The export market can be a real challenge for smaller brewers but it can also be a risk worth taking, says Martin Constable, chairman of The Can Makers
In the last two years, sales from craft breweries have been booming as increasing international demand for craft products has coincided with a growing thirst for independent British beers.
When it comes to exporting, data from HMRC sourced by the British Beer & Pub Association, showed a total
of 4,495,954 hectolitres of beer exported between January and September 2016, and beer in cans makes up 52% of the export volume — an increase of 51% from 2011.
Cans have seen an increase in popularity as a viable packaging option for exporting, due to their small carbon footprint and ease of transportation. The squat shape of cans makes them cube efficient. They utilise less space than bottles, ultimately reducing the size and number of shipments needed.
The quality of the beer is also maintained in the can, despite being transported vast distances, as it protects against UV light, which can affect flavour. Cans are also less likely to suffer breakages compared to other pack formats, and are tamper resistant and tamper evident, offering peace of mind to consumers.
But exporting shouldn’t be entered into lightly. It can bring multiple benefits (brand expansion opportunities, higher productivity and stronger financial performance), but it can also easily fail and damage the business if it’s not managed properly.
So how can small breweries make it a success? Research, research, research, and understand all the stages of the process. Here are my top five tips to help you think the right way about exporting your product.
1. Research your markets
Businesses should conduct research to identify target markets with the most potential or existing demand for their beer. A good place to start is by contacting trade and professional associations, such as the Food & Drink Exporters Association (FDEA) or UK Trade & Investment (UKTI), for detailed, country-specific advice.
When selecting a market, checking the strength of the economy in the region is a clear starting point, as is the identification of potential sellers or distributors for the brand abroad. Also important is knowing the competitive landscape. Which brands are already selling well in the area? Is there space for you within the market?
2. Consider the law of the land
When choosing a market, local laws and regulations ought to be thoroughly investigated. It may sound unlikely, but the ingredients allowed in a drink or its packaging in one country might be against the law of another.
As part of the process of exporting, brands may need to adapt the label of their drink to meet local regulations. Because laws can vary from one country to another, a simple translation is inadvisable. Within the EU there are standardised rules in place, though some countries have additional guidelines.
3. Do your paperwork
There are few things more inconvenient than starting the export process and paying for the drink to be shipped abroad, only for the product to be halted at customs because paperwork hasn’t been completed correctly.
With Brexit on the horizon, movement in the EU is going to change, therefore paperwork is going to change. The easiest thing to do is to contact the authority in the destination country, asking them simply about the best route through customs.
4. Think about how you transport
Depending on how far you need to transport your product, each mode of transportation offers different advantages for shipment. Important points of consideration are costs, which will vary according to distance, speed and required time of delivery.
Also bear in mind the condition in which the drink must be kept. If, for instance, heat will have a negative effect on the quality of the product, consider modes of transport with cooling options and avoid routes that pass through areas with extreme climates.
Cans are an ideal pack option for any drink brand exporting its product. Cans are lightweight, easily stacked and take up less space than bottles. This provides storage and shipping efficiencies and ultimately limits your carbon footprint.
5. Know your VAT responsibilities
When exporting, there are important VAT rules and duties to consider. If you are producing beer, then you should also visit https://www.gov.uk/guidance/beer-duty to read about required beer duty.
VAT is another fiddly matter that is surprisingly easy to overlook when first assessing the benefits of exporting. Depending on whether the drinks will be exported within the EU or not, VAT responsibilities will differ.
At a basic level, when selling outside of the EU, it is essential that companies keep thorough records and submit details of all sales on their VAT return. They are responsible for clearing goods outwards of the UK through UK customers. Documents that count as proof of export, such those relating to the identity of the customer, the goods and their value, the export destination, the mode of transport and the route, should all be saved. As sales increase, there will come a point when a form called an Intrastat Supplementary declaration will need to be completed.
If in doubt, checking with HM Revenue and Customs (HMRC) will ensure that nothing goes amiss.