With Brexit looming on the horizon, some of our more ambitious craft brewers anticipate that the Export market will rapidly increase in importance in the next few years.
A number of our top craft brewers have already blazed a trail and some I’ve spoken to in recent times talk about 20% or more of their sales coming from foreign markets. They indicate that the Nordic countries, Italy and Eastern Europe, for example, are demonstrating a healthy preference for our craft beers and ciders.
In the recent SIBA Members Survey (see below), 23.5% of those surveyed were already exporting. But more tellingly, 60.7% said they wanted to export, so it's clear that there is also a wider ambition in the industry to add Export to the sales mix.
Exporting is not sensible for every brewery business, but it makes a lot of sense to evaluate the potential for yours, particularly if you are already getting enquiries from abroad.
Brewers with a strong small pack strategy will be off to a flying start. Cans especially lend themselves to long haul travel, being both compact and good at sustaining beer freshness over time. Great branding and interesting beer styles will also enhance your Export appeal.
Benefits of Exporting
When done well, exporting offers solid benefits to your brewery business:
- Spreads your business risks – if demand falls in the UK, you still have other markets to rely on
- Enhances your profile – both with home-based and international customers
- Greater opportunities for innovation – with a broader view of the market, you can take advantage of developing trends which have not yet reached the UK
Master the Challenges
However, before you realise these benefits you will need to master several challanges whilst developing your foreign sales. These include:
- Finding customers
- Market Research
- Language and communications
- Product and service localisation
- Protecting your Intellectual Property
- Capacity in the business
- Getting paid, Export credit and dealing with currency risks
- Export paperwork
- VAT reporting
- Tariffs (for outside the EU)
The good news is that there are many organisations including the Department for International Trade (DIT), Exporting is Great, UK Export Finance (UKEF) and Export Britain (British Chamber of Commerce) that can provide useful advice, expertise and support for new and established exporters. SIBA also offers its Export Club with UK-based administrative support including Excise Movement and Control System management for their individual export opportunities. Much of the advice is free or subsidised and in some cases, there can be Government or EU funding available to support companies in certain markets or sectors.
DIT statistics show that companies that export are more likely to stay in business and often have significantly higher productivity than non-exporters. Just over 11% of UK business export.
It is important to recognise that it may cost more to support sales in some export markets. A true end to end cost of sale analysis should be done to understand the differences compared to local sales and how that in turn compares to realistic export market pricing. There is little point in growing export sales unless overall profitability is improved. Proper strategic planning will help you make better business decisions on the value or otherwise of exporting and to plan and manage the impact of uncertainties e.g. exchange rates.
If you would like to consider your export strategy further, The Business of Drinks is also available to provide advice and support with your strategy development. For example, you may not be ready for export now, but what are the key steps you need to take to get yourself ready for export by the Brexit deadline. We can help you answer these and other business strategy questions as part of our 360 Review Programme.
To find out more please get in touch to arrange an exploratory phone call or meeting.
Authors: Susanne Currid and Gordon Carmicheal