Written evidence submitted by the Department for Environment, Food and Rural Affairs (Defra) (BFD0038)
Introduction
The Government welcomes the EFRA Committee’s inquiry into the promotion of British food and drink. Increasing exports is a priority for this Government: exports support jobs, productivity, competitiveness, profitability and economic resilience. The food and drink sector is the UK’s largest manufacturing sector, and we are committed to helping food and drink companies export more quality UK products.
1. How effectively is the UK Government promoting and marketing British food and drink abroad?
Strategic context
In 2016 the Government published the International Action Plan for Food and Drink 2016 – 2020 (IAP). The IAP was developed jointly by Government and industry and set out an ambition to increase exports across priority markets, raise the profile of UK food and drink, and encourage new exporters.
In 2017 Defra, working in collaboration with the Department for International Trade (DIT), VisitBritain and the Foreign and Commonwealth Office (FCO), developed the stand-alone Food is GREAT campaign to underpin the IAP and raise the profile of the UK’s excellent food and drink exports. The campaign had a budget of £1.25m in 2017/18, rising to £1.5m in 2018/9.
The Food is GREAT campaign focuses on countries identified in the plan as having the greatest potential for export growth. In its first year, it focused on China and the US as markets of significant potential, but it will broaden its coverage to other potential growth markets in the coming year. Its main objectives are to:
a. Build global demand for UK food and drink among international businesses in key markets;
b. Build global awareness and demand for UK food and drink among international consumers in key markets;
c. Increase export ambition among UK food and drink businesses.
Specific activity
The Government ensures a strong UK presence at international food trade shows, organises ‘meet the buyer’ activity at these and other events, negotiates market access agreements with third countries, provides ongoing market access support, and works through UK Embassies to organise trade missions. The Government works hard to identify and prioritise high-potential and large markets, and match, develop and maintain the key relationships between British companies and overseas buyers in the retail and hospitality trade. Overall, Government trade support in 2017/18 contributed to export deals of over £1 billion for the UK food and drink sector. Examples of activities with Food is GREAT support in the past year include:
The Food is GREAT campaign brings together activity across Government (including DIT, Defra, and British Embassies) and industry to make the most of national and international networks, expertise and knowledge to create greater impact.
Specific activities to build global awareness and demand for UK food and drink among consumers in key markets include:
Alongside the Exporting is GREAT campaign, Defra has showcased Food is GREAT at many major domestic agricultural shows to engage with food and drink businesses and increase export ambition:
In 2018, we will be expanding our presence at agriculture shows with activities and communications around the Royal Welsh Show, Royal Highland Show and Great Yorkshire Show.
To help tackle perceived barriers to exporting, Defra and DIT implemented a regional PR campaign that featured positive exporting case studies and information. 284 articles were placed in regional media from November 2017 to March 2018, 81 of which targeted food and drink SMEs in Yorkshire and the South West.
In 2018/19 the PR campaign will extend further to feature businesses from other locations across the UK. There will also be further investment domestically through a new “Food United” initiative, which aims to bring industry together to share expertise and realise export opportunity.
DIT have also made available Tradeshow Access Programme (TAP) grants to new exporters to enable them to participate in trade shows.
2. Whether British food and drink has an identifiable ‘brand’ overseas?
Individual products, including our two biggest exports, Scotch Whisky and Scottish farmed salmon, have longstanding brand reputations. But as UK food and drink exports continue to expand (currently UK food and drink is enjoyed in over 200 countries and territories[1]), more and more of our products are being recognised for high standards, taste, quality, safety, animal welfare, sustainability and traceability. We are well-placed to develop a strong UK food and drink brand that takes advantage of growing consumer demand for quality food and drink and ‘western’ style diets in emerging economies.
The UK has one of the most advanced markets for natural, organic and ‘free-from’ products, which offers consumers additional reassurance about the integrity of their food. There is global demand for healthy, safe food from a secure supply chain. UK products are well-placed to respond to these trends, and in some cases can attract a premium.
The Food is GREAT campaign is mainly funded by, and benefits from, being part of the internationally-facing, high profile GREAT Britain campaign which provides increased visibility of food and drink abroad through its extensive international network.
The GREAT Britain campaign was launched in 2012 and operates in over 144 countries. The campaign unifies the marketing efforts of the UK Government’s internationally-facing departments within a single high-impact brand to maximise economic returns from the global markets of tourism, trade, investment and education.
Independent research carried out by CANVAS8 (on behalf of DIT) shows that the GREAT Britain campaign has a positive impact on the buying actions of the UK’s international target customers. In all major overseas markets, businesses or individuals that come into contact with GREAT are 10 to 18 percentage points more likely to buy British goods and services or choose to invest, visit, or study in the UK.
In 2017, the GREAT Britain campaign led or supported over 1,066 economic events and programmes worldwide and secured independently confirmed economic returns of £3.4bn for the UK, with a further £3.3bn currently being appraised and a strong pipeline of future returns being generated (approximately £1.8bn).
To maximise these GREAT events and contribute to building an identifiable brand overseas, Defra develops and issues a quarterly Food is GREAT hospitality toolkit which is shared with the British embassy network worldwide. The toolkit includes materials (e.g. images, videos, social media posts) and advice on how to promote UK food and drink. Since launching the toolkit, it has been downloaded and used by over 160 British embassy staff.
As part of the Food is GREAT campaign, Defra works with public and private stakeholders to promote UK produce overseas. In 2017/18 we worked with over 1,500 UK firms and stakeholders to secure campaign support – all of which have access to the Food is GREAT brand to provide consistent, recognisable marketing.
The Food is GREAT campaign uses high-impact content and materials to promote UK food and drink internationally. This has included films showcasing the qualities of British produce (specifically targeted at audiences in USA and China), digital content such as infographics and maps, and a collection of 55 Food is GREAT brand assets featuring UK food and drink. These materials are available and used across government, the British embassy network, and through our partners to widen our visibility and reach internationally.
3. What opportunities and challenges exist in promoting and marketing British products abroad?
Promoting and marketing British products abroad can present both challenges and opportunities. Defra has identified that food and drink SMEs, in comparison with other sectors, have considerable scope to reach their potential to export in light of these challenges. In 2017, of the 9,865 food and drink manufacturing companies in the UK, 97.5% were SMEs, yet they contributed around 25% of the industry's turnover and 32% of the workforce. Defra estimates that exports are dominated by large firms and that only 18% of food and drink manufacturers are exporters. In 2017, Defra commissioned research to identify perceived barriers to exporting for food and drink SMEs. These included:
Further research was carried out by DIT in 2017 looking at international business perceptions of the UK food and beverage sector. This research showed that:
VisitBritain and Defra commissioned research in 2017 to understand consumer perceptions of UK food and drink in key markets. The research found that:
Now in its second year, Defra plans to extend the Food is GREAT campaign to provide more opportunities to market British products abroad. Additional funding has been secured to allow the campaign to expand into other markets such as Japan, UAE, Australia and New Zealand. For 2018/19, there will be an increased focus on partnerships to gain more support (in kind and financial) from industry and stakeholders that will help widen the reach and impact of the campaign.
Defra will use the Food is GREAT brand to make the most of activities and opportunities around key cultural events such as the Rugby World Cup 2019 in Japan, Beijing Horticultural Exhibition in 2019, the Dubai Expo 2020 and the Japan Summer Olympic Games in 2020.
The Government wants to build a truly Global Britain that is the firmest of advocates for free trade across the globe. The UK’s departure from the European Union offers an opportunity to forge a new role for the UK in the world, and enable us to negotiate our own trade arrangements. The government has engaged widely, with a range of stakeholders, since the EU Referendum and will continue to do so. We are determined to secure the best possible trading opportunities for the UK. Any trade deal must be right for UK consumers, producers (including agriculture) and businesses. It must also uphold high levels of labour, health, animal welfare and environmental standards.
The Government published a Trade White Paper in October 2017 setting out its ambition to build trade, inviting views on its approach. Submissions were received from across business and civil society, including representative organisations, non-government organisations, academics, and individuals. Stakeholder input will continue to shape emerging trade policy, including improving trade legislation, as the Trade Bill makes its way through Parliament. Government will continue to engage with a wide range of stakeholders across the whole of the UK.
4. The support given by the UK Government to trade bodies and companies to break into overseas markets
The Government works closely with trade associations to support industry ambitions to grow exports of British food and drink. In 2016 Defra, DIT and industry developed the International Action Plan for food and drink 2016-2020, which set out our joint ambitions to grow exports. Since the launch of the action plan Government continues to work closely with trade associations to support them to develop their own sectoral action plans, including Dairy UK, British Beer and Pub Association, Wine and Spirits Trade Association and Seafish. Defra also works closely with industry to secure market access for products in new markets.
The Industrial Strategy White Paper, published by the Department for Business, Energy and Industrial Strategy (BEIS) in November 2017, announced the formation of a new Food and Drink Sector Council. Being a big employer in every region of the UK means that there are few sectors better-placed to deliver “an economy that works for all” than food and drink. The Council will focus on seven priority areas: workforce, agricultural productivity, nutrition, packaging & waste, exports, innovation and logistics. Defra has been supporting industry through the Food and Drink Federation (FDF) and other industry bodies to develop a set of proposals for a food and drink manufacturing sector deal. The proposals being developed focus on two priority areas: exports and innovation. The proposals set out an industry ambition of delivering a 1.5% increase in GVA above predicted levels – equating to an additional £8bn of growth to the UK economy by 2030.
The Department for International Trade supports businesses to access international markets through its regional network of International Trade Advisers, Head Quarters based sector teams, an extensive overseas network and online services via the great.gov.uk website. Food and drink exporters are also supported by UK Export Finance (UKEF) who have a network of 24 specialist Export Finance Managers located across the UK.
DIT provides practical advice, help and support to current and potential food and drink exporters. The help includes assistance through an online portal, face-to-face export support via DIT’s network of international trade advisors, the potential to participate at UK stands at international trade shows, attend overseas trade missions, participate in bespoke meet the buyer events in the UK and world-wide as well as obtaining specific market research on individual markets and their opportunities.
A new Export Strategy is currently being developed which will ensure that Government has the right financial, practical and promotional support in place to allow businesses to benefit from growth opportunities, generating wealth and wellbeing for the whole of the UK. The strategy will be published in the coming months.
5. How effectively Defra and DIT are working with the devolved administrations to promote British food and drink
Food and drink is a devolved matter and as such the devolved administrations have their own funding and programmes to promote regional food and drink. However, the UK Government continues to engage with devolved administrations to coordinate and collaborate on activity to promote the UK as a whole through the Food is GREAT Campaign.
Defra and DIT have frequent contact with Scottish Development International, the Welsh Government and Invest Northern Ireland to promote export opportunities. Businesses from the devolved administrations participate in activity organised by the Department for International Trade as part of its support to companies across the UK and there have been a number of significant export deals resulting from this support. One example of this is DIT’s team in China introducing “Trioni”, a leading provider of organic milk and dairy products based in Wales, to distributors and e-commerce platforms and helping to register the company’s products with the Chinese authorities. As a result the company is building brand-recognition with Chinese consumers and expanding its sales to the market.
6. The role of European protected status for food and drink
Geographical indications (GIs) are a form of intellectual property (IP) protection. GIs are important to the UK’s reputation as a great food nation and in boosting the UK’s global food reputation.
Defra owns GI policy for agri-food products, wine, aromatised wine and spirits and is the UK’s competent authority for the 4 EU schemes that UK products are currently registered under. Producers can apply to protect regionally distinct or traditional products. Once registered, these products enjoy protection throughout the EU against imitation or misuse of their names. A GI label on a product assures buyers that the product has been made in a certain place and/or to a certain recipe. Producers of GI products value the scheme for the collective protection from imitation and the premium they can charge for some products.
The UK has 86 products registered as GIs under the EU schemes: 76 agricultural products, 5 wines, 5 spirit drinks (including three trans-border GIs that we share with Ireland). This is a varied collection that includes Scotch Whisky, Anglesey Sea Salt, Native Shetland Wool, Cornish Clotted Cream and English Sparkling Wine.
A 2015 EU Commission report investigated consumers’ attitudes to geographical origin labelling across the EU member states[2]. Detailed comparisons between the various studies/surveys the report considered are difficult due to different methodologies, though general conclusions can be drawn. The report’s main findings are around interest, awareness and willingness to pay (WTP). Consumer interest in origin labelling is strong but varies by product; consumer awareness of the scheme remains low across the EU; and there is generally a low level of WTP. These findings are across the EU and not UK-specific. Findings also highlighted the issues of the value-action gap, in regards to interest in country of origin labelling vs. purchasing behaviour.
Willingness to pay (WTP) for GIs is a complex issue – while some evidence suggests consumers consider origin labelling, other factors such as price and product quality are known to have a greater impact on consumer purchasing decisions[3]. Research undertaken by the National Farmers Union suggested GI logos influenced purchasing decisions for just 2% of respondents[4]. This difference between expressed values, and purchasing behaviour (a ‘value-action gap’) suggests that while consumers might indicate they are more likely to purchase a GI protected product, this may not translate into actual behaviour (for example, if a product next to it is on offer). Nevertheless, for those who want to be sure they are getting the genuine article (and it would be reasonable to assume that there is a higher than average recognition of the GI logos among these people) we can expect the GI logo on a product to inspire confidence.
A Hybu Cig Cymru (Meat Promotion Wales) 2015 report[5] estimated that 25% of the cumulative growth in Welsh lamb exports between 2003 and 2012 could be attributed to the scheme, with 50% of growth due to favourable exchange rates and the other 25% of growth coming from general growth in the industry[6]. The robustness of these estimates is uncertain, however they do highlight that other factors, such as exchange rates may be more important for export growth. Other economic benefits included an increase in job creation, yet it didn’t appear to consider possible negative effects on other businesses that didn’t join the scheme. The report highlighted that PGI Welsh Beef was the first PFN court case to successfully test the legal protection of a PFN within the UK and that the scheme helped restore consumer confidence following the horsemeat scandal in 2013.
GIs could have a positive effect on food tourism. For example, Anglesey Sea Salt Ltd moved to new premises and opened a visitor attraction in February 2015. This created new jobs and additional revenue for the company. It is important to consider other potential costs and benefits of the GI scheme, such as creating jobs, but also consequences for other businesses which do not utilise the scheme.
GIs are included in many of the EU’s Free Trade Agreements and other sectoral agreements. There is a cross-Government programme of work to transition these agreements in order to maintain continuity in existing trade arrangements. As part of this work, Defra is working with other government departments and global trading partners, on the transitioning of commitments on the recognition and protection of UK GIs. We will use the EU (Withdrawal) Bill to incorporate relevant EU legislation into domestic law, providing the legal means to protect GIs in the UK after exit. The Government’s objective in any trade negotiations will be to support the best possible outcome for the UK’s geographical indications and the UK economy as a whole, and we will continue to engage with stakeholders on how we protect UK food and drink as we consider future trade opportunities across the world.
After EU Exit we will continue to fulfil our obligations under the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights. Both UK and international producers will continue to have the legal means to prevent the misuse of GIs in the UK.
7. The role of trade bodies in facilitating and supporting the growth of British food and drink at home and abroad
The food and drink sector is characterised by a small number of very large companies, and a long tail of small, medium and micro companies. At the start of 2017, there were a total of 9,865 food and drink manufacturing companies in the UK, of which 97.5% were SMEs. There were 7,840 food manufacturing companies, of which 2.8% were large companies, 8.4% were medium-sized, and 88.8% were small and micro companies. In terms of drinks manufacturing, there were 2,025 companies, of which 1.2% were large companies, 3.0% were medium-sized, and 95.8% were small and micro companies. This fragmented nature of the sector means that reaching all companies is difficult.
As the voice of their members, trade bodies are crucial in facilitating and supporting the growth in the industry. Members look to them to work with Government to set a strategic direction, and to support them in growing their businesses. Each sector body will have their own objectives, as agreed by their membership. For bodies with export ambitions, government is helping them to achieve through greater market access (e.g. beef to Japan), or promotion and marketing (e.g. Food is GREAT activity in China and USA).
Government recognises the need for a more structured approach to engagement as we move towards negotiating our own trade deals with other countries. Stakeholders have contributed views based on the example of other countries’ engagement models and we are considering the best approach for the UK which has its own unique set of circumstances. As part of these engagement structures, the Secretary of State for International Trade announced his intention to set up a new ‘Trade Policy Strategic Advisory Group’. DIT is currently working through plans for this group, including how it should fit into the wider stakeholder engagement framework. DIT will seek to include individuals capable of taking views from across business communities, civil society, consumer groups and academia from across the UK, including the devolved administrations.
8. How the UK Government can leverage industry quality marks such as the Red Tractor Assured Food Standard to underpin the UK’s reputation for high standards at home and abroad?
“Red Tractor Assured” provides British food producers with a widely-recognised method of assuring full traceability and UK quality of animal welfare. The government welcomes the high standards this and other recognised assurance schemes require, some of which are higher for welfare and environmental standards.
As the UK moves towards EU exit, Defra will look at how we can drive still higher standards in UK food production, building on the excellent work of Red Tractor and other assurance schemes such as LEAF, RSPCA Assured and Soil Association Organic, among others. Different international markets will have different priorities and our food and farming sectors need to be able to provide a broad range of standards to suit these different markets. Defra has started exploring what a Gold Standard for food and farming quality might deliver, including how it could acknowledge the full range of assurance schemes available to producers and consumers to meet their needs. A key area of this work will be looking at how the standard can drive exports to new markets.
9. What can be done to encourage consumers to buy British at home?
Increasingly, UK food and drink is renowned for its quality and traceability, and there is a growing demand from UK consumers for food with local provenance. The UK is the only country in Europe with a strategic programme of research on food authenticity. The UK has some of the highest animal welfare standards in the world. Defra aims to retain our world-leading standards, and the Government believes that British shoppers will continue to back the high standards and traceability of British farming. Mintel’s February 2018 survey on attitudes to British food found that 63% of shoppers say they try to buy British food whenever they can, and 81% agree it is important to support British farmers[7].
It is important that consumers can identify high-quality food from the UK. Origin and provenance information has been increasingly tightened in law and is now required for many foods, including beef, veal, pork, sheep, goat and poultry, fresh fish and shellfish, honey, olive oil, wine, and most fruit and vegetables. Defra is currently considering what more could be done to improve the food information available and improve consumer transparency. Country of origin labelling is not in place for dairy and processed meat products, such as bacon, but this is often done on a voluntary basis and Defra is currently considering how to build on the voluntary principles for country of origin labelling. Following the UK’s exit of the EU there will be an opportunity to review food labelling requirements for all foods.
There is a growing trend for supply-side (retailer) interventions in improving consumer transparency and supporting British produce. Industry, including retailers and the food service sector, promote the excellent produce available from across the UK. Every major retailer has a British-focused promotion. All major supermarkets sell only British milk, and most are committed to sourcing 100% fresh British meat all year round. Some of them have expanded this commitment to also include processed products such as sausages. Co-op recently announced that it would stock only 100% British meat, including in chilled ready meals, pies and sandwiches.
The Plan for Public Procurement[8] aims to simplify the public procurement process and open up the market to more SMEs and local producers by providing a level playing field on which UK producers can compete. It provides tools, including the balanced scorecard, to help contracting parties to balance a range of criteria beneficial to the consumer, the environment, and to producers. These include embedding UK production standards, encouraging seasonality of fresh produce.
Another element of the procurement toolkit is our online portal, the GB Food Marketplace. This is an online service which brings together buyers and suppliers of food. It includes a self-assessment questionnaire which tells suppliers how they measure against the Government Buying Standards and the Balanced Scorecard. Suppliers can then decide whether or not to share information about their products with potential customers.
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[1] International Action Plan
[2] https://ec.europa.eu/agriculture/sites/agriculture/files/milk/origin-labelling/com-2015-205_en.pdf
[3] Defra, 2014. EU Food Information to Consumers baseline for evaluation
[4] NFU Mutual, 2017. Food Fraud Report
[5] Hybu Cig Cymru (Meat Promotion Wales) 2015
[6] Hybu Cig Cymru (Meat Promotion Wales) 2015
[7] Mintel, 2018. UK Food Tracker: British Food Attitudes
[8] https://www.gov.uk/government/publications/a-plan-for-public-procurement-food-and-catering