Help is at hand so food and drink SMEs can expand and export
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Leigh Martin is an intellectual property and brand protection lawyer at global law firm DLA Piper.
It is exciting to see increasing numbers of Yorkshire food and drink producers including many SMEs exploiting export opportunities, particularly outside the EU. There has been steady growth in food and drink exports in recent years, with “Brand Britain” and its associated reputation for quality continuing to add value and help create openings. Yorkshire producers have taken advantage of this demand but clearly more can be achieved. According to data issued for 2018 from the Food and Drink Federation, UK food and drinks exports totalled £22.6 billion last year (£8.6 billion of which went outside the EU) with Yorkshire accounting for £1.2 billion of this.
Whilst exports outside the EU were broadly flat, the top 20 non-EU markets (including Australia, Singapore and China) reportedly saw growth rates exceeding 10%; with particularly strong demand for alcoholic beverages and cheese, where we have considerable strength in our region.
It is self-evidently the case that exporting to new markets and increasing sales to existing overseas markets can help drive business growth, and that the diversification of sales channels can hedge against slower growth in other markets.
Whilst the opportunities can be inviting, the prospect of exporting to new markets can also be daunting, with a myriad of issues to be addressed which can take up valuable time and money. These may include such matters as understanding local cultures, investing to build local demand, choosing and building a relationship with a local partner, navigating local regulations, protecting one’s brand locally and ensuring that brand or other aspects of a product do not infringe on any third party rights – the list goes on.
All of these issues place a greater demand on SMEs than would be the case for a larger and better resourced company. It is, therefore, important for SMEs to take advantage of all of the help they can get. Speaking with a number of local businesses at the recent TheBusinessDesk.com Food and Drink Roundtable event, it was apparent that many benefit from pooling resource and knowledge, for example sharing information on distributors; and it is encouraging to see open collaboration, even between competitors. There are also a number of places to look for funding and other forms of support. For example, expert sector support can be obtained from the knowledgeable and dedicated local representative of The Department for International Trade, which can be invaluable.
One other route to international markets can be found through various types of tie-ups with multinational companies. With the increasing consumer popularity of independent and craft products, we are seeing numerous global businesses acquiring or investing in SMEs, serving these growing markets. Not only can such tie-ups open up new avenues and customer groups for larger businesses, but it can also help them future-proof against changing consumer trends, and to diversify more quickly and nimbly than would otherwise have been the case.
There are numerous ways in which such investments can be structured which don’t result in the SMEs losing control or materially changing the entrepreneurial style in which they operate. Instead they can bring very welcome increased working capital, help to professionalise the business and, crucially, open up substantial established distribution channels.
If a local food and drink producer is considering seeking external investment of any sort, it would be highly advisable to consider all areas of the business which might come under the microscope in any due diligence process. This can allow a business to rectify any identified issues in good time and help accelerate the length of time it takes to put any deal together. It may well also help to maximise the attractiveness and value of the business. Areas to consider would include contracts with key suppliers and employees, the adequacy and suitability of intellectual property protection and the security and length of leases for manufacturing and/or warehouse premises, to name a few.
DLA Piper is a leading global law firm with specialist food and beverage lawyers based in offices across the Americas, Asia Pacific, Africa, the Middle East and Europe, and we are continually engaged in supporting our clients wherever they do business. Our Leeds office, for example, hosts quarterly food and beverage sector networking events aimed at influencers, retailers, manufacturers and intermediaries in the region.
These quarterly events provide a great opportunity for attendees to meet with like-minded people, connect, socialise and build new business opportunities in a relaxed environment. The next event in the series takes place on Thursday 7 November 2019 at Harvey Nichols, Leeds. Ed Sunter, Sales Director of Free Trade, from Leeds Brewery, will be providing a brief talk and showcasing Leeds Brewery’s latest products. If you are involved in the food and beverage sector and wish to attend this event please register by following this link https://www.dlapiper.com/en/uk/insights/events/2019/11/food-and-beverage-sector-networking-event/7-nov/