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2021 Inetherlands Country Market Profile: Netherlands Euromonitor reports that the Dutch contracted sharply in 2020. The Coronavirus (COVID-19) pandemic derailed the Dutch economy in the first two quarters of 2020. Since the relaxation of the containment measures in late spring, a partial rebound has been under way; this continued to take hold in the third quarter. Real Gross Domestic Product (GDP) will improve to growth of 2.4% in 2021 and will gradually decline to reach about 1.3% per year in 2024-2027. • Real GDP fell by 3.7% in 2020 – down from growth of 1.7% in 2019. This marks the end of six years of consistent growth and will be the largest post-war contraction in the country’s history. • The real value of private final consumption rose by 1.5% in 2019 and a fall of 6.8% was expected in 2020. Consumption expenditure is weighed down by persistent Coronavirus (COVID-19) related uncertainties that depress consumer confidence, as well as adverse employment expectations that are set to keep precautionary savings elevated. • The unemployment rate rose from 3.4% in 2019 to 4% in 2020. Initially, the rise in unemployment pertained to the shedding of workers on flexible and temporary contracts in affected sectors. However, the continued increase after the economy reopened stemmed mostly from the re-entry into the labor market of those who lost their jobs at the onset of the crisis. The Dutch economy depends crucially on foreign trade. Rotterdam is Europe’s largest port, handling more than twice as much cargo as its nearest European rival, Antwerp. The port’s industrial and distribution activities generate annual added value equivalent to around 10% of Dutch GDP. There are also a large number of coastal and international vessels providing cargo services and important ship servicing facilities. Growth in productivity is improving but lags behind that of many European Union member states. The workforce will contract in the medium term as a result of population ageing, making improvements in labor productivity even more important. Larger fiscal surpluses will be needed to offset expected increases in population-related spending. The Netherlands’ population was 17.3 million in 2019, up from 15.9 million in 2000. Total population will be growing very slowly in the future. Median age in 2019 was 42.7 years – 5.4 years greater than the figure for 2000 and above the regional average. USDA’s Foreign Agricultural Service, FAS, Office of Agricultural Affairs or “OAA”, located in The Hague, hereinafter referred to as “Post” reports that although the Netherlands is a small country geographically, it is the gateway for U.S. products into the European Union (EU) due to the presence of the Port of Rotterdam, Amsterdam Schiphol Airport, the confluence of two major European rivers, and an excellent road and railway infrastructure. It is the largest importing country within the European Union (EU) and continues to be the second largest exporter of agricultural products in the world, after the 1 United States and before Germany. These exports include products produced in the Netherlands (€68.3 billion in 2020) as well as imported products that are re-exported (€27.3 billion), often after further processing and adding value. The Netherlands is the largest market for U.S. exports of consumer ready food products in all of Europe and the 8th largest export market in the world. U.S. exports of consumer ready food products totaled US$1.2 billion in 2020, a decline of 8%. The Netherlands are the 2nd largest U.S. processed food export market in Europe after the U.K. and the 9th largest overall, totaling just over US$918.3 million, a decline of 2%. Top processed U.S. food products exported to the Netherlands in 2020 included: • Food Preparations & Ingredients • Fats & Oils • Canned, Dried &Frozen Fruit • Alcoholic Beverages • Processed Vegetables & Pulses • Non-Alcoholic Beverages Retail Sector: Euromonitor reports that the packaged food retail sales value reached US$21.5 billion in 2020. That represented a growth of 11% or over US$2.1 billion since 2016. They also predict growth of 12.7% by 2025, amounting to nearly US$2.7 billion for a total packaged food value of nearly US$24.5 billion. High growth categories in the forecast include: • Ready Meals • Pet Food • Processed Fruit & Vegetables • Sauces, Dressings & Condiments • Breakfast Cereals • Savory Snacks • Ice Cream & Frozen Desserts Post reports that the Dutch retail sector is rather consolidated, employing over 300,000 people and operating over 4,300 stores. This industry profited from the closure of many HRI-Foodservice outlets. The industry’s turnover for 2020 is forecasted at US$52.8 billion, up by 11%. High-end supermarkets continue to gain in popularity as consumers are demanding service, variety, and fresh and convenient products. The two largest food retailers control 56% of the market. Consumers are increasingly looking for sustainable products, healthy foodstuffs, and convenient products. The Dutch are expected to continue to buy more plant-based foods and private label brands. Moreover online shopping is expected to remain popular, and consumers are expected to continue to utilize home delivery services for their groceries. Finally, food retailers are 2 expected to continue to invest in innovative food service concepts at their supermarkets in order to attract customers. Roughly 80% of all food retail outlets are full-service supermarkets, operating between 500 and 1,500 square meters of floor space and located in cities or residential areas. Retailers with full-service supermarkets have responded to the need of the Dutch to have these supermarkets close to their homes. The remaining 20% includes: mainly ‘on the go’ or convenience stores including SPAR City, Jumbo City, COOP Vandaag, and AH To Go, located near office buildings, and train/metro stations, and high traffic areas in city centers; some wholesalers; and a few superstores like Albert Heijn XL and Jumbo Foodmarkt (all conveniently located in shopping malls or industrial parks). The top two food retailers in the Netherlands, Albert Heijn and Jumbo, had a combined market share of almost 56% in 2019. The combined market share held by German discounters, Aldi and Lidl, was almost 18% in 2019. Independent food retail stores are increasingly leaving the market due to shrinking margins, growing competition from online sales, and on-going consolidation. Post reports that overall sales of the Dutch food retail industry have increased 9% since the outbreak of the coronavirus (COVID-19). Because social distancing recommendations have prevented most people from eating out, consumers are increasingly buying more food from their local supermarket, including treating themselves with comfort food as a form of compensation. However, supermarkets and convenience stores located in tourist-focused areas, busy shopping streets, train stations, airports, and other places that depend on foot traffic have seen a significant decline in sales (or have closed their doors entirely). With the increased number of people at home, supermarkets have seen their online sales burgeon, as home deliveries have increased by 40%. Supermarket chains saw their online sales burgeon, up 41% in the first 19 weeks of 2020 compared to the same period a year earlier. While half of Dutch consumers say they will revert to their old purchasing habits after the pandemic, roughly a quarter believe the long-term effects of COVID-19 will persist. Consumers say that for many categories (including dry groceries, beverages, and packaged foods) they plan to continue using online platforms after the crisis ends (instead of returning to a physical store). Euromonitor reports that supermarkets saw significant growth in 2020 as a result of the COVID-19 pandemic. Supermarket density in the Netherlands is very high, and as such most consumers have a supermarket within walking or cycling distance of their homes, making visits to this grocery channel easy and convenient. As greater numbers of local consumers worked from home during the pandemic, they were able to shop in supermarkets more frequently, and those stores located in residential areas saw the strongest growth. The wide product variety and value for money that retailers in this channel can offer was also appreciated by Dutch consumers during the pandemic. 3 Albert Heijn remained unchallenged as the leader in supermarkets in value terms in 2020, thanks to maintaining the largest number of outlets, which are spread across the country. The company benefits from strong recognition for its Albert Heijn brand and years of leadership in grocery retailing. One challenge for the company has been to counter the damaging perception amongst Dutch consumers that Albert Heijn is expensive, and the company has sought to expand its private label range, in particular through its budget private label range. Albert Heijn also recently began to trial self-scanning checkouts in some of its supermarkets, after its successful experience with this payment model in its convenience stores. Jumbo Supermarkten is Albert Heijn’s main challenger, and the latter achieved rapid growth over the last decade, primarily due to the acquisition of former rivals, but did not increase its value share in 2020. Best Product Prospects: Post reports U.S. products present in the market that have good sales potential include nuts (almonds, peanuts walnuts, pistachios, pecan and hazelnuts); fruit juices (orange and grapefruit); beverages, (super) fruits containing high levels of antioxidants like pomegranates, all berries, etc., non-alcoholic beverages; craft beers, dried fruits (dates, figs, cranberries, raisins) Foodservice Sector: Post reports that the Dutch hotel, restaurant, and institutional (HRI) foodservice industry’s turnover for 2020 is forecasted at almost US$11 billion, down by 34%. The steep decrease is due to the measures taken to prevent the spread of the COVID-19 virus.
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