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The Competitive Position of the European Food and Drink Industry

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The Competitive Position of the European Food and Drink Industry The competitive position of the European food and drink industry Final report Written by the ECSIP consortium February 2016 EUROPEAN COMMISSION Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs Directorate D — Consumer, Environmental and Health Technologies Unit D.3 — Biotechnology and Food Supply Chain Contact: Benjamin Vallin E-mail: [email protected] European Commission B-1049 Brussels EUROPEAN COMMISSION The competitive position of the European food and drink industry Final report Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) 2016 EUR [number] EN Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission however it reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet (http://www.europa.eu). Luxembourg: Publications Office of the European Union, 2016 ISBN 978-92-9202-186-3 doi:10.2826/039661 © European Union, 2016 The competitive position of the European food and drink industry Final Report Client: Executive Agency for small and medium sized enterprises (EASME) Compiled by the following partners of the ECSIP consortium: Ecorys DTI Agricultural Economics Research Institute (LEI Wageningen UR) as subcontractor Rotterdam, 9 February 2016 About ECSIP The European Competitiveness and Sustainable Industrial Policy Consortium, ECSIP Consortium for short, is the name chosen by the team of partners, subcontractors and individual experts that have agreed to work as one team for the purpose of the Framework Contract on ‘Industrial Competitiveness and Market Performance’. The Consortium is led by Ecorys Netherlands and further consists of the partners Cambridge Econometrics, Danish Technological Institute, Euromonitor, IDEA Consult, IFO Institute and WiiW, as well as a group of specialised subcontractors and 28 highly skilled individuals. ECSIP Consortium p/a ECORYS Nederland BV Watermanweg 44 3067 GG Rotterdam P.O. Box 4175 3006 AD Rotterdam The Netherlands T. +31 (0)10 453 88 00 F. +31 (0)10 453 87 55 Email [email protected] ECORYS Nederland B.V. 2 PdB/KK FGK97719 Table of contents Preface 7 List of acronyms 9 List of tables 11 List of figures 13 Abstract 15 Executive Summary 17 1 About this study 25 1.1 Purpose and scope of the study 25 1.2 Guideline for reading the figures with competitiveness results 27 1.3 On the interpretation of results 28 1.4 Activities conducted 29 1.5 Reading guide 30 2 Market performance and competitiveness of the food and drink industry 31 2.1 Introduction to the sector 31 2.2 Trends affecting the sector 33 2.2.1 Income 33 2.2.2 Socio-demographic developments 36 2.2.3 Trends in consumer preferences and trust in the food supply chain 38 2.2.4 Trends downstream in the supply chain 43 2.2.5 Innovation 45 2.2.6 Conclusion 52 2.3 Market performance 52 2.3.1 Agricultural commodity prices and consumer prices 52 2.3.2 Value added 55 2.3.3 Profit margin 56 2.4 Competitiveness of the food and drink manufacturing sector vis-à-vis benchmark countries 57 2.4.1 Overview: EU28 competitiveness versus benchmark countries 57 2.4.2 Structure of the EU industry compared to benchmark countries 58 2.4.3 Trade and market shares 58 2.4.4 Overview of sub-sectors 60 2.5 Summary of the key findings: 63 3 Market performance and competitiveness of selected sub-sectors 65 3.1 The European Meat Industry 65 3.1.1 Introduction of the meat sector 65 3.1.2 Overview of the market for meat products 65 3.1.3 Market performance of the meat sector 66 3.1.4 Competitiveness of the meat sector vis-à-vis benchmark countries 67 The competitive position of the European food and drink industry 3 3.1.5 Summary of key findings: 70 3.2 The European Fish Industry 70 3.2.1 Introduction of the fish processing sector 70 3.2.2 Overview of the market for processed fish 71 3.2.3 Market performance of the fish processing sector 71 3.2.4 Competitiveness of the fish processing sector vis-à-vis benchmark countries 73 3.2.5 Summary of the key findings: 75 3.3 Fruit and Vegetable Industry 75 3.3.1 Introduction of the fruit and vegetable sector 75 3.3.2 Overview of the market for fruit and vegetable products 76 3.3.3 Market performance of the fruit and vegetable sector 76 3.3.4 Competitiveness of the fruit and vegetable sector vis-à-vis benchmark countries 77 3.3.5 Summary of the key findings: 80 3.4 Vegetable and animals oils and fats 80 3.4.1 Introduction of the vegetable and animal oils and fats sector 80 3.4.2 Overview of the market for vegetable and animal oils and fats 81 3.4.3 Market performance of the vegetable and animal oils and fats sector 81 3.4.4 Competitiveness of the vegetable and animal oils and fats sector vis-à-vis benchmark countries 82 3.4.5 Structure of the industry 83 3.4.6 Overview of the sector: 85 3.5 Dairy 85 3.5.1 Introduction of the dairy sector 85 3.5.2 Overview of the market for dairy products 86 3.5.3 Market performance of the dairy sector 87 3.5.4 Competitiveness of the dairy sector vis-à-vis benchmark countries 88 3.5.5 Summary of the key findings: 90 3.6 Cereal products 90 3.6.1 Introduction of the cereal products sector 90 3.6.2 Overview of the market for cereal products 91 3.6.3 Market performance of the cereal products sector 91 3.6.4 Competitiveness of the cereal products sector vis-à-vis benchmark countries 92 3.6.5 Summary of the key findings: 95 3.7 Bakery products 95 3.7.1 Introduction of the bakery sector 95 3.7.2 Overview of the market for bakery products 96 3.7.3 Market performance of the bakery sector 96 3.7.4 Competitiveness of the bakery sector vis-à-vis benchmark countries 97 3.7.5 Summary of the key findings: 100 3.8 Other food products 100 3.8.1 Introduction of the “other foods” sector 100 3.8.2 Overview of the market for “other foods” products 101 3.8.3 Market performance of the “other foods” sector 101 3.8.4 Competitiveness of the “other foods” sector vis-à-vis benchmark countries 102 3.8.5 Summary of key findings: 105 3.9 “Other foods”: Sugar 106 3.9.1 Introduction to the sugar manufacturing sector 106 4 The competitive position of the European food and drink industry 3.9.2 Overview of the market for sugar 107 3.9.3 Market performance of the sugar manufacturing sector 107 3.9.4 Competitiveness of the sugar manufacturing sector vis-à-vis benchmark countries 108 3.9.5 Summary of key findings: 109 3.10 “Other foods”: Confectionery 110 3.10.1 Introduction to the confectionery products sector 110 3.10.2 Overview of the market for confectionary products sector 110 3.10.3 Market performance of the confectionery sector 111 3.10.4 Competitiveness of the confectionery products sector vis-à-vis benchmark countries 112 3.10.5 Summary of key findings: 113 3.11 Beverages 113 3.11.1 Introduction to the beverages sector 113 3.11.2 Overview of the market for beverages 114 3.11.3 Market performance of the beverages sector 114 3.11.4 Competitiveness of the beverages sector vis-à-vis benchmark countries 115 3.11.5 Summary of key findings: 118 3.12 Spirits 118 3.12.1 Introduction to the spirits sector 118 3.12.2 Overview of the market for spirits 119 3.12.3 Market performance of the spirits sector 119 3.12.4 Competitiveness of the spirits sector vis-à-vis benchmark countries 120 3.12.5 Summary of key findings: 121 4 Regulatory and other framework conditions 123 4.1 Regulatory conditions 123 4.1.1 Industry Specific Legislation 123 4.1.2 Common Agricultural Policy (CAP) 130 4.1.3 International trade liberalisation and intra-EU trade 132 4.1.4 Environmental regulations 134 4.2 Other framework conditions 136 4.2.1 Economic developments and the financial crisis 136 4.2.2 Innovation, R&D and Product Development 136 4.2.3 Level of skills and access to labour 137 4.2.4 Developments in food and drink world markets 138 4.2.5 Access to energy and raw materials 140 4.3 Conclusions 141 4.3.1 Regulatory conditions 141 4.3.2 Other framework conditions 142 5 Scenario analysis, conclusions and recommendations 143 5.1 Review of past scenarios 143 5.2 Main conclusions of the current study 143 5.3 Future outlook 144 5.3.1 Exogenous factors 145 5.3.2 Vertical factors 146 The competitive position of the European food and drink industry 5 5.3.3 Horizontal factors 148 5.4 Policy Recommendations 149 5.4.1 Strengthening the international trade position 150 5.4.2 Supporting productivity 150 5.4.3 Improving the functioning of the supply chain 151 Annex 1 Methodology 153 Annex 2 Review of past scenarios 159 6 The competitive position of the European food and drink industry Preface In 2005 the European Commission commissioned a study on the competitiveness of the food industry, which led to the publication of the report ‘Competitiveness of the European Food Industry.
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