UK chocolate exports up 11% with falling pound

By Oliver Nieburg contact

- Last updated on GMT

UK chocolate exports on the rise with weak pound. Pic: ©iStock/jax10289
UK chocolate exports on the rise with weak pound. Pic: ©iStock/jax10289

Related tags: International trade, European union, Uk

Chocolate volumes exported from the UK have grown substantially in the third quarter versus the same period last year, driven by the weak pound.

Chocolate was the UK’s main food export in Q3, according to figures from the Food and Drink Federation (FDF) released last week.

Chocolate exports were up 13.2% in value and 10.8% in volume to £471m ($585m) over the period, said the trade body.

Weak pound drives exports

An FDF spokesperson told ConfectioneryNews: “Growth is likely due to the strong reputation of UK food and drink manufacturers abroad, promotional efforts by Great British Food Unit and Food and Drink Exporters Association, and growing competitiveness overseas as a result of falling pound since November 2015.”

Top 10 chocolate export markets in Q3

Ireland, Netherlands, Germany, France, Poland, Canada, USA, Belgium, UAE, Australia

Pound sterling tumbled against the dollar to its lowest level in 31 years in early October and trading continued to slide to $1.24 yesterday.

This means foreign buyers need less currency to buy the same amount of goods allowing exporters to sell items for less and possibly increase profit margins.

Top markets

The top five export markets for UK chocolate in Q3 were Ireland, Netherlands, Germany, France and Poland.

Chocolate exports to Ireland were up 17.5% during the period, while exports to Germany climbed 21.4%. UK chocolate exports also soared 342% to Lithuania and 116% to Jordan.

Nestlé York investment

Nestlé is one of the UK’s main confectionery producers. The company’s York site, which produces brands such as KitKat and Aero, has received over £50m ($62m) investment in the last six years.

Around 17% of annual confectionery production at the plant is exported, equivalent to 26,000 metric tons.  Its top markets are Germany, Italy and Canada.

Top growing markets for chocolate export for year to date

  • £21m increase (+17.5%) to Ireland
  • £6.5m increase (+21.4%) to Germany
  • £6m increase (+32.4%) to Poland
  • £8.5m increase (+114.4%) to USA
  • £3.5m increase (+30.4%) to UAE
  • £3m increase (+342%) to Lithuania
  • £2.5m increase (+75%) to Hong Kong
  • £2m increase (+116%) to Jordan

Sugar confectionery

Total UK confectionery exports were up 8.3% year-to-date to £769.0m ($954.3), according to FDF data.

Sugar confectionery exports reached £146m ($181m) for the year-to-date, up 2.8% on last year.

The bulk of sugar confectionery sales (£102m/$127m) came in the EU, up 2.9%, while non-EU sugar confectionery exports rose 2.7% to £44m ($55m).

“We hope to see a further upswing in exports in the coming months as companies capitalize on the opportunities Brexit presents,”​ said FDF’s spokesperson.

Business environment

Three quarters of FDF members surveyed earlier this year foresaw no impact on UK export sales following the country’s vote to leave the European Union.

However, 70% of respondents were slightly or much less confident about the UK’s general business environment following the EU referendum.

The FDF spokesperson said export sales success would depend on future trade arrangement with EU and non-EU countries.

Euromontior International has projected​ confectionery will be the worst hit UK food & drink segment after Brexit, with a compound annual growth rate (CAGR) decline from 2015 to 2020 as consumers cutback on discretionary items.

Further reading….ConfectioneryNews Brexit business impact survey. See results HERE.

Related topics: Markets, Chocolate, Emerging Markets

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