- British exporters could unlock a premium of up to £2.1bn by branding their products as Made in Britain across the eight countries in the study
- Half of UK goods are currently exported to the EU where British goods command a lower premium but the appetite for British branded goods in new and emerging markets is much stronger
- Overseas consumers will pay a premium for British branded goods above English, Scottish or Welsh
New research from Cebr independently commissioned by Barclays Corporate Banking, shows that products labelled Made in Britain command a considerably higher premium when sold abroad than those with no declared country of origin. When consumers in eight key export markets see the Union Flag on a product, their inclination to buy increases. This is especially true in new and emerging markets where two thirds of consumers (64%) would be more inclined to purchase a product carrying the Union Flag.
The report’s findings sought to understand the value of ‘Brand Britain’ for export purposes in comparison to the brand values of Made in England/Wales/Scotland.
The research combined ONS export data with a survey of 7,610 individuals in eight key export markets (France, Ireland, Germany, the USA, Brazil, South Africa, China and Qatar) designed to examine the premium they are willing to pay for different goods labelled as Made in Britain/England/Scotland/Wales.
When labelled as Made in England/Scotland/Wales, goods tend to command considerably lower premiums than Made in Britain. The only case where this is not true is for alcoholic beverages where the branding Made in Scotland adds a greater premium than Made in Britain in several countries, particularly in the USA and Ireland. However, this is not replicated in new and emerging markets where alcoholic beverages branded as Made in Britain commanded bigger premiums in China and South Africa.
The research, which examined product categories including food, drink, fashion, precision tools and automotives, found that:
There is a stronger preference for British branded products in new and emerging markets than in developed markets. Across all product categories, the ‘willingness to pay’ gap between developed, and new and emerging markets is 4.5 percentage points.
31% of customers in new and emerging markets have knowingly paid a premium for products from Great Britain. The same figure for developed economies is just 14%.
The label Made in Britain triggers a willingness to pay up to 7% more among customers in new and emerging markets than for products without a declared country of origin.
At least 50% of respondents in all countries perceived the quality of British goods to be “good” or “very good”. Scottish, English and Welsh products were also perceived positively, but often not to the same extent.
The report estimates that of the up to £2.1bn premium gain in the eight markets surveyed by labelling goods ‘Made in Britain’, the highest gains, in the order of £0.8 billion, would be obtained for exports to the USA, the market to which the UK exports the most in absolute terms, followed closely by £0.7 billion to China, a country to which UK exports have accelerated rapidly over the last decade.
Across a basket of goods, the additional average gain per transaction for products marketed as ‘Made in Britain’ are highest for food in Qatar (£0.46), for alcoholic beverages in the USA (£0.42), for fashion in Qatar (£1.26), for precision tools the USA (£0.55) and for automotives in South Africa (£1,004).
Rebecca McNeil, Head of Business Lending at Barclays Corporate Banking commented:
“While British businesses are currently reliant on the EU and the USA for the majority of their exports, they are well placed to expand into new and emerging markets. The report shows that the biggest premiums for British branded goods will be paid in these markets, not the developed markets. These new and emerging markets are also growing at a faster rate than the established trading partners, meaning growth opportunities and premium pricing are aligned.
“We understand that these new markets can be more challenging to enter but for those that persevere, there are opportunities for a greater return. Rather than focusing on seemingly saturated developed markets, exporters should seriously consider looking further afield as there are bigger premiums to be had when products are marketed as Made in Britain.”
Other findings from the report include:
- Calculating an average premium made by branding goods exports as Made in Britain shows gains from £22.8m in Ireland to £742m in China and £823m in the USA.
- In terms of perception, goods from Scotland and Wales were most frequently perceived as “standing for tradition” whereas English and British products were most frequently described as “internationally recognised.”
- Scottish and Welsh goods exports are less dependent on EU countries than English exports. In Q2 2014 goods exports to the EU accounted for 50% of English goods export but just 45% of Scottish and Welsh exports.
This study uses stated preference techniques to estimate willingness to pay for five product categories among respondents from eight countries and changes thereto based on the country of origin of the product. This is to establish the premium paid by consumers for different origins. These are: England, Scotland, Wales and Great Britain. The effect of country of origin was tested across five categories: general food product, general alcoholic drink product, fashion item, high precision tool and automotive. YouGov polled 7,610 consumers online as part of its Omnibus Service across eight countries: the US, Germany, France, Republic of Ireland, Brazil, South Africa, China and Qatar. The consumer surveys were carried out with a representative sample of above 1,000 adults (apart from Qatar where only 153 consumers participated in the survey) over the period 2nd to 18th September 2014.
For each of the surveys conducted the responding sample is weighted to the profile of the sample definition to provide a representative reporting sample. The profile is normally derived from census data or, if not available from the census, from industry accepted data. In each of the surveys all figures have been weighted and are representative.
The focus of this research is on the value of Made in Britain, which includes England, Scotland and Wales. In places, official data on UK exports (including Northern Ireland) are used as data separating out Northern Ireland are not available.
All monetary figures quoted in the report have been calculated by Cebr.
For further information about Barclays Corporate Banking, please visit the website www.barclayscorporate.com