a branded finished product or a private label finished product. This will determine the distribution channel. Food service: Brakes, 3663 and DBC are the main distributors to restaurants and pubs, whilst Sodexo dominates the for cost institutional market. Cash & Carries: These provide the opportunity to sell to food service and independents. Bookers and Makro are major players. Premium independents: Hider, Petty Wood, Cotswold Fayre, Blueberry Group and others distributors access farmers markets, garden centres and premium independents for specialist food stuffs. They also distribute to top end retail like Harrods, Fortnum and Mason. Access to the multiples for brands and private label has been covered earlier in section 2.1. Online shopping is growing rapidly even for perishables and produce. This is being spearheaded by the major retail chains but exporters can set up their own operations too.

2.5 Pricing
The pound has weakened against the New Zealand dollar exchange rate and this has put pressure on many exporters margins as retailers have been very reluctant to put prices up and expect exporters to absorb the margin loss. One exporter publicly announced price rises together with expected volume sales reductions, in order to restore its margins. Exporters need to determine what pricing the market will bear, rather than doing a cost price upwards calculation, as, if a market will bear higher prices it is sensible that the exporter should benefit from this. A European pricing approach is becoming increasingly necessary as many retailers are multinational in their scope and they will play different national prices off against each other. Provision in the cost structure must be made to pay for marketing and PR support. Premium independents and food service are less sensitive on pricing, but the volumes are much lower than the retail chains.

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3 MARKET RESOURCES AND CONTACTS

ORGANISATION Department for Environment, Food and Rural Affairs (DEFRA) Food Standards Agency (FSA) HM Revenue and Customs Business Link (International Trade Section) Food and Drink Federation Institute of Grocery Distribution (IGD) British Retail Consortium (BRC) Soil Association The Grocer (trade publication) TRADE EVENTS WEBLINK ww2.defra.gov.uk food.gov.uk www.hmrc.gov.uk www.businesslink.govt.uk www.fdf.org.uk www.igd.com www.brc.org.uk www.soilassociation.org www.thegrocer.co.uk WEBLINK

There are relatively few United Kingdom only food and beverage trade shows. The largest food and beverage trade shows in Europe are Anuga in Cologne and SIAL in Paris. PLMA in Amsterdam is the best show for private label. All these shows have a high United Kingdom attendance, as do Fruit Logistica in Berlin and ISM for confectionery and bakery in Cologne. NZ Winegrowers Annual Trade Tasting Event Food and Drink Expo UK Natural and Organics Product Europe PLMA Annual "World of Private Label" International Trade Show London International Wine Fair Specialty and Fine Food Fair The Restaurant Show World Fruit and Vegetable Expo The International Food and Drink Event OTHER NZTE PUBLICATIONS United Kingdom Country Brief Wine Market in The United Kingdom www.nzwine.com/events/annual-trade-tastinglondon www.foodanddrinkexpo.co.uk www.naturalproducts.co.uk www.plmainternational.com 2011.londonwinefair.com www.specialityandfinefoodfairs.co.uk www.therestaurantshow.co.uk www.wfvexpo.com www.ife.co.uk

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Economist Intelligence Unit, United Kingdom; Consumer Goods and Retail Report, published November 2010 Datamonitor, Food Retail in the United Kingdom, published June 2010 Datamonitor, Foodservice in the United Kingdom, published September 2010 Economist Intelligence Unit, United Kingdom; Consumer Goods and Retail Report, published November 2010 Economist Intelligence Unit, United Kingdom; Consumer Goods and Retail Report, published November 2010 Economist Intelligence Unit, United Kingdom; Consumer Goods and Retail Report, published November 2010 USDA, United Kingdom: Retail Foods, published February 2011 Economist Intelligence Unit, United Kingdom; Consumer Goods and Retail Report, published November 2010 Economist Intelligence Unit, United Kingdom; Consumer Goods and Retail Report, published November 2010 Statistics NZ, via The World Trade Atlas International Grocery Distributors (IGD), United Kingdom Country Presentation, published March 2011 International Grocery Distributors (IDD), United Kingdom Discounters, published March 2011 International Grocery Distributors( IGD), UK Convenience, March 2011 USDA, Key UK Retail Outlet Profiles, February 2011 International Grocery Distributors (IDG), Top Shopper Trends for 2011, published February 2011 Morrisons Press Release, Now all fresh meat at Morrisons is 100% British, Morrisons website, link: http://www.morrisons.co.uk/corporate/press-office/corporate-releases/Now-allfresh-meat-at-Morrisons-is-100-British International Grocery Distributors (IDG), Top Shopper Trends for 2011, published February 2011

ii iii iv

vi

vii viii

ix

x xi

xii xiii xiv xv

xvi

xvii

Disclaimer: This publication is provided to you as a free service and is intended to flag to you market opportunities and possibilities. Use of and reliance on the information/products/technology/concepts discussed in this publication, and the suitability of these for your business is entirely at your own risk. You are advised to carry out your own independent assessment of this opportunity. The information in this publication is general; it was prepared by New Zealand Trade and Enterprise (NZTE) from publicly available and/or subscription database sources. NZTE; its officers, employees and agents accept no liability for any errors or omissions or any opinion/s expressed, and no responsibility is accepted with respect to the standing of any firm/s, company/ies or individual/s mentioned. New Zealand Trade and Enterprise is not responsible for any adverse consequences arising out of such use. You release New Zealand Trade and Enterprise from all claims arising from this publication. New Zealand Trade and Enterprise reserves the right to reuse any general market information contained in its reports.

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Exporter Guide | UNITED KINGDOM | Food & Beverage| May 2011