Nicola Thomas reports back from a recent roundtable, where UK food and drink brands shared candid insights on international growth challenges – from exclusivity pitfalls to post-Brexit friction
What’s on the minds of the UK’s food and drink export leaders?
That’s what Adam Hardie – Head of Food and Drink at Johnston Carmichael – and I set out to discover at a recent dinner-debate we hosted for senior international executives from companies including Walker’s Shortbread, Whittard of Chelsea, Tayto, AG Barr, Taylors of Harrogate, Ramsden International and The Welsh Whisky Company.
The idea sprang from the work Adam and I both do supporting FDEA members and private clients to develop overseas expansion strategies and plans. A good number of the organisations we help are typically turning over £10m-plus in international sales, and sit between the more reactive export newbies and large multinational operators. They are quite strategic, tend to have some dedicated export resource, processes and structure in place. We noticed that they face some rather unique overseas expansion challenges, particularly around scaling up, long-term planning and sustainable business growth. Our aim, therefore, was to bring these players together in an informal setting to explore some of these common themes in more depth.
Below, we take a look at some of the main challenges which emerged at the event, and offer up some thoughts on how to potentially counter them:
Exclusivity
We kicked off the session with a candid overview of Waitrose’s international sales operation, thanks to Barry Delehanty, Director of Commercial Sales & Convenience who leads the retailer’s Export drive.
He explained how they offer a one-stop shop to selected overseas retailers, enhanced by deep category and product expertise. Barry highlighted the importance of building long-term relationships, which triggered some debate around the pros and cons of giving exclusivity to in-market distributors: some felt that granting exclusivity for a market or sales channel could be transformational in terms of a supply relationship becoming a partnership, with distributors getting right behind brands and upping their performance. Others were wary of offering solus distribution, especially initially when the company and its capabilities are an unknown quantity. This can be mitigated by upfront due diligence, checking their track record with other brands in their portfolio and developing joint sales plans. Within your distribution agreement you can give exclusivity for a defined period with built-in sales targets and reporting mechanisms. If these targets aren’t met, it’s not necessarily a cue to drop them, but it does leave the door open if you want to look elsewhere.
Market management
Linked to performance is the problem presented by being in too many markets and having a long ‘tail’ of small, often high cost-to-serve distributors who have little chance of being able to scale. Having the courage to turn them off was echoed by several brands in the room. Sometimes you find that these partners are underperforming as they have been rather neglected at your end – maybe your focus is on shipping orders but not building sales and your relationship with them is pretty hands off which usually comes down to resources. If this is the case, you may be able to turn them around by putting them on probation and giving them some TLC. Another solution could be to outsource management of those accounts to a UK-based export wholesaler who may well be servicing the market anyway and they simply become an extension of your domestic business. The financial and human resource this frees up can be reinvested in penetrating further into your priority territories.
On the flip side, a couple of brands were conscious of relying too heavily on a small number of countries, with over 50 percent of sales coming from a sole territory or region not uncommon. Unsurprisingly, targeting growth in new markets is high on these company’s agendas as they recognise that political change, a dive in consumer spending or a slow-down in category growth will leave them very exposed. We always recommend developing a diversified portfolio of markets to improve risk-mitigation, especially in the long-term as the losses caused by a crisis in one country or region may be balanced out by your presence in others.
Internal barriers
One of the biggest challenges felt by the group is around the fact that export is almost always the poor relation to the domestic sales drive within an organisation. Many brands come up against the ‘international sales prevention team’, ie Finance, Marketing, Ops for whom anything other than volume lines for UK retailers is seen as a spanner in the works. We heard a couple of horror stories where the main business had delisted export best-selling export SKUs in range reviews, reformulated products or revamped packaging without consultation. This disconnect can arise because the export rationale and ambition have not been communicated to the business by the Board so colleagues don’t fully understand why they may be asked for limited runs of products with bespoke labelling, or budget for a trade show. Export is not just a department – it should be a company-wide initiative, ideally with involvement and input from all departments from the outset. Rightly or wrongly, the onus is also on the Export team to keep international front of mind within the organisation. Again, communication is key – maybe shine a spotlight on a different overseas market at each Board meeting, invite major distributors to your factory to meet the team and/take your Marketing or Finance Director on market visits to see export sales in action and build peer-to-peer relationships.
Ongoing EU supply woes
Finally, it will come as no surprise that trading with the EU can still be problematic – outwardly simple things like sending samples to potential customers being one of the persistent pain points, with people resorting to sticking staff on planes with suitcases full of product to ensure they arrive for key retailer meetings.
This issue was also highlighted in the findings of our recent FDEA member and EU distributor survey where we gauged the temperature five years on from Brexit – what’s working, what’s not and what’s next? The main challenges on both sides of the Channel remain Red Tape (customs, VAT, paperwork), followed closely by logistics and supply chain hurdles including border delays, groupage…and samples.
Whilst the recent SPS agreement offers hope that this complexity will ease and associated costs will come down, no one is holding their breath until further details and timelines are revealed. In the meantime, our FDEA logistics and compliance experts advise ensuring you fully understand the requirements of each country – which is easier to do in 2025 than it was in 2020 – and prepare well ahead of time to avoid unnecessary delays.
So, plenty of common challenges came out around the table which hopefully was heartening for those who took part. We look forward to exploring them in more detail at a future session – if you are turning over circa £10m+ in export sales and would like an invite to our next international leaders event, please DM me at nicola@ukfdea.com
Nicola Thomas is a Director at the UK Food and Drink Exporters Association
Nicola has more than 25 years’ experience helping ambitious F&B companies accelerate sales in overseas markets. She works alongside boards and management teams to break through the ‘pain points’ associated with exporting and achieve sustainable and profitable global growth.
