Ukraine and Russia Update – Export difficulties


In 2019, UK exports to the Ukraine totalled £7.35million, and were estimated to be in excess of £7.5million in 2021. Though not a significant trade partner for the UK (accounting for only 0.1% of total trade), Ukraine plays a vital part in many UK export agreements.

Both Russia and Ukraine are a key export market for alcoholic beverages, in particular beer and cider. Sovereign Beverage Company Ltd, the UK’s leading exporter of premium beverages, counted the Ukraine as their largest export market last year, exporting premium British brands such as Robinsons Brewery, Westons Cider and Saltaire Brewery.

Due to the Russian invasion, Ukraine has been placed under restrictions, one of which includes banning the sale of all alcohol in order to prioritise essential items. This has resulted in an immediate cancellation of all pending orders, as well as a complete review of forecasted sales for 2022.

A further difficulty for all businesses exporting to Ukraine is that martial law was imposed from 24th February 2022 for a 30-day period. Under martial law, the National Bank of Ukraine has imposed a ban on transferring payments abroad for all but critical imports. The decision will be reviewed at the end of March, and it is anticipated that the limitation will be continued.

This restriction means that suppliers with outstanding invoices can’t be paid. For companies like Sovereign Beverage Company who have extended credit to their Ukrainian customers, this will result in a potential default in payment, leaving them liable with their insurers for a % of the total invoice.

This article was first published on TechRound

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