Yogurt an opportunity for UK domestic market, says ADHB

If WTO tariffs are applied post-Brexit, trade barrier rates will vary significantly depending on fat level and flavouring. Currently the largest category for both UK imports (36%) and exports (38%) would see a combined tariff of 8.3% of the value of goods plus a fixed amount of €124/tonne, according to the UK Agricultural Development and Horticultural Board (ADHB).

The UK has had a trade deficit in yogurt for a number of years, which reached 126,000 tonnes in 2016. France accounted for around 43% of imports (62,000 tonnes), Germany (41,000 tonnes), Ireland and Greece (both around 15,000 tonnes).

According to Kantar Worldpanel, UK retail sales of yogurt over the last 12 months (52 w/e 16 July 2017) were 616,000 tonnes. Around two thirds of those sales were branded products, a number of which include imported brands such as Activia and Onken.

To replace a net trade deficit of 126,000 tonnes of yogurt, the UK would need to find 130-150m litres of milk, depending on yogurt type. The UK would also need significant investment in processing capacity, and a plan for brand development to offer an alternative to the current brand portfolios.

In price terms, displacement might not be cost effective. In 2016 the average price of imported yogurt was £1,224 (€1,353) per tonne, whereas exports averaged £2,144 (€2,380) per tonne.

Additionally, the majority of yogurt sales in the UK are for flavoured products, for which ingredients are often imported. The high level of brands, the need for significant processing investment and the challenge of importing some base ingredients, means displacement of imports for yogurt may be more difficult than it appears for cheddar.

If WTO or similar tariffs are applied to both UK yogurt imports and exports, the trade balance will change. Regardless of the Brexit trade deal, the key remains cost-effectiveness across the supply chain in order to compete for whatever opportunities arise.

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