UK government targets $500m food and drink Australian trade strategy

Victoria Craw
AUGUST 6, 2017
news.com.au

BLACK pudding, mushy peas and room temperature ale aren’t exactly the gastronomic holy grail.

But Australian shoppers could get used to seeing a whole lot more British food on supermarket shelves under an ambitious $500 million strategy targeting food and drink post-Brexit.

Grocery items are a key part of the UK government’s “export action plan” that and aims to rejuvenate existing trade and open up new avenues between the UK, Australia and New Zealand by 2020.

Australian Food and Grocery Council CEO Tanya Barden said the renewed focus could pave the way for an influx of UK brands and products, and vice versa, as EU tariffs and quotas could be removed from food and drink.

“There has been recent interest from several international supermarket retailers considering entering the Australian food and grocery market due to the relatively high Australian supermarket profit margins by global standards,” she told news.com.au.

“If a free-trade agreement were to lead to investment from UK supermarket retailers, such as Waitrose or Tesco, into the Australian market this increase in competition would be welcomed by Australian manufacturers of food, beverage and grocery products as it would give them an alternate channel to sell their products.”

At present Scotch whisky, gin, crackers, chocolate and cereal are some of the main products in the $560 million worth of items the UK exports to Australia annually. Australia sends mostly wine, meat and vegetables to the UK in what makes for our sixth largest trading partnership for food and drinks.

However those figures have come under scrutiny in the UK hunt for new trade deals, with a newly created Department of International Trade working to promote British products in 18 countries through a specially designed Food Unit.

The latest plan cites “specific opportunities” in “ambient grocery products, health, wellbeing & free-from and alcoholic drinks (beer and cider)” in Australia.

“We will target key retail buyers, in-store promotions and category development. The Australian Prime Minister has also made clear his desire to proceed quickly with a new trade deal for Britain,” it claims.

A Sydney based team is already working with major food importers to promote British tea, coffee, beers and premium spirits. Meanwhile British and Australian leaders have started a scoping study to explore possibility of how a trade deal could be implemented once the UK leaves the EU in March 2019.

European-owned supermarkets Lidl and Aldi have already made a huge impact on the Australian scene, with another juggernaut Kaufland — also owned by Lidl’s parent company — currently hiring architects and planners in Australia.

So will we really be shopping for Ostrich eggs and “essential” brand crème brulee at Waitrose come 2020?

Not quite, said Grocery expert IGD chief economist James Walton. While the UK is keen to cut a deal with Australia, such things are “notoriously difficult and laborious, with food and drink often a real sticking point.”

The EU will be the UK’s “highest priority” given it is the largest trading partner, he explained. Any agreement with Australia has a long way to go and will have to take into account issues that range from animal welfare to labour laws, food standards and farm subsidies.

“A deal such as this is very speculative at this time and would depend a lot on the detail,” he said.

“In the event of a free trade deal being done between the UK and Australia, one that includes food and drink, we would anticipate that the main difference would be a widening of trade in goods, driven by lower prices. Shoppers in both countries would therefore potentially benefit.”

Chin chin to that.