Why the UK can be a market of opportunity for some Australian organic food & beverage exporters (Part-1)

Why the UK can be a market of opportunity for some Australian organic food & beverage exporters (Part-1)

The UK market offers many potential opportunities for Australian organic food and beverage producers to export their products. Currently, there’s a growing trend for consumers who favour organic products. Especially those that also follow sustainable practices in their production. In the UK especially, Australian products are highly favoured as being of high quality. 

Recently, Export Connect hosted a UK Export Market Development masterclass in association with Australian Organic Limited and included interviews with Al Overton from Planet Organic UK and Anastasia Nishnianidze from Austrade UK. 

Following are some insights gathered from Najib’s interviews with Anastasia from Austrade and Al from Planet Organic.

1. The Changing Buyer Base

Covid is changing the world, and it has been particularly disruptive in the UK with three major lockdowns. This has meant that the restaurant trade has been non-existent. In the past, restaurants have been very proud to serve Australian products as part of their menu, but this is not really an option at the moment. This is not anticipated to change for at least another six months or even longer.

However, there is now incredible growth in the retail sector and a lot more demand for products. To this end, retailers have started to expand their private label offerings which has brought about increased competition. Therefore, suppliers need to think about pitching and selling their products to large retailers like Tesco and others with large private label ranges.

2. The Growing Demand For Organic Food

The demand for organic food is growing. This is not unique to the UK, but there has certainly been significant growth in this market. This growth has been driven by customer preferences changes, including the need for healthy diets and sustainability. 

Big chain supermarkets like Sainsbury’s are starting to introduce organic food products onto their shelves. This is a somewhat new trend in the UK, unlike in Australia, where major chains like Woolworths and Coles have had organic food products available for some time now.

Specific product segments include:

  • Fruit and vegetables
  • Canned and packaged organic goods such as beans, rice, grains,
  • Organic meats, poultry and fish
  • Organic beverages                                                                                                                                                                                                        

3. The Rapid Growth Of eCommerce

Because COVID has disrupted the supply chains, many retailers are now using eCommerce channels to supply products to their customers. This has come about because customers want their fresh food delivered to their homes.

Plus, there’s also an increased demand for grocery box deliveries. This is becoming a lot more popular as people are cooking at home rather than going out to eat. It’s anticipated that this trend will continue even after things start to go back to normal.

4. Sustainability

There is now a lot of talk about clean energy and reducing carbon emissions, and consumers are becoming increasingly conscious. They’re starting to ask questions about the supply chains and the origins of products.

In fact, one major chain grocer has announced that by 2030 they will source from net zero-carbon sources for fruit, vegetables and meats. This is important for suppliers to consider how they pitch and position their products to be conscious of climate change.

What Are The Opportunities For Australian Exporters To The UK?

Australian products are highly regarded in the UK market. They are generally perceived as being good quality products. 

On a side note, Anastasia debunked the myth that Australian products would have an advantage over EU suppliers because of proposed tariffs being imposed on EU products. However, these tariffs have not been imposed. Therefore, EU products are still in competition with Australian ones. 

However, there’s still a lot more room for new products to be introduced into the market due to customer demand. Another opportunity to keep an eye on is the Free Trade Agreement negotiations. These generally deliver lower tariffs that result in lower costs of doing business between the two countries. 

Given the strong relationship between Australia and the UK, there’s a really good chance of delivering some good outcomes from these negotiations. Currently, the negotiations are moving along well, and there’s a hope that these may conclude near the end of the year. 

What Are The Challenges For Australian Producers To Get Into The UK Market?

Anastasia identified four major challenges for Australian producers who want to export to the UK market.

1. Tariffs

There are some tariffs and regulatory barriers that Austrade is working through. Lowering the tariffs would certainly help Australian producers improve their profit and view the UK as a viable market.

Customs and regulatory problems arise from time to time, and Austrade helps resolve these issues as they come up. The Department of Agriculture plays a big role with customs and regulations, and Austrade works closely with them.

2. Pricing

Quality products do come at a higher price, and if tariffs are added as an additional cost, this increases the final price to the consumer. Therefore, it’s essential that Australian producers are offering their products at a competitive price.

3. Competition From The EU

The third challenge is competition from the EU who also provide comparative quality products. Therefore, it’s important for Australian producers to look at the competition and decide how to best promote and market their products within the UK market. 

There are a lot of opportunities in niche areas. Australia is well known for its quality meat and fresh produce.  However, there is competition from France and Spain that they need to be aware of. 

4. Sustainability

Producers need to concentrate on positive stories about how they’re focusing on helping the environment. Especially stories about zero carbon emissions and lowering their carbon footprint.

What Advice Would Anastasia Give To Australian Producers?

Here are Anastasia top tips to Australian producers who are keen to export to the UK:

  1. Be ready to explore the market.
  2. Have a good, clear proposition 
  3. Be ready to commit for the long term
  4. Be prepared to invest time and effort into establishing and developing relationships.
  5. Learn how to tell ‘Your Story.’ 
  6. Keep in mind that you have to be price competitive

This is the end of the first part of a two-part insights series. We hope you’ve found these insights on the UK market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.