Flavoured water among exports to UK

The signing of a free trade deal with Britain has given New Zealand exporters a head start to explore untapped export potential, an economist says.

The deal announced last month will remove tariffs on 97 per cent of goods once a final agreement is settled, with all tariffs removed within 15 years. That is expected to save exporters $37.8 million a year.

Infometrics economist Andrew Beattie said while many other countries still faced punitive tariffs and quotas, New Zealand had the upper hand as only the second market, after the EU, to secure a deal post-Brexit.

Infometrics had identified 311 realistic export opportunities in Britain, with the top 10 including wine, cheese and apples.

While wine exports to Britain were already high, there was still room to grow, and the category came out with the highest untapped potential, Beattie said.

‘‘Our enhanced competitiveness through the FTA should allow us to take more market share from other large competitors like France, or help grow the overall demand for New Zealand wine.’’

Among the more unusual opportunities with a high untapped export potential were frozen potatoes, capsicums, and flavoured water.

‘‘Although we currently export very little or zero of these to the UK, they are all large trade markets and have been growing in recent years,’’ Beattie said.

‘‘New Zealand also has established export markets for these products in other countries and should look to the UK for new opportunities.’’

The international bottled water market is estimated to be worth more than $280 billion and is growing by about 8 per cent each year.

Britain imported US$1.4 billion (NZ$2b) worth of flavoured water in 2019, second only to the United States (US$2.26b) and ahead of Germany (US$1.31b).

New Zealand is a small player on the global stage, making up 0.3 per cent of the world’s water exports and facing strong competition from France, Italy, Switzerland, Australia and Scandinavia.

According to the New Zealand Beverage Council, nearly 135 million of the 168 million litres of water bottled in New Zealand each year were sold in the domestic market.

The rest was exported, nearly half of it going to the US.

The US was followed by China and Hong Kong, which took 44 per cent of exported bottled water, and Australia took 4 per cent.

While the FTA would be a good step up for many exporters already tapped into the British market, being favourably positioned did not necessarily mean exports would easily continue to grow there.

Despite New Zealand being the dominant supplier of sheep meat to Britain, this had not been identified as a growth opportunity, Beattie said.

‘‘This is because we are already at or near market saturation. However, sheep meat also has a sizeable tariff in place of 12 per cent.

‘‘Sheep meat is one of the few exports where the tariff elimination will occur 15 years after the start of the agreement. Such arrangements give UK sheep farmers time to adjust to the increase in competitiveness after trade barriers are removed.’’