What is Baked Goods Trade Finance?
Despite baked goods being one of the many sectors targeted in the 2018 Sino-US trade war, bread, biscuits and other baked goods continue to form a significant portion of the food processing market. Domestically, bakery trade is one of the most profitable sectors of the industry, and most bakeries have good return on capital. However, few commercial bakeries have the scale to meet the large order volumes demanded by international retail chains whilst satisfying their existing customer base. Trade financing offers a solution to this impasse.
Baked Goods Trade Finance
As global per capita incomes rise, leading global bread and baked goods manufacturers are expanding their operations into Asia, the Middle East, Eastern Europe and Africa. Moreover, a surprisingly large amount of the international trade in baked goods is conducted in frozen baked goods, biscuits, and manufactured baking goods used in other food products, such as pizza bases and ready-made pastry. Crowded markets for baked goods products are also incentivising firms to get creative with products and emphasise the quality of their production processes; as a result, total export volumes of “healthy” baked products, like wholegrain and multigrain bread, or specialist products, such as gluten-free biscuit ranges, are rising rapidly.
For all firms involved in the industry, these trends mean profitable opportunities for firms willing to invest in their international trade ventures continue to arise. However, the low tolerance for investment risk at traditional banks and their strict capital requirements for commercial loans can prevent even large-scale baked goods producers from obtaining finance to invest in these opportunities. To resolve this difficult situation, Trade Finance Global can construct bespoke trade finance products which do not require baking firms to provide large capital securities. Instead, TFG can connect firms to a broad network of private finance sources who lend to businesses on the basis of their business activities (such as profitable accounts receivable). These trade finance products can offer baked goods firms the finance they need to grow their revenues at the speed and flexibility required to satisfy their suppliers.
Key baked goods products include:
- Other baked products
- Your business has a proven trading history in the sector
- Your business is creditworthy
- You are requesting finance to support a profitable international trade venture
Trade Finance Global helps firms overcome delays caused by goods and payments moving over borders through the use of bespoke trade finance tools such as letters of credit or promissory notes. Having arranged to provide finance to a firm purchasing goods, these tools allow TFG to provide conditional credit undertakings to their suppliers. This ensures exporters realise swift returns on their contracts once they fulfil the terms of the transaction by processing and dispatching the goods receivable. This also ensures buyers receive their goods promptly and in good condition. Once received, TFG’s flexible repayment terms allow buyers to realise profits on their goods receivable via sale to business or customers before repayments are made, granting them the opportunity to generate the capital to repay the loan from the profits of the venture.
What is the SIC Code for Trade in Baked Goods?
Four SIC codes cover the production and manufacture of the primary dairy products, with a fifth reserved for margarine manufacture:
|10620||Manufacture of starches and starch products|
|10710||Manufacture of bread; manufacture of fresh pastry goods and cakes|
|10720||Manufacture of rusks and biscuits; manufacture of preserved pastry goods and cakes|
A separate trade finance page exists for Food & Drink Trade Finance.
Full tariff schedules for bread, biscuits & starches can all be found on gov.uk.
A commercial baker in Hertfordshire which distributes its goods abroad required a credit facility to expand its product into an overseas retail chain. An export finance facilitate helped them get the credit they needed to support their growing business.
Learn more about trade finance - speak to the team
- Support from experienced trade financiers
- Access a wide range of bespoke products supported by private lenders
- Grow your business by taking your product to new customers and markets