The U.K. is a highly attractive market for global brands. British consumers spent £242bn ($298bn) on food and drink last year according to new research – that’s more per head than many of their European neighbours. Britons are open to new products, particularly in the wake of the country’s departure from the European Union, and Brexit is changing the relationship of retailers in the U.K. with suppliers based in other countries.
U.S. brands are in a strong position to capitalize. The strong historic and cultural ties between the U.K. and the U.S. are supportive of trade, and the U.K. presents good market opportunities for U.S. products in areas such as specialty foods, healthy food items, wine, sauces, fish, shellfish, fruit, nuts, and juices. In 2020, the last year for which data is available, U.S. sales of food and drink to the U.K. topped $1bn, making the country the 10th most important global market for U.S. producers.
Nevertheless, launching into the U.K. market is not without challenges. Here are nine things that U.S. brands need to know before crossing the Atlantic for the first time:
1. Products must meet U.K. food hygiene and compositional standards
Imports of food and drink into the U.K. must meet the same – or equivalent – food hygiene and compositional standards and procedures as food that is produced in the U.K. itself. The Food Safety Agency sets the rules, focusing on food categories rather than individual products.
2. Labelling rules are strict
All pre-packaged foods sold in the U.K. must carry a food label that displays certain mandatory information. This is to ensure your food product complies with food hygiene requirements and allows customers to make informed decisions. Information that must be displayed on food labels includes: ingredients, allergen information, storage conditions, date labels such as “best before” or “use by” date, the name and address of the manufacturer, country of origin or place of provenance, preparation instructions, and a nutritional declaration.
3. Some products require authorization
Certain food and feed products, known as regulated products, require authorization from the Food Standards Agency before they can be sold in the U.K.. These include: extraction solvents, feed additives, feed for particular nutritional uses, flavourings, food contact materials, food additives, food enzymes, genetically modified organisms (GMOs), irradiated food, novel foods, and smoke flavourings.
4. Some ingredients allowed in the U.S. are banned in the U.K.
U.K. regulators – like their peers in the European Union – take a stricter approach to certain ingredients than U.S. food safety watchdogs. As a result, some U.S. producers may find products they sell domestically include ingredients banned from sale in the U.K. To be sure all the ingredients in your product are accepted by U.K. regulators, consult the U.K. Government’s advice, which explains what is allowed in areas such as additives and food contact materials.
5. Import duties will be payable on your products
Surprisingly, the U.K. does not have a trade agreement with the U.S., though officials are keen to negotiate one. That means imports from the U.S., including food and drink, are subject to the U.K. Global Tariff, which levies import duties on products coming into the country. In practice, the rate of duty payable on your product will depend on how it is classified – you can check the various classifications here. You will need to discuss who covers this cost with your partner in the U.K. – such as your retailer or distributor.
6. The rules on recycling are getting tougher
The U.K. is keen to make progress in areas such as recycling of packaging and reduced use of single-use plastic, and is therefore implementing regulations and taxes to encourage this. Many of these initiatives focus on the food and drink sector, so importers will need to keep track of the changing picture. For example, in April 2020, new taxes came into effect on plastic packaging produced in or imported into the U.K. that does not contain at least 30% recycled plastic. The U.K. is also consulting on a deposit return scheme, which would require producers and retailers to collect drinks containers from consumers.
7. U.K. importers rely heavily on “incoterms”
Importers in the U.K., such as retailers and distributors, will expect to agree on contracts with their overseas suppliers, governing issues such as pricing, payment methods, delivery, and dispute resolution. These contracts typically make use of Incoterms – an internationally recognized set of trading terms used in contracts of delivery. U.S. exporters may also find these terms are commonly used in trade with many other countries worldwide.
8. Health and diet are rising up the U.K. legislative agenda
Policymakers in the U.K. are increasingly worried about poor diet and rising obesity levels, particularly amongst children. This has led to initiatives such as restrictions on how foods with high fat, salt, and sugar content are marketed, both in stores and advertising. The U.K. has also introduced a “sugar tax” on soft drinks. While these initiatives may not directly affect U.S. businesses selling to U.K. importers, they may reduce demand for products in areas covered by the rules.
9. Launching your own company in the U.K. requires public disclosures
If you want to set up a business in the U.K., rather than simply selling to U.K. importers, you’ll need to register your company with Companies House. Operating in this way has certain advantages – it may be a good way to manage import costs, duties, and taxes – but Companies House requires a high level of disclosure. You’ll need to supply basic information such as directors’ names and addresses, as well as making regular filings of your business’s accounts.
While these pieces of advice may be a great starting point, get professional support from one of our many brokers or service providers on RangeMe here.
Curious to learn more about what buyers in the U.K. are looking for? Watch our Global Insights: How to Get Discovered by U.K. Retailers webinar here!