Perseverance and patience

Food and Beverage exports in Europe

Food & Beverage (F&B) executives globally are eager to expand through exports. In Europe, the EU28 became the world’s top exporter of agricultural and food products in 2013, outperforming the US, Brazil, and China. New technologies are helping extend shelf life and reduce perishability, thus boosting profits. This is important considering 40% of the US food supply is wasted, worth about $165 billion. However, F&B executives must navigate challenges like shifting regulations and new labeling standards when considering export opportunities.

F&B executives' desire to expand aligns with growing demand for exports worldwide. In China and India, rising personal incomes and demand for Western goods, like UHT milk, are increasing. For example, UHT milk consumption in China rose from 18 million pounds in 2010 to 331 million in 2013. African countries are also boosting dairy demand. With advances in shelf-life technology, these markets are becoming more accessible to dairy exporters. In Europe, particularly Ireland, the removal of old quota restrictions offers new growth and profit opportunities for companies looking to expand.

The Transatlantic Trade and Investment Partnership (TTIP) is also generating export enthusiasm. Currently under negotiation between the US and EU, the TTIP has the potential to be the largest free-trade deal ever. It promises to boost export markets on both sides of the Atlantic, and could include harmonisation of food standards. The US market has just opened to Irish beef, and there are further opportunities on both sides, such as  American chickens in French markets.

As always, large companies with well-established relationships, infrastructure and export experience will be in a strong position to take advantage of a liberalised export climate. Yet the unique nature of F&B, driven by fast-moving trends, offers opportunities for firms of every size. Small and midsized F&B companies with popular products can ramp-up with outsourced production and quickly have products on tables around the world. These 'mittelstand' firms (the term used in Germany for the companies credited with that country’s economic growth) hold a major advantage over larger competitors: agility.

Savvy F&B executives will balance export enthusiasm with caution. Consumer demand can be unpredictable, and regulatory challenges may arise, making due diligence essential before entering new markets. While the US economy has rebounded, global news is less positive: Europe and Japan remain sluggish, and China’s economy grew at its slowest rate in 24 years (7.4% in 2014). Despite this, there are still opportunities for success, and export-minded executives should consider key questions to maximize their chances of growth.

• have you accurately estimated potential demand for your products?
• have you done a detailed analysis of export costs, including production, logistics, and merchandising?
• do your products meet regulatory standards? This can involve costly changes to product formulas, raw materials, packaging and labeling.  
• can you track and monitor your product's quality and safety, from growers and producers to customers around the world?

Careful F&B executives are reviewing their export plans with knowledgeable advisors and revising as necessary before expanding overseas. Equally importantly, they are partnering with people on the ground in these new markets who have the technical processes and expertise to help them succeed.

To learn more about how Grant Thornton how can help you achieve your international ambitions, download Expanding horizons today.

Ciara Jackson is national leader of food and beverage at Grant Thornton Ireland