U.K.: competition is keen in this mature market

AgExporter, August, 1995

The United Kingdom has also been a very good market for U.S. fresh and processed fruits and vegetables, with the U.S. market share continuing to grow. In the processed category, sales of frozen french fried potatoes grew from $2 million in 1990 to almost $20 million in 1994. U.S. exports of frozen french fries continue to grow despite exchange rate movements that could have dampened growth.

With fresh fruits and vegetables, U.S. exporters came in with a very good quality product. They conducted in-store promotions under the Market Promotion Program in conjunction with food retailers. The promotions helped increase market share in several product categories, particularly Washington State apples.

However, now U.S. apple exporters are facing intense competition from Chile and New Zealand, while the quality of EU apples has improved. As a result, it is increasingly difficult to raise market share in this category.

One way U.S. exporters have combatted this stiff competition is by using stickers to differentiate U.S. apples from other countries' apples. Another approach that meets the needs of the major multiple supermarkets and U.K. consumers is to package four apples together in a pack. Because British consumers have very small kitchens and refrigerators, this kind of packaging is more convenient.

As for dried fruits, the United Kingdom is also a big market for raisins, due in large part to the U.S. raisin industry's marketing strategies. In fact, we basically have the market for raisins and have made some inroads in taking share away from sultanas.

Another category where I believe we'll see continued growth is in fruit juice exports. Thanks to aggressive marketing by U.S. orange juice and cranberry juice manufacturers, U.S. fruit juice sales to the United Kingdom reached a record $18 million in 1994, up 60 percent from the year before.

Another consumer-oriented product category showing dramatic growth over the past five to six years has been pet foods. Recently, dry, full-ration dog foods, with which the United States seems to have a competitive advantage over the EU, are being substituted for moist dog foods. Much of this dry dog food is sold through specialty pet stores and veterinarians rather than supermarket chains.

As the U.K. pet population remains steady, the market may be reaching a point where growth will not be as dramatic. New market entrants will need to find niches for some of their products.

Snack foods are another category in which we've seen growth that peaked at nearly $34 million in 1993 and dropped to nearly $21 million in 1994. Sales dropped in 1994 after the pound sterling was significantly devalued against the dollar. This category is very sensitive to exchange rate movements because the target market for snack foods is not the major multiple supermarkets but up-market stores.

What we have seen in the snack foods category and in some other categories as well, particularly dairy products, is a move to produce the product in the United Kingdom after the item has become established in the local market, provided the raw materials are available locally.