Fruit and vegetables to the United Kingdom

(Last updated: 17 Jul 2007)

Trends and opportunities

The market

The single most important trend is the need for supply of almost all products 52 weeks a year. Having been treated like a commodity sector and sold only on price in the past, fresh produce is now starting to be marketed more like grocery products, with a higher profile. This means development of new products, greater store prominence, generic and specific marketing campaigns. Retailers have driven the sector by expanding the product ranges to increase purchasing.

The market for fresh produce is becoming more diverse as consumers demand greater variety and higher quality. Speciality varieties are marketed as premium produce and hold a higher value. The trend of double income families and a desire for convenience food has led to a range of new products. These include:

• Snack packs of baby carrots
• Packs of baby apples and bananas aimed at children
• Cut and peeled ready-to-cook packs of stir fry or casserole vegetables
• Washed mixed salads with dressing and crouton sachets
• Peeled, pitted and sliced fruit lunch packs with forks
• Ripe-and-ready-to-eat packs of avocados, pears, etc
• ‘Flown for freshness’ labelling

Fruit

Retail value of fresh fruit is A$7.4 billion with 90 per cent of fruit imported. The major changes have been in soft citrus, berries, exotic fruit and pears, all of which have seen increased sales. The average UK multiple supermarket now offers:

• Two varieties of avocado
• Two or three varieties of banana
• Four to six types of apples
• Five or more varieties of citrus fruit

Vegetables

The UK remains self-sufficient in many traditional vegetables, and new storage techniques and seed varieties have improved domestic production. Exotic squashes, peppers and chillies are now grown outside in southern England.

Sixty per cent of produce sales are vegetables. Although potatoes remain the dominant vegetable, the trend is away from loose product to part-cooked, ready peeled, chipped and value-added potato. Potato and green vegetable consumption has decreased since 1970. Potatoes are also under threat from easy to prepare carbohydrates such as rice and pasta.

Organic produce is a growing area that also commands a premium of up to 30 per cent. Importantly, 70 per cent of organic products are imported, much from outside of the European Union.

Opportunities

There are a number of key areas where there are opportunities for Australian suppliers, principally:

• Fresh temperate fruit such as premium apple varieties, cherries, nectarines, peaches, late navel oranges, soft and easy-peel citrus, table grapes and berry fruit.
• Fresh exotic fruit – particularly, mangoes, tropical fruits and Australian native fruits (limited).
• Fresh vegetables – limited opportunities but with possibilities for onions and root vegetables.

Competitive environment

Most imports of vegetables come from Europe, mainly Netherlands and Spain, which have well-developed intensive horticulture. Both countries supply tomatoes and capsicum all year round.

Tariffs, regulations and customs

The UK is part of the harmonised trade system of the European Union (EU).  A Common Customs Tariff is applicable to goods from non-EU countries, including Australia. Fresh produce tariffs will vary depending upon the type of produce being shipped, and the time of year.

Most duties are ad valorem (per cent), based on the General Agreement on Tariffs and Trade (GATT) Valuation Code (approximate cost, insurance and freight value). However, some products, particularly those grown in Europe, will attract additional charges or higher duty rates at certain times of the year, increasing the overall cost.

It is worth investigating this issue in some detail as it can have a huge impact on profitability. It is possible to reduce the burden by holding non-perishable goods in bonded cold storage in Rotterdam for release at more favourable times, or by working with one of the major tax accountants. 

If you are shipping any goods to Europe, you should obtain a written customs duty ruling, known as Binding Tariff Information (BTI). Getting a BTI is free and will prevent any conflict over customs or excise duty. A BTI is valid for six years.

HM Customs and Excise
Tariff Classification
2nd Floor South West
Alexander House
21 Victoria Avenue
Southend-on-Sea
Essex SS99 1AA
Tel: +44 (0)1702 366077

Generally there is no Value Added Tax (VAT) on fresh produce.

Industry standards

Many importers will expect to see evidence of in-field Quality Assurance (QA) systems and integrated pest management. Industry standards are distinct from the legal regulations, which suppliers must comply with. The Food Standards Agency is the UK government department in charge of standards, regulations, quality, health and consumer protection. The main industry standards are:

• Hazard Analysis Critical Control Point (HACCP)
• EUREPGAP
• Produce marketing standards

Marketing your products and services

Market entry

Supermarkets don’t buy direct from growers, but have one or two specialist suppliers for each product category. These suppliers, or multipliers, import specific products from around the world in order to provide seamless delivery to the retailer. Some retailers are closely involved in vetting new products and overseas suppliers, while others leave that responsibility to the multiplier.

The key to success is to prove credibility to the multiplier and to become part of the supply program for the retailer.  In order to become part of a supply program, you need to demonstrate consistency in quality, price, volume and supply. This can be difficult for smaller growers, but some have successfully created scale by working with other growers across Australia in formal or informal affiliations. Others have sold through a consolidator or exporter in Australia who handles the relationship with the UK. 

Innovation, rather than increased consumption has driven growth in the UK produce sector. The quality offering has changed so that consumers expect the best all the time - it is hard to market on quality alone.

UK consumers look for three key attributes:

1. Convenience – ripe-and-ready and seedless varieties
2. Time and labour saving – pre-washed, ready-to-cook and pre-packs
3. Novelty – new varieties and ‘baby’ products

Do some research in the UK and visit the leading retailers before approaching potential importers. This will give you a better idea of the products already on offer, the retail prices and what the retailers are looking for.

Australia isn’t a major supplier of fruit and vegetables, therefore many importers and retailers will need to be convinced of your capabilities. Consistency is your most important asset so be clear on supply window, exportable volume, export costs (transport and duty) and shipping times. UK companies expect to build a relationship with their suppliers, so treat your business with them as a long-term strategic investment.

The use of the Internet for internal supply-chain management is becoming more important, but there are mixed messages about the opportunity for exporting produce online.

Distribution channels

In the UK, 50 per cent of fresh produce (by volume) is sold through retail outlets, the remainder through the wholesale trade and for processing.

Retail distribution of fresh produce is via:

• multiple supermarkets – 75 per cent
• greengrocers – 10 per cent
• others (mail order, etc) – 9 per cent
• co-ops – 3 per cent
• independent stores– 2 per cent
• farmshops – 1 per cent

Supermarkets such as Tesco, Sainsbury's and ASDA dominate the retail distribution of fresh produce.  They won’t buy direct, but from preferred suppliers in the UK, who source and deliver the produce to the supermarkets’ requirements.

Smaller retailers such as greengrocers and independent stores tend to buy from the wholesale markets as they are buying in smaller quantities and can be more flexible with their product offering.  Some retailers will have a buyer at the bigger wholesale markets, such as New Covent Garden in London or Rungis in Paris.

The wholesale markets such as New Covent Garden in London are less powerful in produce distribution than their equivalents in Australia. However, there are many small and specialist companies located in the markets supplying restaurants and independent retailers. These companies will often buy in much smaller quantities and make spot purchases and the sector tends to be more price conscious than retail.

Links and industry contacts

Fruit and vegetable related resources

The Department for Environment, Food and Rural Affairs (DEFRA) – www.defra.gov.uk
Food from Britain – www.foodfrombritain.com
Fresh Produce Journal – www.fruitnet.com
Food Standards Agency – www.foodstandards.gov.uk
Institute of Grocery Distribution – www.igd.com
International Food Exhibition – www.ife.co.uk

Government, business and trade resources for the United Kingdom

European Union Customs – http://europa.eu.int/comm/taxation_customs/customs/index_en.htm
European Union Portal – http://europa.eu.int/index-en.htm
HM Customs & Excise – www.hmrc.gov.uk/home.htm
Trading Standards – www.tradingstandards.gov.uk
UK Government Portal – www.ukonline.gov.uk
UK Statistics – www.statistics.gov.uk

Media

Fresh Info subscription e-zine – www.freshinfo.com
The Grocer e-zine – www.grocertoday.co.uk
Just Food e-zine – www.just-food.com/index.asp

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

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