EU industry sees US$264b growth over ten year period, outlined in new analysis by FoodDrinkEurope

26 Nov 2019 --- FoodDrinkEurope has released its latest Data & Trends 2019 report, providing comprehensive statistics and insights on the EU food and drink industry. The report outlines that bloc’s sector employs 4.72 million people, generates a turnover of €1.2 trillion (US$1.3 trillion) and €236 billion (US$260 billion) in value added, making it the largest manufacturing industry in the EU. In half of the EU’s 28 member states, the food and drink industry is the biggest manufacturing employer. The organization further underscores a boom in digital technologies and significant economic stimulation by small and medium-sized companies (SMEs).

Data & Trends 2019 also provides an outlook on markets. About three-fourths of EU food and drink exports are destined for the single market. At the same time, the EU is the largest exporter of food and drink products in the world with extra-EU exports reaching €110 billion (US$121 billion) and a trade surplus of €36 billion (US$40 billion). 

Over the past 10 years, FoodDrinkEurope highlights that the EU industry has grown by €240 billion (US$264 billion). After having been outpaced by input costs for a number of years, the report outlines that the growth of value added in the EU food and drink sector has resumed recently. Over the last decade, value added and input costs in the EU industry have grown faster than in manufacturing in general, with input costs absorbing a higher share of turnover.

The top five sub-sectors (bakery and farinaceous products, meat products, dairy products, drinks and the “various foods” category) represent three quarters of the total turnover and more than 80 percent of the total number of employed persons and companies, highlights FoodDrinkEurope.

European consumption
In 2017, the report outlines that the share of household expenditure on food and drink products remained stable compared to the previous year. FoodDrinkEurope notes the share of EU household expenditure on food and drink products at 13.8 percent. 

Across member states, the share of household expenditure on food and drink products varied from 10 percent to 31 percent. Food manufacturing prices and food prices paid by consumers are more stable than agricultural prices. Food manufacturing prices include other input costs than agricultural raw materials.

Trade within the Single Market
Germany is currently the EU country with the highest level of intra-EU trade in food and drinks. Meanwhile, FoodDrinkEurope details that intra-EU exports account for 25 percent of the EU food and drink industry turnover.

In 2018, intra-EU exports reached €277 billion (US$250 billion), while extra-EU exports were tallied at €110 billion (US$121 billion). In total, exports amounted to €287 billion (US$316 billion).

More than 50 percent of the Dutch and Belgian food and drink industry turnover is generated by exports to other EU member states. The EU drinks sector exports as much to the single market as to third countries, while for most other sectors the value of intra-EU exports considerably exceeds extra-EU exports.

EU27-UK trade
FoodDrinkEurope reports that EU27 exports of food and drink products to the UK would correspond to almost two times the exports to the US and three and a half times the exports to China. As Britain braces for Brexit, both EU and UK industries have rallied for a free trade agreement following the UK’s departure from the single market.

EU27 food and drink exports to the UK accounted for €33 billion (US$36.4) in 2018, with EU27 food and drink imports from the UK amounting to €14.5 billion (US$16 billion). Meanwhile, the EU27-UK trade balance is outlined at €18.5 billion (US$20.4).

Among the EU27 Member States, Ireland has by far the strongest trade link with the UK. Close to 40 percent of Ireland’s food and drink exports are destined for the UK and more than 50 percent of its imports originate from the UK. Wine is the EU27'’s most prominent product exported to the UK, while distilled spirits lead the EU27 imports from the UK. 

Small scale, big impact
The report highlights that the EU industry is a highly diversified sector with many different sizes, with SMEs generating a collective turnover of €531 billion (US$585 billion) and €108 billion (US$119 billion) in value added.

SMEs notably generate almost 50 percent of the EU industry’s turnover and value added and provide two thirds of jobs in the sector. Overall, the sector accounts for more than 290,000 SMEs, employing almost 3 million people. These businesses account for around 99 percent of all food and drink companies.

Digitalization of industry
The impact of new digital technologies is quickly gathering pace and is gaining prominence across all industry spaces. FoodDrinkEurope notes that 88 percent of food companies in Europe are fully aware of the new prospects brought by the digital transformation. Meanwhile, 59 percent of food companies have the necessary skills to harness digital transformation.

“The integration of digital technologies within a company requires significant investment, used to develop new products or services (58 percent) and to improve the production process (74 percent),” highlights the report.

FoodDrinkEurope outlines that 24 percent of food companies that have seen concrete results from the adoption of digital technologies reported an increase in their employee numbers. Twenty-seven percent of food businesses have appointed a Chief Digital Officer.

The report further reveals that there are currently 30,000 robots operating in the EU food and drink industry, while robot sales rose by 52 percent across the sector between 2013 and 2017. “Robotics is becoming common practice, all along the production line,” says the organization.

In the report, Germany and Italy account for 45 percent of European food robots. Meanwhile, Robot density is highest in Sweden, Denmark, the Netherlands and Italy.

By Benjamin Ferrer

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