Exports were worth £9.9bn (€14.3bn) over the year, the highest level since 1996 when the meat sector was hit by mad cow disease, according to statistics released by Food from Britain (FFB).
"This is the third consecutive year that food and drink exports have continued to rise," stated David McNair, FFB's chief executive. "With the return of beef to European menus and the continued expansion into new markets, we are confident that 2006 will be a defining year for UK manufacturers overseas."
The trade consultancy, which is partly funded by government, said Britain's manufacturers are also taking advantage of new distribution channels, looking beyond just the traditional branded retail sales. Private label product is now a growing area for UK manufacturers, especially in countries such as Spain, Belgium and the Netherlands. The foodservice segment is particularly strong in the expat strong-holds of Spain, Portugal, France and Dubai.
Exports to emerging countries in Asia and the Middle East will play a significant role in this development as many embryonic markets continue to evolve, FFB believes.
Diversification has been key to success with South Korea and Canada entering the top ten countries for exports. South Korea's imports from the UK rose by 22 per cent, Canada's by one per cent. China became on of the top 20 export markets, growing by 62 per cent over the year.
McNair said the growth came without the contribution of red meat, indicating the health of the industry. He urged food and drink companies to focus on growing exports as a means of keeping competitive.
"The opportunities are certainly increasing but competition for these emerging markets is fierce against exporting heavyweights like France, Germany and the US, so we need to shed our UK-centric attitude and encourage more companies, both big and small, to put exporting on the business agenda," he stated.
Food and drink exports to other EU countries grew by three per cent in 2005 to £6.4 billion. Ireland remains the UK's number one market. Exports to the island increased by eight per cent to to £1.8 billion. France, the second most important market, accounted for £1.2bn in exports, a gain of two per cent.
Germany accounted for £579 million of exports, a gain of five per cent.
Exports to the EU's new member states grew by 11 per cent to £191.1 million. Poland was one of the top markets in the region, with sales up 35 per cent to £55 million, resulting from good gains in frozen fish, poultry, spirits and soft drinks.
Cyprus was also an important market, with sales increasing by 14 per cent to £36m. Sales to the Czech Republic were up 18 per cent to £21 million.
Exports to non-EU markets also increased by an average of three per cent during the year.
The biggest gains were made in the Asia Oceania region, where sales grew by 14 per cent. Double-digit increases were made in every country, except Japan, where exports dropped by five per cent to £153 million.
China has been target that represents one of the biggest opportunities for UK food and drink exporters over the next decade according to FFB, as it is one of the fastest growing markets for UK exports in the world.
Sales of alcohol, and especially Scotch Whisky, continue to the most important export product category and grew by two per cent in 2005. Alcohol accounts for about a quarter of all overseas sales.
There was also good news for the UK's farmers as fresh meat exports showed strong signs of recovery, up 10 per cent for the full year to £735 million.
Beef started to make in-roads from a small base, up 25 per cent to £25 million during the year. With the lifting earlier this year of an EU-wide ban on British beef, exports are expected to rise even further in 2006.
Other product categories performing well include seafood, with exports rising by five per cent to £931 million. Sales of seafood to China rose 72 per cent to £33.2m.
Cheese exports rose by eight per cent to £218 million. Breakfast cereal exports rose by seven per cent to 303.3 million. Soft drinks sales were up 16 per cent to £169 million.
Chocolate confectionery exports rose by seven per cent to £285 million, with sales to France particularly strong. Sales in the category to France rose by 15 per cent to £32 million.