Against the odds, some might say, the UK natural and organic trade sector continues to produce some remarkable export success stories. Jim Manson has been talking to some of the British brands still boldly breaking into new markets
“The phrase ‘challenging times’ doesn’t cover it anymore,” one brand owner comments, as he reflects on the succession of trade shocks – the pandemic, Brexit fall-out, supply chain havoc and war in Europe – still reverberating around the world.
And yet, amid the turmoil, international trade continues, orders are being taken and distributorship deals signed. More than that, says the Food & Drink Federation (FDF), UK food exports to several key international territories – USA, Australia, Canada, Japan and the UAE among them – are now up on pre-pandemic levels.
The FDF’s view is that, against a backdrop of widespread economic and political instability, a renewed focus on exporting is a ‘crucial risk-mitigation strategy’ for UK food and drink companies in 2022.
Global facing Britain?
Of course, many of the challenges exporters faced when the Brexit transition ended in December 2021 remain. Trade with the EU and Northern Ireland is still plagued with inconsistency and for some it is still simply more hassle than it is worth (although, as we will hear, others are maintaining – even growing – their exports to Europe).
But what of opportunities beyond the EU? The UK Government has talked up the idea of a confident ‘global-facing Britain’ and there is evidence that UK firms are increasingly focused on opportunities in south Asia – a trend known as the ‘Asia-Pacific tilt’. With the UK set to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP) later this year, the region’s strategic importance to UK businesses will be strengthened further.
Organic muesli specialist Alara Wholefoods is one UK food business reporting increased exports into the region. The company recently received Japanese Organic Standards (JAS) certification which founding director Alex Smith says has ‘opened a lot of doors’. On the strength of this, Alara is now shipping two 40-foot containers to Japan each month – the equivalent of 36,000 packs of muesli. As well as the new Japanese orders, it recently secured a major new listing with Hong Kong-based supermarket chain city’super and is increasing its trade with customers on mainland China. And the company has just signed a deal to produce private label organic cereals for Philippines-based retail chain Healthy Options, which operates 150 natural food stores across the country.
Smith says: “Perhaps inevitably, we are seeing a shift in the UK’s economic centre of gravity away from Europe to fast-growing regions like Asia-Pacific. There are huge consumer markets in the region, and a growing appetite for high quality organic products, with strong provenance.”
So, what does it take for a natural products brand to succeed on the international stage? Here, some leading name on the UK organic food and supplements scene share their insights as seasoned exporters.
Natures Aid was one of two UK supplements brands (along with Terranova) to receive the Queen’s Award for International Trade in 2021. What is remarkable about the achievement is that the company had no export business at all ten years ago. Managing director, Chris Morrey, explains: “For 30 years Natures Aid did business in the UK and Ireland exclusively. Exports were considered to be a slightly scary area. But the level of enquiries was starting to really build up around ten years ago, with a lot of the interest stemming from the fact that we manufacture all our own products. So, we had a meeting one day where we took a decision to move into exports – and then we literally asked ourselves: what do we need to do to get this started?
The company’s first port of call was the local chamber of commerce, which Morrey says has been ‘incredibly helpful and supportive over this whole period’. He adds: “The first territory we entered was the Middle East – which is basically where we were getting most of the enquiries. And it is still the largest single territory. Really, the decision to enter a particular market is ultimately a question of balancing demand and barrier to entry. So you tend to look for markets where there is high demand at the lowest barriers to entry.”
As well being able to offer quality products – and in Natures Aid’s case, decades of manufacturing expertise – what other attributes does Morrey think have helped propelled the company to such visible export success? “British-made is still the number one advantage. But diversity of range is also important, and I think another feature of UK industry is that we are so strong on innovation. We have fantastic brands in Britain, we’re often first to market. And I think that’s why British businesses are so strong in overseas markets.”
Only Natural Products
For Keith Garden, managing director of Only Natural Products (owner of the Higher Living and Dr Stuart’s tea brands – and a double Queen’s Award winner in the past), to ignore exports is to miss out on a major opportunity.
Garden says: “It’s easy to become just focused on your UK sales, but there’s so much more potential when you look further afield. Also in a category like ours – tea – there are an awful lot of brands competing for the same shelf space.” He says that with teas and herbal teas, British brands have a distinct advantage. “The fact that we grow only tiny amounts of tea is beside the point, it’s the perception of tea drinking being a quintessentially British tradition that still really resonates in many parts of the world.”
Initially, Only Natural focused on English-speaking parts of the world, building a strong presence in Australia, New Zealand, the US and South Africa. But the company is now ‘doing good business’ in Asia, especially in Japan and Korea. And despite the challenges, it is growing its EU trade. “In fact, Germany produced the strongest growth for us in any market, last year,” Garden notes. He admits that every ‘EU-bound order presents a challenge’ and that trade with some smaller EU countries is not currently viable. “It is harder. People now need to order in container load quantities, rather than pallets, or multiple pallets. But it’s working, and what we’re finding is that distributors are stepping up. And if they hadn’t previously been at container level, they stepping up to that now.”
Stephen Terrass, CEO and founder of Terranova Nutrition, describes receiving the Queen’s Award as a ‘surreal experience that still hasn’t quite sunk in’. Terranova, which launched in 2009, got into international trade early on. Today, export trade accounts for a whopping 80% of overall sales, making its importance difficult to overstate.
Europe remains Terranova’s biggest export market. Terrass adds: “As such, the vast majority of our export business in within the EU. And because we have historically calibrated our product formulations and practices to ensure EU legislative compliance, this makes our brand especially well-suited to European and UK markets. That said, fortunately we have discovered that our products, principles and overall message translate especially well in other regions of the world. And this has been helped by the fact that EU regulatory standards for supplements appear to be highly regarded by many authorities outside of Europe.”
Terrass is keen to emphasize the vital role of an ‘amazing family of international distributors’ to the company’s export successes. “Rather than actively looking for distribution partners, or earmarking a country for development because of its perceived potential, we waited for the right distributor to come to us – someone with a sincere desire to represent Terranova in their market based on how Terranova’s philosophy, standards and products resonated with them.
“Another crucial aspect of our approach is that we have a firm policy of never competing with our distributors. Our entire business model is to only supply national distributors, so we have no direct supply of product to retailers or consumers.”
Terrass adds that Terranova is ‘extraordinarily hands-on’ in its relationships with international distributors. “It’s not enough to just appoint a distributor and supply them. It’s our responsibility to choose the right partner for each country, and then proactively empower and support their efforts to develop the brand within their market. This policy of ours has fostered an even deeper loyalty, trust and commitment from our distributors, and from our distributors’ retail customers.”
“Although the UK remains our single biggest market, we’ve had an international outlook from day one,” says Christopher Dawson, CEO and founder of Clearspring. Today, the company exports to a remarkable 60 countries, with Europe remaining the strongest trading region, but with significant business across Asia, the Middle East and in parts of Africa.
Dawson says a key to the brand’s continued success in Europe and beyond is the long-standing relationships the company has with its export partners, some of whom have worked with Clearspring for over two decades. “With our 30 plus years of experience we have learnt that openness and transparency are critical when building strong and long-lasting relationships with export partners.”
Dawson says that gathering knowledge on the ground and working with local partners is crucial when opening up new distribution channels. “Whilst researching online can give you many insights, there might still be many blind spots. Don’t be afraid to pick up the phone, whether to your export partner, a trade commission or even someone you know from the country you are looking to export to, to expand your knowledge base.”
Being successful in international markets has required significant investment for Clearspring. “Regulation and labelling remain our biggest challenges. We’ve put in place a four-strong quality and assurance team and a four-strong new product and product development team to ensure we stay on top of these issues.”
“It’s all about the brand, not categories,” says Organico Realfoods (owner of the Organico and Fish4Ever brands) founder Charles Redfern, when asked which products or categories perform strongest in international markets. “I think organic products are available widely enough in the world, let alone ‘natural’ ones. We’ve succeeded with Fish4Ever, for example, because our brand has a genuine expertise and credibility in sustainability and we’ve 100% targeted retailers who are in theory, at least, very interested in genuinely ecological alternatives.”
Organico has quadrupled its exports in the last three years, with Europe being the most important market. “We now sell more in Europe than we do in UK,” Redfern reveals. He says that the company’s relationship with specialist organic retail chains has played a key part. “We’ve got into major chains such as Bio-Coop, Ekoplaza, Natura Si, Naturalia – and are slowly adding and deepening that.”
Refern doubts that ‘just being British’ counts for very much when it comes to organic. “The organic market is incredibly close to the ‘local’ market, and so being British rarely helps. Plus, if anything, both chains and independent shops prefer to support their own breakthrough or challenger companies. There’s pretty designs and clever marketing everywhere. Ultimately the hardest question to answer is, why do I deserve to be selling in the first place?”
Redfern says it was important for Organico to go direct. “Brokers, importers and agents by and large get in the way and take margins you can ill afford. You’ll also need large reserves of perseverance and must understand each of your markets intimately.”
The view from the trade associations
The Organic Trade Board (OTB)
“The Government unfortunately doesn’t seem to grasp the clear business and environmental opportunity that organic represents. Leaving the EU was meant to allow for a greater opportunity to seek new markets and build on the UK’s reputation for integrity and quality. However, there is currently a distinct lack of financial commitment and ambition from Government to capitalize on strong demand and added-value international market opportunities that others so clearly recognize. As the OTB we represent over 150 organic organizations and brands, and there are significant opportunities that have been identified. As such we demand a clear commitment from the Government to support the sector, in UK and internationally.”
Graham Keen, executive director, Health Food Manufacturers’ Association (HFMA)
“At the HFMA we have been providing a lot of expert health and advice to our members as they navigate the tricky waters of post-Brexit movement of goods. Though our involvement in groups like Defra’s Business Readiness Forum, the FSA’s Food Industry Liaison Group, and the UK Food & Drink Industry Roundtable, we have been in a position to influence events to a degree, and also keep our finger on the pulse of all that has been happening.
“The most obvious thing to say is that, in general terms, the movement of goods between the UK and EU has been extremely challenging, and we are yet to see the benefits of a wider global export opportunity. But having said that, the situation has certainly been easing as companies adjust to the new requirements. A particular challenge has been the movement of POAOs (products of animal origin), and the definition of what is or is not a composite product in relation to POAOs. This is an area where the HFMA has particularly been able to assist its member companies, and our eyes and ears in Brussels, our European federation EHPM, has been an invaluable sounding board for us.
“Ironically, one of the particular challenges in recent months has been the import restrictions imposed by the EU on ‘third countries’ (of which GB is now one) like China and India. A lot of the key raw materials our sector uses are from those two countries, and many of those ingredients find their way into the UK via the EU. So this is something we are taking great care with at the moment.
“But, overall, I would say that our member companies have faced massive challenges, are now finding things easier than they have been, but still extremely challenging and some way from being successfully resolved.”
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