Brexit: UK drinks firms should explore US and China

14th January, 2020 by Owen Bellwood

UK beverage businesses should focus their efforts on trading with China and the US to avoid the “worst effects of an inevitable no-deal Brexit”, export and marketing firm Absolute Advantage has advised.

China-US-trade-war

UK businesses should target trade in China as a no-deal Brexit seems “inevitable”

As the UK’s departure from the European Union (EU) on 31 January nears, Colin Rainsforth, director of Absolute Advantage, has called on UK food and drinks businesses to act now by exploring the “fast-growing markets of China and the US”, which he says will be unaffected by “the changes Brexit will inevitably bring”.

“We’re seeing a growing reluctance among European buyers to begin stocking new UK brands due to the inevitable but unpredictable changes in market conditions,” said Rainsforth.

“In China and the US the opposite is true. British products are highly valued by Chinese and American consumers for their premium quality, style and branding – commanding substantially better margins for retailers and producers alike.”

Following the UK’s exit from the EU, the country will enter a transition period during which a UK-EU free trade agreement will be sought before 31 December 2020.

Following the Conservative Party’s victory at the 2019 general election, prime minister Boris Johnson has ruled out any further extension to the transition period and to the time available to agree a deal.

Paul Dales of Capital Economics, an economic research consultancy based in London, said: “Johnson has left himself just 11 months to strike a new trade agreement with the EU that has taken others around four years.”

According to Absolute Advantage, the tight deadline to agree a free trade deal means that it “seems certain that the UK will ultimately lose access to the EU’s single market”.

The export firm said the effects of this are already being felt on both sides of the Channel, “creating a hostile environment for food and beverage producers” and could place them in “serious jeopardy”.

Rainsforth added: “The opportunities [in China and the US] far outstrip those available in Europe right now, and brands need to look to these alternative markets to offset the effects of Brexit rather than relying on EU markets where they will undoubtedly be facing increased costs, with strictly enforced and complex barriers to trade.”

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