Scottish Food & Drink Industry To Target Emerging Markets for Export Success

Scottish food and drink exports in 2012 reached £5.31 bn – the second highest on record – according to new figures released today by Scottish Development International (SDI).

The figures also show that the top three destinations for Scottish food and drink exports changed during the last year, with the US overtaking France as Scotland’s top export market during 2012. The official 2012 overseas food and drink export figures show that exports to the US grew by 12.5% to £817m during 2012, surpassing exports to France which valued £675m.

The export data also shows Singapore rising up the rankings to occupy the number three spot with exports of £340.5m – the first time an Asian country has occupied a top three spot. This rise is largely due to burgeoning whisky exports to the country, which at £339m, account for the vast majority of total food and drink exports to Singapore.

The total value of Scottish food and drink exports during 2012 was £5.31bn, which represents a 1.4% drop on the 2011 figures, but an increase of 18% on 2010 exports. Food only exports during 2012 were £1.04bn, while the drinks (Scotch whisky) category was worth £4.27bn.

The slight decrease in exports last year is due in part to a drop off in demand from some European countries, as the Eurozone crisis affected consumer spending, particularly across the Southern European countries of Spain, Portugal, Greece and Italy.

However, exports to other parts of Europe increased over the same period, with growth in Germany (up 16%) and parts of Eastern Europe; notably Estonia (up 28%), Latvia (up 49%) and Ukraine (up a massive 273%, albeit from a relatively low base).

Elsewhere, one of the most positive developments was a growth in exports to emerging markets across Sub-Saharan Africa (up 9.9% to £246m), Latin America & the Caribbean (up 3.5% to £511m) and Asia & Oceania (up 2.2% to £1,090m).

These results reflect the need for the industry to broaden food exports into new markets, following the success of the whisky model, and Scottish Development International is already working with industry leadership group Scotland Food and Drink and the Scottish Government to develop a new export strategy to target new and emerging markets.

Commenting on the figures, Anne MacColl, chief executive of Scottish Development International, said: “We’ve enjoyed tremendous growth in food and drink exports from Scotland in recent years; working in collaboration with our partners. The intelligence coming from our overseas field teams tells us that the international appetite for Scottish produce remains very strong and we are continuing to see demand from international suppliers. Just last month we hosted a delegation of Spanish seafood buyers all looking to increase their stock of Scottish produce.

“Nonetheless, we can’t ignore some of the ongoing global economic issues which have impacted on exports this year, and we are continuing to support companies to identify where the big market opportunities will be in future years.

“To this end, we are in the process of expanding our presence in regions such as Asia, Africa and the Middle East. This will allow us to be even more proactive in responding to new international opportunities; particularly in emerging markets where having local staff with in–market expertise is vital to secure new business for Scotland.”

James Withers, chief executive of Scotland Food & Drink said: "Last year we celebrated food and drink exports passing the £5bn mark, achieving the industry's growth target six years early. This year, we hope that our combined domestic and overseas sales will reach £12.5bn, the target we had set for 2017. This industry remains Scotland's best-performing sector.

"However, latest figures highlight a key area of focus for us. Whisky exports have held up in tough economic times, with growth in Asia and other emerging markets making up for the drop in trade with Europe. The food industry needs to follow that model. Over 70% of our food exports go to the European Union, so we are focused on developing new customers in high growth markets with dedicated resource and increased activity. These markets are looking for premium quality food, with a strong provenance story, so our potential for growth is huge."

Scotland’s Cabinet Secretary for Rural Affairs Richard Lochhead said: “Scotland produces a spectacular array of high quality premium products which continue to be in demand across the globe. Last year when I led a trade mission to Japan and China – which are two key growth markets – it was clear throughout the trip that the provenance of our food and drink, as well as its heritage and uniqueness, is hugely valued by retailers, chefs and consumers.

“The food and drink industry continues to make a huge contribution to our economy and we have set a new target which aims to grow the value of food and drink sent abroad to £7.1bn in just five years. When some markets closer to home are facing tough economic times, I'm confident the sector will rise to the challenge by targeting export growth in emerging markets such as the middle and far east, as well as the key US market.”

Some Scottish company successes from recent SDI trade missions include the Scottish Deli tripling its orders of lobster to Japan, and Gourmet’s Choice identifying an opportunity to supply Scottish salmon into Ghana.

SDI has also been working with premium international supermarket chains in emerging markets broker Scottish food and drink promotions. Two such promotions were held in the Ole supermarket chain in China and the upmarket Alosra chain in the Middle East with the aim of taking advantage of strong local appetite for Scottish produce. Both of these promotions have been hailed as a success by the supermarkets and SDI field teams are now in discussions re similar promotions with other supermarkets.