The UK’s recent deal to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has been described as the “biggest trade deal since Brexit.” This agreement opens up significant opportunities for UK food and drink exporters, offering benefits such as zero tariffs on cheese, chocolate, gin, and whisky products and expedited trade in short shelf-life products. However, to fully capitalise on these opportunities, exporters must navigate the challenges and complexities of this diverse bloc of nations, which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Here, we explore the attractiveness of these markets and the key considerations for UK food and drink brands.
Population Sizes and Purchasing Power
The CPTPP countries collectively represent a market of over 500 million people and will account for 15% of global GDP once the UK joins. For mass-market products, large populations are attractive, making Mexico (130 million), Japan (124 million), and Vietnam (97 million) particularly appealing. However, for niche products, overall population size is less critical. Markets like Singapore (5.4 million), New Zealand (5.1 million), and Brunei (under half a million) may offer limited long-term growth due to their smaller populations.
Beyond population size, purchasing power is a crucial factor. According to the International Monetary Fund’s GDP per capita forecast for 2028, Singapore, Brunei, Canada, and Australia all rank higher than the UK (USD 66,000), indicating strong purchasing power. Japan and New Zealand are roughly on par with the UK, while Chile and Mexico’s GDP levels are about 50% of the UK’s. Vietnam and Peru have even lower GDP per capita, at USD 21,000 and USD 19,000, respectively. However, per capita wealth does not always tell the whole story, as income and wealth inequality can be significant, particularly in emerging markets like Mexico, Chile, Peru, Vietnam, and Malaysia.
In countries with higher GDP per capita, consumers generally have more disposable income to spend on imported products, making these markets more attractive for premium and niche products. Conversely, in countries with lower GDP per capita, there may be a greater focus on affordability, which could influence product positioning and pricing strategies.
Urbanization Affects Distribution
Urbanization plays a critical role in the distribution and adoption of new products. Consumers in urban areas are generally more open to new products and trends, demanding more processed, protein-rich, convenient, and Western-style food and drink to match their fast-paced lifestyles. Retail and food service outlets are also concentrated in cities, making it easier and more cost-effective to deliver products to points of sale.
Within the CPTPP nations, Singapore stands out with 100% urbanization, facilitating distribution. Japan also has high urbanization levels at 92%, with significant populations in cities like Tokyo (37 million) and Osaka (19 million). This urban concentration makes it practical to target specific cities or regions rather than the entire market at once. In contrast, Vietnam has a lower urbanization rate at 38%, which may pose distribution challenges.
Urbanization also impacts consumer behavior and preferences. Urban consumers are more likely to be influenced by global trends and have access to a wider variety of products. This makes urban areas ideal for launching new products and building brand awareness. Additionally, urban areas often have better infrastructure and logistics networks, which can reduce the cost and complexity of distribution.
Key Trends and How to Find Them
The UK leads in key industry trends such as health and wellness and premiumization. However, in many developed markets, these trends are nearing saturation. By identifying and expanding into countries where these trends are just beginning to move from niche to mainstream, UK manufacturers can extend the lifecycle and revenue streams of their current ranges.
For example, the Asia Pacific region is expected to see the highest growth in health and wellness food and drink products by 2030, driven by the rapid adoption of Western culture and the rise of health and wellness tourism. In Malaysia, the “free-from” category is currently limited but has significant growth potential. UK exporters can help expand this category with second-generation products that deliver on taste and quality packaging.
Similarly, in South America, the “free-from” category is set to grow dynamically, although it remains an emerging category in Chile, Peru, and Mexico. In markets like Canada, New Zealand, and Australia, there is a strong affinity for British products due to shared heritage and culture. However, these are highly competitive markets with strong local suppliers and “buy local” policies. In Asian CPTPP countries, British brands are under-represented, offering growth potential. However, UK manufacturers will need robust market entry and development plans to compete with well-established Australian and New Zealand manufacturers.
Understanding local consumer trends is essential for success in international markets. This involves researching market data, consumer preferences, and competitive landscapes. Engaging with local partners, attending trade shows, and leveraging market research reports can provide valuable insights into emerging trends and opportunities.
Navigating Trade Agreements and Import Requirements
While the CPTPP offers lower tariffs and smoother trade, member countries have diverse import requirements, including labeling, packaging, permitted additives, and halal certification. UK exporters must research and comply with these requirements to avoid entry refusals and other trade barriers.
For instance, labeling requirements can vary significantly between countries. Some markets may require labels in the local language, while others may have specific regulations regarding nutritional information, ingredient lists, and health claims. Packaging requirements can also differ, with some countries mandating specific sizes, materials, or recycling standards.
Permitted additives and ingredients are another area where regulations can vary. Exporters must ensure that their products comply with local food safety standards and do not contain prohibited substances. In some markets, obtaining halal certification may be necessary to cater to Muslim consumers.
Navigating these regulatory requirements can be complex, but it is essential for successful market entry. Working with local partners, trade associations, and regulatory consultants can help exporters understand and comply with these requirements.
Conclusion
The UK’s accession to the CPTPP presents significant opportunities for food and drink exporters, but it also comes with challenges. To succeed, companies must carefully evaluate each market’s population size, purchasing power, urbanization levels, and key trends. They must also navigate complex trade agreements and import requirements. By conducting thorough research and developing tailored market entry strategies, UK exporters can capitalize on the benefits of the CPTPP and achieve long-term growth in these diverse and dynamic markets.
In summary, the CPTPP offers a promising avenue for UK food and drink exporters to expand their reach and tap into new markets. However, success requires a strategic approach that considers the unique characteristics and requirements of each market. By leveraging the benefits of the CPTPP, understanding local consumer trends, and navigating regulatory complexities, UK exporters can unlock new opportunities and drive sustainable growth in the global marketplace.
If you or your client are a food and drink manufacturer looking to export or explore new markets globally, please reach out to the Food and Drink Exporter’s Association (FDEA).
The FDEA is a vibrant community of exporting companies, ranging from some of the UK’s most successful exporters to those just beginning their export journey.
Their International In-Market Expert members and commercial operators in leading markets offer bespoke services to help brands grow their business.
Additionally, their Professional Associate Experts provide support for the practical aspects of exporting, including logistics, labelling, certification, compliance, and much more.
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