Monday Interview: Scotch beef firm aims to be big in Japan as Brexit looms

The Scottish meat processor struck a deal last month to export Scotch beef to Japan, a contract which will be worth £1 million to the Broxburn-based company.

For managing director Grant Moir, one of four equal shareholders who acquired the business in 2015, it was a crucial breakthrough as the UK stands on the brink of a new era of international trade, and bids to strike free trade deals with nations such as the US and Japan.

“As Britain goes around trying to negotiate deals with both those countries, it is important that we as a business have a firm foot through the doorway and are able to capitalise on whatever is agreed,” he said.

AK Stoddart’s deal with Japan was a long time in the making, though. The agreement came after Japan opened itself up to beef exports from the UK for the first time in 23 years in January 2019, following their prohibition in the wake of the BSE crisis.

The company, which has plants in Broxburn and Ayr, made contact with its Japanese counterparts around 12 months ago, when representatives from the Scottish firm travelled to Tokyo to assess the market’s potential. It then took part in a major food show in Japan alongside Quality Meat Scotland, which was followed up with a subsequent visit during the Rugby World Cup last autumn.

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“All of that helped to showcase the product, and more importantly we got to network. There is no better way to do business with the Japanese than face to face,” Mr Moir said.

“It will hopefully grow,” he added. “We are forecasting that will generate about £1m worth in incremental sales. Like all markets you go into, [in] two or three years from now that should actually be quite a big market for us. It is certainly quite an interesting market. [With] Brexit coming along… we have to start looking at some of those alternative markets.”

Newspaper coverage of the UK Government’s attempts to secure a free trade deal with the US has tended to focus on food standards, amid fears it could lead to the UK market being flooded by chlorinated chicken.

“It is a genuine concern, and I think there is enough pushback coming from the UK at the moment,” Mr Moir said.

“Certain retailers in the UK have made categorical statements they would not be selling hormone-injected beef or chlorinated chicken. That has made the UK negotiators certainly take it seriously, and I think the UK consumer would push back against anything like that.”

Moreover, Mr Moir observed that the approvals process for food manufacturing companies aiming to export to the US is “incredibly onerous”. AK Stoddart has itself been going through the hoops required before it can begin supplying the market. Its initial focus, when it eventually gets the nod, will be on “ex-pat” areas such as New York.

Mr Moir said AK Stoddart typically generates around 20 per cent of its sales in export markets, and was aiming to grow overseas turnover by 60% this year before Covid struck. It moved into Canada for the first time last year, when it secured distribution with leading butchery shops and one of the country’s top steak restaurants in Toronto. It has a presence in Monaco, through a deal with a company that supplies super yachts and top-end restaurants. Germany is a major market.

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“Certain countries having gone backwards [because of Covid], other countries have carried on pretty much as normal,” Mr Moir said. “The German market has continued to expand for us.”

Asked how concerned he is at the prospect of a no-deal Brexit, Mr Moir replied: “Deeply. We have a lot of business wrapped up in Europe. Having no-deal is going to be hugely problematic – not just for our business, but for the [end of the] free movement of goods between Britain and Europe.

“If I take beef as an example, we are about 75% to 80% self-sufficient in beef, the rest comes in from Europe and the rest of the world, so we have a requirement to import, and if we can’t import freely there are going to be shortages.”

Turning to matters closer to home, Mr Moir said the company has been able to trade continuously throughout the pandemic. It initially put 62 of its 250 staff on furlough, but has gradually reduced that to 22 as the business has recovered.

With the lockdown closing hotels and restaurants for weeks, there has been a change to its usual routes to market. “It has started to re-open, but even still, if you look at some of the bigger markets like London, it is still very, very quiet at the moment,” Mr Moir said. “All of the big corporations are not really fully operational, so a lot of that wealth is not getting spent.

“But at the same time, the top-end independent butcher trade has expanded massively; it has done really, really well. People have changed how they are shopping.”