EU food and drink industry trends review
industry's performance underlines again how significant the
industry is to the EU economy.
The research, which gives an overview of the structure of the industry, evaluates trade activities and highlights the role of the EU industry on global markets, provides a detailed picture of the state of the industry.
In 2005, the food and drink turnover reached €836 billion. It registered a 2.6 per cent growth, which slightly exceeds the trend observed over the past 10/15 years during which the industry experienced a stable 1.8 per cent average growth per annum.
The data covers the whole food and drink industry, and includes a compilation of indicators taken from Eurostat databases as well as those received from CIAA members. Other sources such as OECD and World Bank have also been used.
The importance of SMEs
It remains a fragmented industry however, dominated by SMEs (Small Medium Enterprise) that account for about 50 per cent of the turnover.
"SMEs make up 99.1 per cent of the food and drink business population," said the CIAA.
"These 282,600 companies generate 47.8 per cent of food and drink turnover and employ 61.3 per cent of the sectorial workforce."
Comparison with the manufacturing industry as a whole highlights the important role of SMEs in the food and drink industry, said the association.
A large European survey also looked at the amount of innovation undertaken by the sector. Although amount of innovation undertaken by firms tends to increase with firm size, a number of indicators demonstrate that most food companies, including SMEs, are genuine innovators and look continuously for opportunities to innovate.
Furthermore, product improvement is the top activity for SMEs.These innovations lead to a quick improvement inthose characteristics of a food product immediatelyrelated to satisfaction (i.e. taste, nutritional value).
Process improvement comes second among thechanges pursued by SMEs.
Key sectors of the food and drink industry
The "various food products" category is thelargest sector of the food and drink industry, accounting for 26 per cent of total turnover and 42 per cent ofthe workforce.
This so-called "various foodproducts" category is a heterogeneous group that includes bakery,pastry, chocolate and confectionery productsbut also pasta and baby food.
The meat sector, beverages and dairy productsare also key branches of the industry and, togetherwith the "various food products" category, theyrepresent 77 per cent of the total turnover and 84 per cent ofthe total number of employees.
In the meat, dairy, various food products andbeverages categories, more than 60 per cent of EUturnover is processed in four Member States. Franceranks first in the meat and dairy sectors, whileGermany dominates the "various products"category and the beverages sector.
Markets and consumption
The EU-25 plays a key role in world trade of food anddrink products. It is the world's largest exporter offoodstuffs and the number two importer.
In 2005, the EU exported €47.6 billion worth offood and drink products to non-EU countries, whileimporting €43.1 billion. The EU registered a positivebalance of €4.5 billion.
The US is by far the number one EU trading partner(exports plus imports), followed by Brazil,Switzerland and Russia. It is worth noting that exports to China increased by24 per cent in 2005 to reach €765 million. After severalyears of stagnation, food and drink imports fromChina exceeded €2 billion, further to a 29 per cent increase in 2005.
Food and drink exports rose in 2005/2004 by 5.3 per cent,significantly faster than the EU foodstuffs turnover. Beverages and "various food products" sectors accounted for 56 per cent of EU food and drink exports.
In 2005, exports inside the EU reached €146.4 billion.This amount is considerably higher than the extra-EU sales.
The intra-EU exports account for 17.5 per cent of the turnover in 2005. At the same time, trade to non-EU countries accounted for 5.7 per cent of the turnover.
Comparisons between intra and extra-EU exportshighlight the importance of trade flows in the internalmarket. Intra-EU exports account for 60 per cent to 85 per centof total sales in each of the 25 Member States.
EU-25 food and drink products on world markets
World exports of food and drink products reached$289 billion in 2005 and registered a 60 per cent increaseover the period 2000-2005. But the EU market share of global export market infood and drink products has been shrinking overthe last ten years (from 24 per cent to 20 per cent) to the benefitof other exporters such Brazil and China (the EU-15 market share decreased from 24 per cent in 1997 to 18 per cent in 2004).
However, after some years of decrease, the performance ofEU products in expanding markets like China, Braziland India, measured as the share of EU goods comparedto imports of food and drink products fromother origins, registered a slight upward trend in2005.
Furthermore, EU external trade balance has resisted better thanthe US. Emerging countries, Brazil in particular,registered huge rises of their trade balance overrecent years.
In 2004, EU-15 R&D intensity, expressed as the R&Dexpenditure in the food and drink industry as a percentageof industry output, was, on average, 0.24 per cent. This is below the spending by the food and drink industries of its main competitors: the US (0.35 per cent),Australia (0.40 per cent) and Japan (1.21 per cent).
Within the food and drink sector, Nestle was theworld's biggest R&D investor in 2005. Unilever rankssecond (R&D figure includes all the company foodand non-food activities).
Apart from these enterprises, three EU and four non-EU companies registerR&D investment above the €100 million threshold.
Worldwide R&D investment continues to be concentratedin technology hardware, pharmaceuticals,biotechnology and automobiles. The food sectorranks 15th in the industrial sectors by aggregate R&Dfrom the global top 2000 companies (one per cent of the totalagainst 55 per cent for the four above-mentioned sectors).
CIAA is the voice of the European food and drink industry and defines its role and mission as representing the food and drink industries' interests, at the level of both European and international institutions.