The EU agrofood sector: facts and challenges
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The EU agrofood sector: facts and challenges
IP ErasmusJune 25th 2010
• P 9 à 15 rapport EU• 25 à 57
Agrofood- Agroindustry?…
FARM
INDUSTRY
MOLECULESPharmacy, Hygien,
Cosmetics, Detergents…
MATERIALSConstruction, Paper, Textile,
Plasturgy, Metallurgy, Packaging
ENERGYCarburants, Electricity, Heat
FOODAlimentation, ingredients,
processing aids, neutraceuticals
Agro industryIndustry dealing with the supply, processing and distribution of farm products. (Source: PHC)
Agro Food….. For human food purpose A F I
• Definitions• EU AFI: snapshot• EU Agrofood sector– Impact of CAP
– Evolution and consequences• EU AFI : today , tomorrow … challenges
– What do we observe today?– Strengths & Weaknesses– Threats & Opportunities
• An illustration: the meat & poultry meat area
EU Agrofood sectorSnapshot
EU Food & Drink characteristics
53,52733%
12511115%
519,3435,481%178
134,142%
21316456%
World exports of Agri Food products
Total: 1127,7 mio$
P.prod: 913% intra region PA
WTO 2007
3932%
965
EU Food & DrinkA heavy sector
Largest EU Turnover 965 b € +3,2%
Largest EU employer4,4 million
EU Food & DrinksWhat’s in?
Share of main sectors in the EU Food & Drink exports -2008
EU Agrofood sectorA few « takeaways »
• Value added: 2% EU GDP
• Largest Manufacturing sector in the EU - 13,5% employment
• 12,9% EU Turnover 2008- 965 b € +3,2%
• Fragmented market: 310 000 companies, predominantly SME’s
• Shrinking share in 17,5% global export markets
• Insufficient R&D budget: 0,37%
Now: a period of structural adjustment
EU Agrofood sectorImpact of CAP
Evolution and consequences
– Settled in the 60’s to modernize European agriculture
– Clear objectives:• Modernize agriculture • Allow farmers to be competitive
– Basic principles: • Very high prices comparatively to world prices• Guaranteed by intervention• No quantity limit for sales to intervention
History of CAP
CAP and AgricultureEurope self-sufficient
Quick improvement of productivity of agriculture
Farm restructuring slow many middle-size farms kept
Land occupation Rural exodus slowed down ( 60’s,70’s)
Success for intervention systems, resulting in huge… excess of production… expenses for CAP
and critics: from third countries from consumers and importing countries within the EU
CAP and AFI businesses Predictability of business……As prices kept stable
-Competitiveness: expensive inputs-No need to be competitive Trade barriers Restitutions
Food companies policies
• CAP strategy of volume for many companies• Subsidies “addicts” are:
– Weak in innovation– Not “incented”to create brands and added value, except
multinationals • Easy return• Intra EU trade• Large single protected market- SME
90’s 90’s 0790 07
The changes in the 90’s
• EU begins to reform CAP• Lower farm prices and direct subsidies to farmers are
implemented• Limitation of restitutions
– Changing scope for AFI• From 2000, less access to intervention
Need for many companies to change their strategy
90’s 90’s 0790 07
EU Agrofood vs Production
• Production structures weakened in some areas
• Agricultural activity perceived less attractive
• Many small farm structures – Consequently, “high” prices to be paid to
farmers
90’s 90’s 0790 07
EU AFI companies policies
• Different strategies– Delocalization– Concentration – Outsourcing
• Within a difficult context– Less subsidies– Increased competition from 3rd countries
• Many companies facing difficulties – Too many SMEs – Restructuring has still to go on– Mergers, emergence of large players
90’s 90’s 0790 07
EU AFI companies:challenges90’s 90’s 0790 07
• Find new outlets within EU
• Nutrition challenges in sugar, dairy, meat industry
• Weak competitiveness on world market for commodities
• A strong image of quality products from Europe • Strong network of middle-sized companies with high added value•Emergence of large AFI cies • Strong and competitive retail sector
2007 shock
• Catalysers for price increases– Competition for land ( biofuels)– Speculation on cereals– Climate
• Decoupling had strong effects
Possible consequences?
90’s 90’s 0790 07
A few questions for the future
• Localisation of production will still change• In these conditions, where to process ?• Prices will remain high • Added value is more than ever a priority • Strong domestic market is still strong and vast, with
high purchase power consumers
90’s 90’s 0790 07
Takeaways
• Weak competitiveness in terms of raw material• EU has to improve its performances in terms of
structure and price • But holds assets, among which:
– Added value, even if has to be further pushed– Image– Consumers
EU A.F. I.Today… and tomorrow
Challenges
EU A.F.I.Today… and tomorrow
Challenges
What can we observe today?
EU Food & Drink industry ranks low
Competitiveness of the EU Food industry- 2007 -LEI
EU Food & Drink industry ranks (usually low)
by sectors
Competitiveness of the EU Food industry- 2007 -LEI
Open to the World MarketEU: a major exporter – Intra EU share is hig
0
20
40
60
80
100
120
0 20 40 60 80 100% export-intra zone
Agric. Products – export moi$ 2007
% processed products vs agric prod
AsiaEurLatam
AME
NA
0
2
4
6
8
10
12
14
16
18
20
1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
Etats-Unis
Pays-Bas
Allemagne
France
Brésil
Canada
UEBL
Espagne
Chine
Italie
Shrinking share in world trade TOP 10 exporting countries – Food products
1967 – 2007
18,1%
31,3%
Emergence of Brazil and China in Food&Drinks exports
Trade balance still positive but….. Trade balance of Food & Drinks industries
1999: base 100
To be even more accurate..EU Food & Drink trade balance
2000-2008 (b€)
E 52b€ E 58,2b€
I 48,2b€ I 57,1b€
30
35
40
45
50
55
60
65
70
75
80
1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
France
Allemagne
Italie
Benelux
9 autres UE15
12 autres UE27
Importance of Intra EU tradeShare of EU in Food imports by EU member states – 1967/2007
Selective evolution per sectorEU Food & Drink sector’s balance
2005-2008 – b €
Is « in »… open competitionWorld AgriFood companies- Top 30 by Food & Drink sales WW
Eur Sales 08-09 – 189 b€
ABF-UK
Unilever NL/UKInBev/ An-BE
Danone -FR
Heineken-NL
Diageo-UK
Friesland NL
Lactalis-FR
Vion-NL
Nestle CH
US Asia EU
WW Sales 08- 09– 557,5 b€
34%
TOP 30 WW AFI companies
Top 30 European AFI companies by european Food & Drink sales
EU Agrofood Today… and tomorrow
Challenges
What can we see today?Why?
Indice base 100 -2000- Growth of value added/ employee - CIAA 2008
VA/ emp -
€ -2006
USCanadaJaponAustraliaUE25BrasilChina
92,375,365,359,258
25,512;8
Value-added is medium, but still growing
Weak in labour productivity( worldwide comparison)
1000€/ employee – 2008
0 50 100 150 200 250 300
US
Australia
New Zealand
Canada
EU
Mexico
Brazil
China
2005, Eurostat, SBS
Weak in Labour productivity compared with other industries
1000€/ employee
0 20 40 60 80 100 120
Food & Drink
Manufacturing
Automobiles
Basic metals
Chemicals
Textiles
2005, Eurostat, SBS
Labour productivity growth
2007-2008(%)
-1,5%
+0,1%
Insufficient R&D expenditures
CIAA Report 2009
EU Food &Drinks low in economies of scale
• Highly fragmented market– 99, 1% companies are SME employing <
250pp
But…. high in economies of scope• Cultural differences between• Specialized SMEs• Consumer preference for differentiated and healthy products
To sum up….Strengths & Weaknesses
Small size companies Small size companies
Economies of scope Economies of scale
Attractiveness: labour, € Labour productivity
Value added Too low RD expenditures
Trade driven Exports & Trade balance down
In open market- large cies in competition
EU Agrofood Today… and tomorrow
Challenges
Opportunities & threats
Population: a low « growth »EU 25 population -1980-2050
Eurostat
Population: less spendings in HH expenditures
1995 -2008
Impact of retailers in EU
Increasing scale of the retail chainSales evolution in food retail and food processing 2001/2008
USDA
0
200
400
600
800
1000
1200
2001 2008
Food retailFood processing
Increasing scale of the retail chainSeen from another angle
Ex: price evolution along the food chain( monthly price indices)
Sce: Datastream
A threat?Comparative trends in retailing sector and AFI
( Paris stock exchange-01/91: index 100)
« Cost » of raw materials
?
Alimentation – Self sufficiency
Alimenta tion – exportationFirst non food markets
Energy -Carburants
1950 2000 2050
Detergents- Clothing.. …
• Competition from other uses
• Competition from other countries for food uses
• Trade « weapon »• GMO issue ACCESSIBILITY
HIGH PRICES
PRICE VOLATILITY
Administrative « burden »• Regulatory processes in EU: cost, timeframe• Difficulties for companies to deal with
A way to differentiate• Response to ( some class) of customer expectations
– Food safety/ confidence: biosafety, traceability, clean products,image, transparency..– Ethics: animal welfare…Provided the chain can afford it
EU Food regulationEntry ticket
Labelling
Compulsory nutrition labelling
NOVEL Food
GMO – Zero Tolérance
Cost
From 323€ to 6155€/ label
From 4,8mio€ to 35mio€
GM rice: 3,55 / 7,5 moi€Traçeability non listed soya GMs: 1-2,8 b€
To sum up….Opportunities & Threats
• Fragmented market• Cultural differences• Societal issues
– Health & lifestyles– Sustainability– Animal welfare
• Increasing income• Central & Eastern
Europe: new growth poles
• Ict supply management
• Low population growth• Mature market showing
signs of saturation• Bargaining power of
retailers getting stronger• Pressure on SMEs• Restriction to RM
availability – CAP, WTO…– Non food demand
• Volatility of markets• EU Food law procedures
Retailer concentration & internationalisation
Retail driven supplychain
rationalisation
Hard Discount& Retail Branding Developped markets
Low consumption growth- matureSafety-health
Rising feed, labour, fuelaggravated by currency
Political & pressures: CAP Reform…
Horizontal & verticalconsolidation
"Zero risk“- LawRising regulatory costs
Higher volatility in feed ingredients and exchange rates
conditions
Emerging marketsOutsideInside EU
AFI companies
Long term demand potential
WTO-Rising importsLiberalization of trade
MarketingSegmentation
NPD
Safety
Cost reduction
Risk management
Trade weapons
Social expectationsEthics
Challenges in a new globalized environment
Shifts in population structures & lifestyles
Consumer preferences are
changing
Change in policiesLiberalization of trade
Consumer concerns about price, food safety and health
Social expectations/ ethics
Low levels of labour productivity
INsufficient levels of RD investment
Ongoing consolidation of the food supply chain in
favour of retailers
Growing populations in emerging countries
Financial crisisPrice volatility
ICTBiotechnologies
AFI companies Profitability/ sector
Driverfor Profitability …….Position in chain
NestleUnileverConagra
KraftHeinz
Danone…
A few keywords
Consumer choice
Collaboration
Competitiveness
Clustering
AgroLogistics
Social responsibility
Moving society
Sustainability
Innovation
• Pressuire on SMEs which have persistent lack of resoitce: fnancial K, workforce and time, little RD cap of tyheir own
Population & GDP growth
Sce IMF-UN
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
Union européenne à 27Amérique du Nord
Asie de l'Est et du Sud-Est
CEI et Autres Europe
J apon Océanie et Autres Asie
Moyen-orient,Maghreb
Afrique sub-saharienne
Amérique du Sud
Evolution main areas in GWPparité de pouvoir d’achat 2005*
1960 – 2008(% GWP)
Evolution des PIB réels* par habitant1960 – 2007 – US base 100
Major concerns for the future• Globalisation
– Cheap transport– Cheap information transport– LOw transactioncosts
• Structural change– Mass production– Economies of scale
• Change in trade patterns– EU decrease in shares of the world market:
emerging economies, barriers, custom p^roceduires
• ACess to good quality/ competituvely prived RM
Competitoveness?
Change in consumer preferencesDiversified? High quality,
ffordazbleSustanability etcics
Biotechnologies
PUSH PULL
Producteurs Ingrédients Transformateurs Distributeurs
AgroFood chain: specificities
-4,0 -2,0 0,0 2,0 4,0 6,0 8,0 10,0
Arabie saouditeMoyen-orient, Maghreb
Union sud-africaineNigériaRussieBrésil
MexiqueAllemagne
FranceItalie
Autres Europe Canada
Australie/Nelle-ZélandeEtats-Unis
JaponRoyaume-Uni
9 autres UE15 12 autres UE27
Asie et Océanie ndaEgypteTurquieASEAN
IndeTaiwan
Corée du SudChine
2008/1980
1980/1960
Taux de croissance du PIB par tête en parité de pouvoir d’achat
2005*(en %)
World exports by product category1990-2007 -- Mio $
Sce: WTO
0
500000
1000000
1500000
2000000
2500000
1990 2000 2005 2006 2007
FoodprodAgricultural prod.
Power of retailingValue in Agro-Food (EU)
World exports by region2007 -- Mio $
Sce: WTO
0
100000
200000
300000
400000
500000
600000
700000
800000
UE intra
UE extra
Argen
tina
Brazil
Canad
aUSA
China
FoodprodAgricultural prod.
82
CComposition des échanges agro-alimentaires mondiauxomposition des échanges agro-alimentaires mondiaux
46,17
13,88
4149,56
65,59
38,01
85,04
147,28
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
Commodités Horticoles Semi-transf. Transformés
1985-892000-04
Milliards de dollars courants
* Hors échanges internes à l’Union Européenne. Source: FAO-OCDE.
Specialisation de la FranceChelem-CEPII
Position de l’UE 15 dans le commerce agro-alimentairePosition de l’UE 15 dans le commerce agro-alimentaire
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
45
Bulk Horticoles Semi-transf. Transfor.
ExportationsImportationsSolde
Milliards de dollars, moyennes 2000-2004
85
Composition du commerce agro-alimentaire mondialComposition du commerce agro-alimentaire mondial
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Fruits et légumes
Céréales et prép.
Produits laitiers+œufs
Café, thé, cacao, épices
Autres boissons
Graisses végétales
Aliments divers
Tabacs
Oléagineux
Sucres et miels
Viande bovine
Vins, vermouths
Viande de porcs
Fibres textiles
Viande de volailles
Tourteaux d'oléag.
Cuirs et peaux
Prép. de viandes
Caoutchouc nat.
20031980
Em % da la valeur desexportations tous produits agricoles.
Part des principaux produits agroalimentaires exportésPart des principaux produits agroalimentaires exportés en pourcentage de la production mondialeen pourcentage de la production mondiale
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80
Café
Cacao
Farines oléagineux
Matières grasses
Thé
Coton
Sucre
Bananes
Blé
Viande ovine
Viande bovine
Produits laitiers
Viande volailles
Céréales sec.
Viande porc
Riz
Moyennes des années 1995-1998Moyennes des années 1995-1998en %. Source : FAOen %. Source : FAO
Dynamique de différenciation des produits
Nouvelles exigencesNouvelles exigencesdes consommateursdes consommateurs
(qualité intrinséque et(qualité intrinséque etextrinsèque)extrinsèque)
Certification Certification Intégration deIntégration defilièrefilière
InternationalisationInternationalisationde la distributionde la distribution
Rôle croissant dans l’organisationRôle croissant dans l’organisationdu commerce mondial de produitsdu commerce mondial de produits
agroalimentaires.agroalimentaires.
Nouveaux produitsNouveaux produits(biotechnologies)(biotechnologies)
Impératif deImpératif detraçabilité ettraçabilité etsegrégation segrégation
Intégration deIntégration defilièrefilière
Stakes for Agrifood companies
New consumer
s
Product quality
Norms/ Regulation - EU
Ageing population
Traceability/ segregation
Transparency
Health
Rising expectatio
ns
RetailersWeight &
Internationalisation
New products
GMNanotech
Safety
Emerging countries Product volumes
Certifications ( intl – private)
Reassurance
New consumers
from emerging countries Product quality
Norms/ Regulation – Ex: EU
Traceability/ segregation
TransparencyHealth
Retailers
Food Safety
Acess to food
Certifications ( intl – private)
Reassurance
Ageing population
in developped countries
Choice
Internationalisation
Differenciation
Concentration
Products
Brand management
AFI Processing companies
International
markets
Energy/ biofuels
Speculation
Production
Social network
Nouveau fonctionnement des filières
Hier Hier
Aujourd’hui Aujourd’hui
IndustriesIndustriesd’intrantsd’intrants
AgriculteursAgriculteursEleveursEleveurs
CollecteCollecteStockageStockage
Industries deIndustries detransformationtransformation DistributionDistribution
Relations traditionnelles de marché entre les opérateurs fondéesRelations traditionnelles de marché entre les opérateurs fondéesSur l’optimisation des coûts et de la logistique Sur l’optimisation des coûts et de la logistique
IndustriesIndustriesd’intrantsd’intrants
AgriculteursAgriculteursEleveursEleveurs
CollecteCollecteStockageStockage
Industries deIndustries detransformationtransformation DistributionDistribution
Coopération, coordination entre agents, decisions communes,Coopération, coordination entre agents, decisions communes,Intégration de filière. Intégration de filière.
NormesNormesdede
qualitéqualité
ProcèsProcèsdede
productionproductionSecuritéSecurité
alimentairealimentaire TransparenceTransparencetotaletotale
Certification
BiotechnologieBiotechnologie
Coordination desfilières
Filières intégrées (producteurs agricoles,
collecteurs, transformateurs,distributeurs), agents
travaillant en concertationpour assurer la traçabilité et
organiser le processos de pro-duction em fonction d’um
cahier des charges élaboré parle distributeur.
Internationalisation
Création de mécanismes deCertification internationaleAlliances entre groupes de
la distribution
Altération en profondeur du fonctionnement desAltération en profondeur du fonctionnement desFilières internationales.Filières internationales.
Rôle clé des entreprises de la distribution
Turnover of food processing ind
020406080
100120140160180
1er trim. 2e trim. 3e trim. 4e trim.
NordOuestEst
Conditions d’accès au marché de l’Union européenne
Normes légales de production dans l’UENormes légales de production dans l’UEObligation de respecter :Obligation de respecter :
- Législation sur la production agricole et l’élevage.- Législation sur la production agricole et l’élevage.- Interdiction de l’usage de certains intrants - Interdiction de l’usage de certains intrants (hormônes)(hormônes)-Lois sur la protection de l’environnement et le bien-Lois sur la protection de l’environnement et le bien-êtreêtredes animaux.des animaux.- Obligation de traçabilité.- Obligation de traçabilité.
Regime de importaçãoRegime de importação- Normes techniques de l’Union européenne,- Normes techniques de l’Union européenne,- Inspections vétérinaires et sanitaires,Inspections vétérinaires et sanitaires,- Barrières tarifaires. Barrières tarifaires.
Législation nationale Législation nationale et européenneet européenne
LégislationLégislationeuropéenneeuropéenne
NormesNormes complémentaires complémentaires
crées par les crées par les distributeursdistributeurs
et les alliances globaleset les alliances globalesde distributeursde distributeurs
Exigences imposées aux fournisseursExigences imposées aux fournisseursEuropéens et non-européensEuropéens et non-européens
Première phase :Première phase :Normes de qualité intrinsèque, HACCP,Normes de qualité intrinsèque, HACCP,
traçabilité, etc...traçabilité, etc...
Nouvelles exigences imposées aux Nouvelles exigences imposées aux fournisseurs européens et non-européens.fournisseurs européens et non-européens.
(Préservation de l’environnement et de la (Préservation de l’environnement et de la biodiversité, bien- être des animaux, responsabilité biodiversité, bien- être des animaux, responsabilité sociale, absence d’OGM, commerce “juste” ou “sociale, absence d’OGM, commerce “juste” ou “fair fair
trade”trade”).).
Stratégies de différenciation des produits Stratégies de différenciation des produits agricoles.agricoles.
Première option : diversification de l’offre de dérivés (ex : biodiesel).
Troisième option : valorisation des qualités extrinsèques du produit (impactsur l’environnement, gestion de la biodiversité, responsabilité sociale, bienêtre des animaux, etc..).
Quatrième option : Utiliser les apports des biotechnologies (qualité des aliments,alicaments, aliments-vaccins, qualité des fibres, etc...).
Seconde option : valorisation des qualités intrinsèques du produit (tendreté,saveur, valeur diététique, éléments organoleptiques) et relier à la régiond’origine.
Cinquième option : stratégie de marquesCinquième option : stratégie de marques
0
50
100
150
200
250
300
1995 2005 2015
0
200
400
600
800
1000
1200
1400
1600
1995 2005 2015
Millions de ménages urbainsMillions de dollars de 2000
Ménages pauvres (revenu annuel inférieur à 3000 US$).Classe moyenne inférieure (revenu annuel entre 3001 et 4800 US$).Classe moyenne supérieure (revenu annuel entre 4801 et 12000 US$).
Essor des classes moyennes urbaines en Chine
Idfa 2009
French Agro-Food Industry
M.Pourrias, Gödöllo, June 2010
Meat sector
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
10 15 20 25 30 35 40 45Added value/ annual sales exc VAT-%
Annual sales/ employee-m€annual sales exc VAT-m €
Beverages
Grain
Meat
Dairy
F&V
F&V
Fish
EU-25
Sugar
Dairy
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
10 15 20 25 30 35 40Added value/ annual sales exc VAT-%
Annual sales/ employee-m€annual sales exc VAT-m €
Meat
0
0,05
0,1
0,15
0,2
0,25
0,3
10 15 20 25 30 35 40Added value/ annual sales exc VAT-%
Annual sales/ employee-m€annual sales exc VAT-m €
F&V
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
0,4
10 20 30 40 50 60 70Added value/ annual sales exc VAT-%
Annual sales/ employee-m€
Beverages
Top players in the agri food industry
11 european companies among top 30 world• 2nd- Nestle• 6th – Unilever• 11th – Anheuser Busch-InBev• 12th- Groupe Danone• 14th- Heineken NV
Competitiveness of the EU Food industry
EU food industrySWOT
• Weak in economies of scale• WXeak in labour ptroductivity
Sources
• Competitiveness study• CIAA 2009
Meat
Added value/ annual sales exc VAT-%
Direct export/ annual sales exc VAT-%annual sales exc VAT-m €
Beverages
Grain
Oth Food
Meat
Dairy F&VFeed
Fish
European Agri Food Sales 2008- 965 b €
TON of food ind1999 -2°03
Comparison Zones
Production value 2003moi €
0 50000 100000 150000 200000 250000 300000 350000
Fish
Meat
F&V
Dairy
Grain based
Beverages
Sugar
EU 25 US Australia Canada Brasil New Zealand
France
0 50000 100000 150000 200000 250000 300000 350000
Fish
Meat
F&V
Dairy
Grain based
Beverages
Sugar
France EU 25 US Australia Canada Brasil New Zealand
138871 sur 785244 soit 17,7%
France
European Food Industry
020406080
100Threat of entry
Degre of rivalry betweenexisting competitors
Bargaining power ofclients
Threat of substitutes
Bargaining power ofsuppliers
State & regulation
Eu Main issues ksf
• Grow labour productivity• Develop economies of scope• Encourage product innovation ( eu food
law)
• FRANCE
France
• A strong sector – 12% of the value-added of the french industry
• Among top 3 Europe players
• Companies – 10500 415000 people- 130 b € and 26b€ value added
• Performances of SME in AFI are deteriorating, but offset by a handful of large multinationals
• Profiyability of french afi in line with everage for main developed countries,whereas profitabilityof french sm atypical as witnessed by profit ratio and market capitalisations
• More advantageous positions for largset suppliers ( high mS, product diuifrentiation, sophisticated advertising and brand management strategies)and ones occupyng prpoduct niches
France Agri FoodMain characteristics
France
0
1000
2000
3000
4000
5000
6000
7000
0 5000 10000 15000 20000 25000 30000 35000 40000
Export sales m€
Annual sales exc VAT m€
Meat
Oth Food
Beverages
Dairy
Feed
Grain
F&V
Fish
Number of companies
FRance
0
10
20
30
40
50
60
10 15 20 25 30Added value/ annual sales exc VAT-%
Direct export/ annual sales exc VAT-%annual sales exc VAT-m €
Beverages
Grain
Oth Food
Meat
Dairy F&VFeed
Fish
0 10000 20000 30000 40000 50000
Meat
Fish
F & V
Fats & Oils
Dairy
Grain
Feed
Other
Bev
Ann sales exc VATAdded valueExport sales
per employee of the french food industry
0 0,2 0,4 0,6 0,8 1 1,2
Meat
Fish
F & V
Fats & Oils
Dairy
Grain
Feed
Other
Bev
whole
added valueAnn sales exc VAT
Fra,ce rank
• Among the top 100 agrifood companies WW– Danone, Lactalis, Pernof Ricard, Terrena, In
Vivo
2009- Fortune ex °+ modifRevenues B$
Profits b$ Profits %
FCPFCPFCPFCPFPFPBevFCPFPFPBevFCPBevBevBev
CargillNestleUnileverPepsicoKraft FoodsArcher Daniel MidlandsBungeCoca ColaMarsWilmar InternationalTyson FoodsAnheuser busch InBevGroupe DanoneCoca Cola EnterprisesHeineken HlgKirin hlgs
116600101565 59313 43251 42867 69816 52574 31944
29145 28130 23568 22277 21807 21005 18604
333316670 7358 5142 2910 1802 1064 5807
1531 86 1885 1922 -4394 154 776
2,916,412,411,8 6,8 2,6 218,2
5,2 0,3 8 8,6
0,7 4,2
Intra EU Competitiveness of the meat processing industry. I
• Raw materials.– Pigmeat, poultry
&beef– Volatile markets
(animal health situation)– Concentration of the
slaughter industry.– Imports limited
• Labour productivity.– Traditional processes.– Small production runs
• Sales– A few EU/world wide
appreciated products.– Most national/regional
products. – Very limited number of
customers. (Retail concentration)
• Low return on investment.
EuropeanRevenues B$
Profits b$ Profits %
Meat Fish Fresh & processed FV
OIls & fats Dairy( Rabobank 2009)
Tyson foodsCargillNippon Meat PackersSmithfieldDanish CrownVion gpSwift & CoPilgrim’s prideSara Lee foodsHormel foodsGrampian-13Glanbia-15LDC-21
Marine HarvestIcelandicUnileverYoung’s BluecrestThai union fpPescanovaTrident seafoodsCermaqThe Bolton groupAlfesca
DoleChiquitaFresh Del MonteNestleUnileverPomonaBocchi gp/ UnivBocavorBonduelleMc CainFrans ZentisRauch Fuchsafte
UnileverMontedison SpaNisshin oils mealsBunge int ltdRaisio gpConAgra incAjinomoto coCargill inc
NestleDanoneLactalisFriesland/ CampînaFonterraDean foodsDairy Farmers of AArlaKraftUnileverParmalatSaputoBongrainMeijiMorinagaLand o LakesNordmilch
Grain & flour Starch Beer Spirits WineADMCargillConAgraBogarasiSouffletNisshinVK MuhlenMenebaIntermill ParisCereal F PGeneral millsBaystateBungeRank Hovis
ADMCargill-CerestarRoquetteAvebeTale & LyleCorn productsNational StarchSyral –T&LAgrana
In Bev / Anheuser BuschHeinekenSab MillerCarslberg/ Scottish & NewcastleMolson CoorsModeloTsintaoKirin
DiageoPernod RicartUB GroupBearn Glob S &WBacardiSuntoryConstellation brdVandsBrown FormanGruppo Campari
Constellation brdE & J GalloFosters gpThe Wine gpPernod RicartCastel freresBacardi-MartiniConcha y ToroUCCOARHenkel Soenhlein
SugarSudzuckerDaniscoTereosRoyal cosunNordzuckerBritish sugarAzucereraPfeifer & LangenPolski CukierCo Pro B
sources• Key issues for the agrifood sector 2008- Ministry of Agriculture & Fisheries• Agri Food industry margins in France – Tresor-economics -No 53 March
2009
The disadvantages of CAP• The intervention systems have been successful and
efficient • …but so much efficient that they have brought out
huge excess of production• …and consequently huge expenses for CAP• …and critics from third countries due to distorted
competition• …and critics from consumers and importing
countries within the EU
Was it good or bad for food industry ?
The successes of CAP
• Europe has become rapidly self-sufficient • The productivity of agriculture has been
rapidly improved• The farm restructuring has been slow,
allowing to maintain many middle-size farms– Responding to the necessities of land occupation – Slowing the rural exodus during the 60’s and 70’s
Politically, it was a success
R&D - % of industry output for Food & Drink industries
EU food & Drink sector’s balance2005-2008 ( b€)
Share by sector of international trade ( excl. energy) 1967 – 2007
Main household expenditures in EU
Balance AgriFood chain 1967-2006
% of agrifood products trade – Constant price and exchange rate
•Sce- CEPII-Chelem
Share of the house hold expenditure on Food & Drinks
12,9% EU Turnover 965 b € +3,2%
Turnover of food processing ind
0
20000
40000
60000
80000
100000
120000m
eat
USCanadaBrazilAustraliaOther EU 25SpainItalyUKFranceGermany
Share of the top 3 retailers
CAP and Agri Food businesses
•Volume strategy•Trade between EU members
How to compete? Added value
Concentration Delocalisation
90’sCAP starts to be reformedDirect subsidies to farmersLower farm pricesRestitutions are limited
2007Biofuels- Competition for landRM prices boomingConsequences of decoupling
Again How to compete?
New outlets within EU
Challenges in nutritionCompetitiveness weak on world
markets
Shares of the major Food & Drink exporters
Private label share of retailers
Meat consumption per head/ meat type
Sce: FAOstat data
Competitiveness of the EU food industry – A, economic and legal assess – European communities 2007
EU decreasing competitiveness
Europen Food industry
Competitiveness of the EU food industry – A, economic and legal assess – European communities 2007
10 most innovative sectors in Europe2007-2008
World AgriFood companiesTop 30 by Food & Drink sales WW
US Asia EU
WW Sales 08- 09– 557,5 b€
Eur Sales 08-09 – 189 b€
ABF-UK
Unilever NL/UKInBev/ An-BE
Danone -FR
Heineken-NL
Diageo-UK
Friesland NL
Lactalis-FR
Vion-NL
Nestle CH
34%
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