Transcript Report - EMI - GHI Greenport Holland International
OVERVIEW OF THE FRESH FRUIT, VEGETABLE AND FLORAL INDUSTRIES: GERMANY
A custom report compiled by Euromonitor International for the Produce Marketing Association on 1 April 2014
D i s c l a i m e r : © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A l l r i g h t s r e s e r v e d . T h e m a t e r i a l c o n t a i n e d i n t h i s d o c u m e n t i s t h e e x c l u s i v e p r o p e r t y o f E u r o m o n i t o r I n t e r n a t i o n a l L t d a n d i t s l i c e n s o r s a n d i s p r o v i d e d w i t h o u t a n y w a r r a n t i e s o r r e p r e s e n t a t i o n s a b o u t a c c u r a c y o r c o m p l e t e n e s s . A n y r e l i a n c e o n s u c h m a t e r i a l i s m a d e a t u s e r s ’ o w n r i s k . T h i s d o c u m e n t i s c o n f i d e n t i a l a n d f o r i n t e r n a l u s e b y t h e P r o d u c e M a r k e t i n g A s s o c i a t i o n I n c . a n d i t s a f f i l i a t e s o n l y . P u b l i c a t i o n o r m a k i n g a v a i l a b l e t o a n y t h i r d p a r t y o f a l l o r p a r t o f t h e m a t e r i a l c o n t a i n e d i n t h i s d o c u m e n t ( o r a n y d a t a o r o t h e r m a t e r i a l d e r i v e d f r o m i t ) w i t h o u t E u r o m o n i t o r I n t e r n a t i o n a l ’ s e x p r e s s w r i t t e n c o n s e n t i s s t r i c t l y p r o h i b i t e d . P l e a s e r e f e r t o t h e a p p l i c a b l e t e r m s a n d c o n d i t i o n s w i t h E u r o m o n i t o r I n t e r n a t i o n a l .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 2
TABLE OF CONTENTS
© E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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EXECUTIVE SUMMARY
Economic strength results in solid expenditure on
As the leading economy and one of the political leaders in the European Union (EU), Germany enjoys high living standards. In total, Germans spend on food and non-alcoholic beverages more than the EU average, 14% of which goes on vegetables and 10% on fruit. The fresh produce market is highly saturated, with a wide offering and entrenched fruit and vegetable consumption patterns. Spending on fresh-cut flowers is also solid with a total market size of US$12 billion in 2012.
3.6 3.9
1.3% 0.5 0.5 1.2% 3.7 5.0 6.0% 1.4 1.5 2.0%
Germans consider fruit and vegetables beneficial
Awareness of the importance of fruit and vegetables in a healthy, balanced diet is widespread amongst the German population. Germany EU Average BRIC Average OECD Average
Chart 1 GDP 2012 and 2017 (US$ trillion 2013 prices), and CAGR 2012-2017
Source: Euromonitor International Passport One of the most prominent campaigns in the relation to fruit and vegetables is the “5 am Tag” (5 a day) campaign, communicating the benefits of eating five portions of fruit and vegetables a day to stay healthy. The campaign was initiated in 2002 by the EU and is supported by federal ministries across the country. Reduction in meat consumption or even becoming a vegetarian is another growing consumer trend related to health as the consumption of red meats is increasingly seen as a factor in the cause of various cancers related to the digestive system. While organic fresh produce is up to 30% more expensive than its nonorganic equivalent, steady growth in consumption of organic fruit and vegetables is yet another manifestation of the health and wellness trend.
Potatoes and apples lead fresh produce consumption
Potatoes are the most important staple in Germany with consumption volumes double that of tomatoes, the second most popular vegetable. Cabbages, carrots, cucumbers, lettuce and onions are other popular vegetables. Apples lead fruit consumption with bananas being second overall. Bananas are the most popular imported fruit. Cherries, pears, plums and strawberries are other important fruit.
Opportunities for convenient fresh produce increase
Eating salads and light lunches is on the rise in an eating culture determined by hectic and active lives. The number of retail outlets with salad bars and convenience-style offers of salads and fresh soups has increased dramatically over the past ten years. This trend led to increased consumption levels of lettuce and similar vegetables. An increase in the number of one-person households and Germany’s ageing population are also expected to increase demand for frozen ready meals, many of which contain some vegetables. New techniques of freezing vegetables claim to maintain nutritional value and vitamins, making them a healthy option in the minds of many consumer groups who are not inclined to enjoy cooking.
Importance of ethical sourcing increases
Ethical sourcing standards are becoming important, as consumers are becoming more aware of issues surrounding fresh produce and food stuffs in general. Conditions of workers in southern Spain, living and working conditions of banana farmers abroad and other related issues are forming opinions on what type of produce to purchase. Consumer activism and boycotts of fruit and vegetable produced under unethical conditions are expected to rise in number and play a more influential role in the next decade.
Highly efficient supply chain
Increasing bargaining power of chained retailers and their ambition to speed up distribution logistics has led to supply market consolidation. Retailers have established direct links with farmers and their cooperatives, resulting in wholesalers and other intermediary players losing market share. Otherwise, the fresh produce supply chain is already highly efficient, with a sophisticated road network, technologically sophisticated trucks with cooling and atmosphere-control systems and well-tuned regional and federal farmer cooperatives facilitating fresh produce distribution from farmer to wholesaler and retailer. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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Discounters offer most opportunity among retail channels
Approximately 80% of fruit and vegetables in Germany is sold in modern grocery retail channels such has hypermarkets, supermarkets and discounters. For the most popular and common fruit and vegetables – apples, bananas, pears, plums, oranges, capsicums, carrots, lettuce, potatoes and tomatoes – discounters generally account for half the sales across modern grocery channels due to their wide outlet network, quality product range and very competitive pricing. Supermarkets account for 35-45% among the modern channels and have a competitive advantage in offering more of exotic fruit and organic produce. Nevertheless, the amount of organic produce is rising in discounters too.
Almost half of all fruit and vegetables consumed in Germany are imported
Fruit and vegetables from all corners of the world find their way onto German tables making for a diverse offering in fresh produce. Approximately half of all fruit and 57 vegetables consumed in Germany are imported, making Germany the second largest fruit and vegetable importer in the world. Many of the popular fruit are not commercially grown in Germany because the climate is unsuitable for the cultivation of, for example, bananas, citrus fruit and peaches. Table grapes in Germany are imported too as local grapes are destined for wine production. Among vegetables green asparagus, artichokes, aubergines and capsicums lack substantial local production and have to be imported. Another major function of imports is to supply the local market outside domestic season. Approximately 90% of imports come from the EU with Spain, Italy, France and the Netherlands being the most important fresh produce suppliers. In winter, produce, such as grapes and oranges, is imported from southern hemisphere countries, especially South Africa, Chile and Argentina.
Local production well developed and strongly preferred by local consumers
Agriculture makes up less than 1% of GDP and employs 1.2% of the work force. Farms are usually relatively small, although larger in the east. Small and medium farms are usually linked together via cooperatives which create collective support in production and distribution of produce. Germany has one of the most technologically advanced farming sectors in the world. Only unfavorable weather conditions such as late frosts or wet springs can a negative effect on production volume and can increase need for imports. If local produce is available, it is always preferable. Germans are especially fond of local seasonal fruit such as blueberries, cherries, plums and strawberries. Retailers advertise the local origin of their fresh produce to highlight its freshness and resulting benefits to the environment from a reduced carbon footprint.
Regulatory regime follows high standards set by EU
German state regulation sets high standards for production methods and sanitary conditions. State and EU single market norms define high standards in terms of animal welfare, hygiene and transparency in production methods to ensure safety of food products. Imports are largely regulated only by the EU. While distribution from outside the EU is monitored, there are no license requirements for fruit and vegetable import, distribution or retail. Neither are there currently any bans on major fruit and vegetable varieties in existence in Germany. For distributing fresh produce inside the EU, there are several important EU marketing norms and control directives in place. Use of pesticides and traces of them in fresh produce is also regulated by a number of EU directives. EU and German regulations impose varying quotas and import taxes for fresh fruit and vegetables, depending on country of origin. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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Chart 2 World Countries Most Similar to Germany 2012 (Within a Difference of 10%): by Population , by Consumer Expenditure per Capita , and by Combination of GDP and Consumer Expenditure per Capita . Note that France has the closest GDP to Germany with a 24% difference, which is not shown
Source: Euromonitor International Passport
COUNTRY OVERVIEW
BACKGROUND
Second largest European country in a central position with temperate climate
In terms of size, it is the continent’s 4 th largest country, behind France, Sweden and Norway. The climate is moderate with four seasons, warm summers in the south, cold winters throughout and relatively moderate spring and autumn weather patterns. In agricultural terms the weather conditions are similar across the country, although the south is blessed with a warmer climate and more sunshine. Whereas crops such as potatoes and apples, the two most important crops in Germany, grow throughout the country, fruit such as plums and strawberries have a greater concentration in southern regions.
Leading member of the European Union
One of the leading members of the European Union (EU) in terms of political and economic direction, the country is shaping European policies on numerous levels, including for import and trade. As the most powerful economy in the EU, the country also enjoys high living standards.
Grand coalition governing the country
Germany enjoys a stable democratic political environment. In the national elections of 2013, Chancellor Angela Merkel was reconfirmed into office, making her the longest serving head of government in the EU with a tenure of 13 years.
Table 1 The Worldwide Governance Indicators 2013
Source: The World Bank
Indicator
Voice and Accountability Political Stability and Absence of Violence/Terrorism Government Effectiveness Regulatory Quality Rule of Law Control of Corruption
World Rank
15 / 212 62 / 212 15 / 210 17 / 210 18 / 212 14 / 210 However, her party, the Christian Democrats, did not win the outright majority needed to govern alone, and a grand coalition was formed with the Social Democrats, merging the policies of Germany’s two largest parties. The coalition is expected to publish a political agenda based on fiscal discipline across the EU to generate long-term economic growth. With respect to trade relations with Germany’s major partners, stability and continuity is expected to guide the policy of the grand coalition. However, negotiations for a free-trade agreement between the EU and the United States are stuck on several issues, as mutual trust between Germany and the USA has been dented by the surveillance scandal unveiled by NSA whistle-blower Edward Snowden and revelations that the NSA wiretapped Chancellor Angela Merkel’s mobile phone. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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MACROECONOMIC ENVIRONMENT
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Feeble growth to remain through 2014
Germany’s real GDP grew by 0.4% on a quarterly basis in the 4 th quarter of 2013 following a 0.3% rise in the 3 rd quarter, despite on-going economic difficulties internationally. For 2014, the German economy will see feeble but slightly stronger growth of 1.4%, as the economy is driven by domestic demand and a modest increase in public investment. Much of the success of the German economy, however, is based on its exports from manufacturing businesses, which contribute 22% to GDP. Business investment remains plagued by uncertainty, and investment as a share of GDP is lower than for most large economies. Weakening investment activities act as a brake on the economy.
3.6 3.9
3.7 5.0 6.0% 1.4 1.5 1.3% Germany 0.5 0.5 1.2% EU Average BRIC Average 2.0% OECD Average
Chart 3 GDP 2012 and 2017 (US$ trillion 2013 prices), and CAGR 2012-2017
Source: Euromonitor International Passport Inflation has been low, with 2013 rates at 1.4%, down from 2.0% in 2012. Annual inflation is expected to rise again gradually to 2.0% by December 2014, as a result of monetary stimulus by the European Central Bank (ECB) and rising wages and record low unemployment in the German economy.
Business friendly climate however high level of taxes and regulations
Protecting Investors Registering Property Paying Taxes Enforcing Contracts Getting Credit Starting a Business 50.0 72.6 73.1 76.6 81.3 82.1 Germany generally has a business-friendly climate although it dropped two places in its ranking in the Doing Business 2014 index. As the largest market place in Western Europe with a population of 82 million, doing business in Germany has wide prospects of success, and several global corporations have subsidiaries in the country. Trading Across Borders Resolving Insolvency Dealing with Construction Permits Getting Electricity 87.2 87.8 89.2 99.8
Chart 4 Distances to the Best Observed Doing Business 2014 Performances (100 Represents the Best; Shorter and Longer Distance Compared to Doing Business 2013
Source: Doing Business 2014 - The World Bank Economic policies encourage competitiveness, but also the social security of its workforce. The country’s social market economy imposes high taxes on business in terms of employment benefits and social duties as social welfare programs are funded by high taxes. Similarly, businesses are subject to relatively high levels of regulation when compared to peer countries in the European Union.
Largest current account surplus in the world in 2014 indicates strong export performance
In 2011, German exports to the rest of the world stood at US$1.5 trillion, and in 2013 the share of exports to Germany’s GDP amounted to 40.1%. The importance of exports to the economy has resulted in one of the world’s largest current account surpluses in 2014. The substantial surplus has been criticized as a potential source of destabilization for the overall European economy. Engineering, chemical, automotive and construction products and services form the backbone of Germany’s export economy. The large majority of this export business, around 60.6%, was done with other EU partners and Germany accounts for more than half of the European Union’s international trade. Other important trade partners include the USA and China accounting for 6.3% and 5.1% of total trade, respectively. Exports to China are expected to rise despite the slowdown in that country. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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Chart 5 Key Imports
Source: UN COMTRADE
, Import Partners , Exports and Export Partners 2007-2012 (Font Size Indicates Average Annual Trade Value; Benchmark Font Size is in the Right Bottom Corner)
SOCIO-DEMOGRAPHIC ENVIRONMENT
An ageing population burdens future economic outlook
Negative population growth combined with an aging population could curtail the long term growth potential of the German economy, as both factors are expected to lead to a declining workforce and lower productivity from older workers. Germany has one of the world’s oldest populations. A median age of 45 years in 2012, up from 41.4 years in 2004, is testament to this. The growing number of older consumers is also altering the pattern of consumption as older consumers look for greater convenience. Germany’s population has been declining for several years and stood at 81.8 million in 2012. By 2030, the country’s population will be at least 8% below the peak recorded in 2003. The country’s workforce is expected to shrink in tandem 729.3 with a possible 12% decline by 2030.
81.8
-0.1% Germany
Chart 7 2012-2017
0.2% 14.9 EU Average 0.9% BRIC Average
Population 2012 (million) and
Source: Euromonitor International Passport 0.5% 36.8 OECD Average
CAGR
Immigration could be a solution but faces general immigrants resistance from many Germans. Although there is a wide acceptance of from southern European countries, such as Greece and Spain, plagued by economic troubles and high
Chart 6 (million) Population by Federal State 2012 and Inhabitants Cities with Over a Million (Berlin, Bremen and Hamburg are Both Cities and Federal States)
Source: Federal Statistical Office and Euromonitor International Passport unemployment, immigrants from Romania and Bulgaria, for example, are sometimes frowned upon. Seasonal workers from © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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INCOME
High per capita income and solid middle class
Germany's per capita disposable income is the third highest in Western Europe, and this combined with a solid middle class gives generous capacity for discretionary spending. Middle class households comprise around a third of all households. Germany is also a relatively equal country, being ranked 18th out of 85 countries in terms of income equality in 2011. As a result lifestyle choices rather than income primarily determine consumption patterns. The highest consumer incomes and expenditures are found in the southern states of Bavaria and Baden-Württemberg as well as in North-Rhine Westphalia. States of the former East Germany continue to have lower consumer expenditure than those in the west, even 23 years after reunification in 1990.
28 874.2
0.9% 21 682.3 0.9% 5.4% 3 191.0 24 927.8 1.3% Germany EU BRIC OECD
Chart 8 Annual Disposable Income per Capita 2012 (US$ 2013 prices) and CAGR 2012-2017
Source: Euromonitor International Passport
Chart 9 Annual Disposable Income per Capita by Federal State 2012 (US$ 2013 prices) and Cities with Over a Million Inhabitants (Berlin, Bremen and Hamburg are Both Cities and Federal States)
Source: Federal Statistical Office and Euromonitor
Chart 10 Consumer Expenditure by Federal State 2012 (US$ billion 2013 prices) a Million Inhabitants and Cities with Over (Berlin, Bremen and Hamburg are Both Cities and Federal States)
Source: Euromonitor International Passport 1 Data from national statistics as reported by the BBC © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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FRESH PRODUCE CONSUMPTION
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CONSUMER EXPENDITURE
Large amount of choice among fruit and vegetables encourages consumption
Germans spent more in absolute terms on food and non-alcoholic beverages than the average for the European Union. 13.2% of overall expenditure in 2012 was spent on food. 100% 80% 60% 40% 20% 0%
Chart 12
21 151.6 2 789.0 Germany
Alcoholic Beverages Expenditure
17 034.2 2 531.5 EU
vs.
1 660.5 578.5 BRIC
Other Consumer 2012 (US$ 2013 prices)
Source: Euromonitor International Passport 20 173.9 2 439.7 OECD
Consumer Expenditure on Food and Non-
Oils and Fats Fish and Seafood Other Food Fruit Sugar and Confectionery Vegetables Milk, Cheese and Eggs Non-Alcoholic Beverages Bread and Cereals Meat 70.5 84.9 140.9 199.9 226.6 263.4 331.9 343.6 535.7 591.8
Chart 11 Consumer Expenditure on Particular Foodstuff per Capita 2012 (US$ 2013 prices)
Source: Euromonitor International Passport Of the total expenditure on food for 2012, 10.2% was on fruit and 13.6% on vegetables. These proportions have remained relatively stable with time, indicating well entrenched consumption patterns for fruit and vegetables in Germany and sufficient choice in fresh produce.
High disposable income supports spending on discretionary pleasures such as flowers
Giving flowers plays a central role in social and cultural events. In 2012, Germans purchased flowers and plants to a retail value of US$12 billion, spending US$146 per person, according to the Verband des Deutschen Blumen Gross – und Importhandels e.V. Cut flowers comprised US$3.9 billion. Spending on flowers has been negatively affected by the economic downturn but 2012 expenditure was 1% more than the previous year. 2012 also was the best year for flowers since 2008.
FRESH PRODUCE CONSUMPTION TRENDS
Lifestyle choices the largest factor in fruit and vegetable consumption
Awareness of the importance of fruit and vegetables in a healthy, balanced diet is widespread amongst the German population. Lifestyle choices are the largest determining factor for fruit and vegetable consumption in Germany. Although factors such as income, education, social background and cultural factors play a role in diets and influence levels and variety of fruit and
“Eating fresh, preferably regionally produced fruit and vegetables is becoming a new virtue amongst consumers”
Proplanta, Media vegetable consumption, a large variety of fresh produce is widely and easily accessible to everyone. Fresh produce consumption is not hindered by socio-economic conditions of those falling below median incomes.
Potatoes and apples remain favorites among wide variety of fruit and vegetables
Fruit and vegetables from all corners of the world find their way onto German tables, making for a diverse offering in fresh 61 24.8 8.9 8 6.4 4.9 3.4 3.1 2.6 2.3 Potatoes Tomatoes Carrots Onions Cucumbers Cabbage Lettuce Peas/Beans Brassica
Chart 13 Popular Types of Vegetable Consumption 2012 (kg per capita)
Source: Federal Ministry of Food and Agriculture Leeks © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y . 1.3 Asparagus
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24.8kg per capita in 2012. Other popular vegetables include carrots, onions, cucumbers, cabbages and lettuce. 9 676.9 6.2% 4.4% 3.8% -1.9% 1.1% 858.4 1.3% 786.6 0.9% 720.6 0.1% 672.8 739.9 420.6 332.5 -0.1% 226.6 1.3% 222.8 Potatoes Cabbages Carrots Tomatoes Cucumbers Onions Lettuce Capsicum Peas Cauliflowers and broccoli
Chart 14 Vegetable Consumption Volume 2012 (‘000 metric tons) and CAGR 2007-2012
Source: FAOSTAT and UN COMTRADE Per capita consumption is broadly reflected in volume consumption, although it should be noted that the consumption shown
for cabbage with the second highest volumes in 2012. However, consumption volumes of the country’s most popular fresh produce, the potato, has experienced a small decline of 1.9% in volume between 2007 and 2012. In the same period lettuce showed the highest growth with 6.2%, followed by capsicum peppers with 4.4% and onions with 3.8%. A wide range of domestically grown and imported fruit and vegetables are available in retail outlets. However, the most eaten fruit by far is the apple, with a per capita consumption of 25 kg in 2012, followed by bananas, which lead imported fruit in
consumption (Chart 15). Other important fruit include pears, plums, cherries and strawberries.
25.0 10.0 5.0 5.0 4.0 3.5 3.5 2.5 2.0 1.4 Apples Bananas Oranges Grapes Clementines Strawberries
Chart 15 Popular Types of Fruit Consumption 2012 (kg per capita)
Source: Federal Ministry of Food and Agriculture Peaches Pears Cherries Raspberries Many of the popular fruit are not commercially grown in Germany because the climate is unsuitable for the cultivation of, for example, citrus fruit and bananas. Late frosts and wet springs can also negatively impact harvest yields, and imports of popular fruit such as pears and grapes are required to feed local demand.
Five megatrends shape future consumption patterns
Fruit and vegetable consumption has increased over the last five years to 2012, and further growth is expected for fresh produce as a whole, given high levels of awareness and on-going health campaigns promoting the consumption of fruit and vegetables. Wide availability of fresh produce in retail will support growing consumption levels. Although increasing prices for selected fresh produce, such as organics or citrus, as producing countries have faced adverse weather, may result in some varieties experiencing lower growth, the wide spectrum available is expected to lead to switching to more affordable produce. The following megatrends have a significant impact on changing consumption patterns for fresh produce.
Healthy Eating Convenience Sustainability Indulgence Local sourcing
The drive for a healthier lifestyle and diet will be the most important driver benefiting increased volumes. Germany’s ageing population is expected to demand conveniently pre-cut and washed fruit and vegetables. Parents also find it easier to feed their children pureed fruit and vegetables. Sustainability concerns among consumers is driving a more conscious approach to reduce food waste. Exotic fruit and vegetables are often considered premium foods. Shorter transport distances for fresh produce contribute to a lower environmental footprint. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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Little change in popularity of different types within overall growth of fresh produce
Consumption patterns for fruit have essentially not changed as the range of fresh produce offered in retail has remained unchanged. Evergreens such as grapes, oranges, pears and apples experience only minor fluctuations in popularity. Short term trends include a decline in the popularity of grapefruit at the expense of other citrus fruit, such as mandarins. New varieties of table grapes may also avert attention away from other fruit. Cranberries have become more popular on the back of claims of their antioxidant content, and new types of rounder peaches such as the paraguayo peach have appeared on grocery shelves. Green asparagus is slowly moving out of the shadows of the revered white asparagus and is finding its way into the German diet.
Country of origin and ethical standards influence consumption
Provenance of fruit and vegetables is important to German consumers, who generally prefer local and regional produce, where regional extends to other EU countries. They are also often prepared to pay more for such produce. The carbon footprint of imported of fruit and vegetables has become a growing concern. Ethical standard also play a role with Fairtrade actively increasing its public profile in 2014 with large billboard advertising around the country. Consumers are increasingly aware of issues related to fruit and vegetable production such as working conditions in southern Spain and of banana farmers, as examples, and some factor these into purchase considerations.
Seasonal fruit such as strawberries signal summer
Germans are very fond of local produce and especially seasonal fruit. The majority of fruit are now available throughout the year as a result of imports from southern hemisphere countries in winter to make up for the lack of local production at that time. Nonetheless, seasonal produce, and particularly fruit, plays a strong role in Germany as these signal summer. The fruit with most seasonality in consumption include strawberries, plums (German variety name “Zwetschge”), cherries and blueberries. All are dependent on ripening to perfection before harvest as early picking leads to lack of taste and juiciness. Strawberry season in Germany starts around June but fruit from Spain, the largest exporter to the German market in 2012, starts in April. Consumption reaches its highest level in the summer months of June to August, and starts to decrease in September. Strawberry and cherry season are widely anticipated when the season start in June and are regional events. Families head out to pick strawberries on farms, and in high streets stalls pop up selling the freshest and ripest locally grown cherries. Both types of fruit are also available year-round as imports, but they tend not to travel well and locally grown ones are considered the ripest and sweetest. However, the lack of long sunshine and recurring poor weather in Germany often hamper harvest volumes of local production, requiring high levels of imports to feed demand.
International sourcing allows wide availability all year
Most other fruit, especially citrus, are available all year. Good transport links to the major growing areas in Spain and proximity to the Netherlands allow for various types of fresh produce to be available all year at affordable prices. The region around Almeria in southern
Spain (Picture 1) is Europe’s largest fruit and vegetable growing area, whereas the
Netherlands has a strong production base due to extensive greenhouses.
“Spain and the Netherlands are the indispensable importers into Germany”
- GEFA, Export Association White areas are covered growing areas
Picture 1 Satellite Image of the Southern Spanish Province Almeria with 450km 2 of Plastic Foil Protecting Europe’s Largest Single Vegetable Cultivation Area
Source: Google Earth © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 12 Changes in consumption volumes throughout the year may be a result of seasonal price changes, however. For example table grapes, peaches and some other fruit are usually more expensive in the period December to March. Higher prices for some imported fruit, such as mangos, papayas, hass avocados or physalis, may put these out of reach of lower income households.
Organic produce widely available but still expensive
Organic potatoes made up 2.5% of all potatoes in 2013 Organic vegetables made up 10.3% the overall vegetable market Income does make a difference when it comes to the consumption of organic produce with higher income households generally eating more organic food than lower income households. Organic fresh produce, while also available in discount retail outlets, can be up to 30% more expensive than its nonorganic equivalent. Despite higher prices, however, the organic fruit and vegetable market has grown steadily in the past decade according to the German Association of Organic Food Producers (BOWL). The association puts the 2013 value of organic vegetables at US$248 million.
A lively gardening scene with hobby farmers
Gardening and cultivation of fruit and vegetables for personal use is popular in Germany. Although official figures on private output of fruit and vegetables are not available, the wide array of membership clubs and organizations supporting people with gardening know-how points to its popularity. Apple trees, easy to grow and hardy, are one of the favorites across the country, along with potatoes, beans, herbs and berries. 1.4 million allotment gardens in 2013 covering an estimated 470 km 2 An important type of private gardening is the allotment, or “Schrebergarten” in German – small private gardens found mostly in urban and suburban areas, providing a little space of green inside city perimeters.
Picture 2 A Typical “Schrebergarten” Often Used by Private Individuals for Growing Vegetables
Source: http://prezi.com/civ3r63x1hri/copy-of urban-gardening/
Health-conscious Germans further encouraged by public campaigns
“Combining health eating with a demanding lifestyle is the most difficult job of the 21 st century”,
Albert Huth, Retail & Wholesale
“There is need for much more fill magazines”-
Fachgruppe Obstbau, Association Although Germans are relatively health-conscious, government campaigns against obesity and lack of physical exercise. Consumption of a well-balanced, varied diet, which includes fresh fruit and vegetables, features prominently in public health campaigns and is strongly supported by organizations concerned with health and the general media. The “5 am Tag” (5 a day) campaign encouraging five portions of fruit and vegetables a day was initiated in 2002 by the EU and is supported by federal ministries across the country. It highlights the benefits of more energy, better cardiovascular fitness and the preventive effects of fruit and vegetables against cancer. Schools and other educational
need for education on how to eat healthily. The media has often not helped but confused people even more with conflicting messages to
institutions are a focus to increase awareness of the benefits of a healthy daily intake of fruit and vegetables at a young age. Despite such campaigns and high levels of awareness, campaigners feel there is much room for improvement as Germans fall far short of the recommended daily volume of 450g of fresh fruit and vegetables – on average, Germans eat only around 250g.
Vegetarianism on the rise and promoted as a health trend
Vegetarianism is a growing consumer trends related to health, as the consumption of red meats is seen as a factor in causing cancers related to the digestive system. Meat consumption is high in Germany, with an estimated consumption of 60kg per capita in 2012. This high meat intake has also prompted government institutions, health organizations, insurance companies and sections of the media to market a higher intake of fruit and vegetables in Germany. According to a survey by the University of Göttingen and Hohenheim, the share of vegetarians in Germany is growing, with two-thirds of declared vegetarians being women. Many, however, seem to sit on the fence, giving rise to a trend called “flexitarian” – consumers with ambitions for a vegetarian diet, but not
60% want to reduce meat consumption 11.6% are trying to reduce meat consumption
9.5% are reducing meat consumption
Survey by the University of Göttingen and Hohenheim © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L prepared to give up meat on the occasions when it suits them, such as for Christmas or special occasions. 13
Loose produce is the preferred form allowing for closer inspection and reduced waste
Loose produce forms the majority in the grocery retail sector, as apples, potatoes, oranges and a wide range of vegetables are mostly found loose in retail outlets. Discounters are the retail format most likely to sell packaged fruit and vegetables such as 2kg bags of apples, 2.5kg bags of potatoes or 500g trays of various fruit such as grapes, pears and plums, for example. Discounters sell packaged bags of vegetables mainly as a part of a pricing strategy, whereas quality-minded outlets such as supermarkets will sell the majority of fresh produce loose. Nonetheless the amount of waste generated is highest at the retail end of the fresh produce supply chain. For most consumers, the ability to pick and choose is very important and people like to touch and feel produce before purchase. German consumers are relatively well educated when it comes to gauging ripeness and general quality of the produce by touch and on inspection. Color of apples, softness of plums, redness and ripeness of strawberries or the firmness of potatoes are all important purchase considerations. Although for many fruit, especially more sensitive ones such as blueberries, a container is necessary to protect the fruit from being squashed, the ability to look at them is always important. Extra packaging is also seen to increase household waste, an on-going issue in Germany, which has high standards of recycling and consumers aware of the need to keep waste at low levels.
RETAIL DEMAND FOR FRESH FRUIT AND VEGETABLES
A highly concentrated retail market with strong leading players
Germany has a highly consolidated grocery retail landscape. Outlet and retail value growth have been negligible in the period
slow turnover growth for retailers.
“Marketing fresh produce is of major importance for a retailer as it shows a lot about their approach on quality.”
– Category manager, Retailer The five leading grocery retailers had a combined share of over 50% in 2013
(Table 2). Germany’s leading retailer Edeka is a national retail chain with an
emphasis on supermarkets, run either by independent traders or a corporate policy. Edeka stores are focused on quality produce, with a strong private label product range to appeal to price-conscious shoppers.
284.5
369.6 4.0%
1.3
1.4 0.1% -0.5% 110.5 60.8 -1.1% -0.8% 0.2% Germany 0.3% EU Average BRIC Average 0.5% OECD Average
Chart 16 Grocery Retail Value RSP 2012 (US$ billion 2013 prices) and CAGR 2012-2017
Source: Euromonitor International Passport Germany
Chart 17 people) Grocery Retailers 2012 (outlets per ‘000 and
0.1 EU
CAGR 2012-2017
BRIC Source: Euromonitor International Passport
Table 2 Top 10 Grocery Retailers by Retail Value RSP with Number of Outlets 2012
Source: Euromonitor International Passport 0.1 OECD
Top 10 Players
Edeka Zentrale AG & Co KG Lidl Dienstleistung GmbH & Co KG Aldi Süd
Outlets 2012 Value Share 2012
11,879 21.4% 3,290 8.5% 1,805 7.6%
© E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y
Table 2 Top 10 Grocery Retailers by Retail Value RSP with Number of Outlets 2012
Source: Euromonitor International Passport E U R O M O N I T O R I N T E R N A T I O N A L 14
Top 10 Players
Rewe Markt GmbH Kaufland Warenhandel GmbH & Co KG Aldi Nord Metro Group Penny-Markt GmbH Globus SB-Warenhaus Holding GmbH & Co KG
Outlets 2012
2,811 620 2,510 312 2,363 44 157
Value Share 2012
7.0% 6.8% 5.8%
4.3% 3.9% 1.8% 1.8%
Edeka Regionalgesellschaften
Stable retail environment with well-established modern retailing
more than 80% of fresh produce volumes are sold by modern retail outlets with discounters accounting for some 40% of fresh produce sales in Germany. Supermarkets and hypermarkets lag, as price is a major issue in favor of discounters. 95.4 75.6 1.4% 50.5 0.8% 0.4% 31.0 13.0 -1.2% -0.1% -0.7% 14.7 0.9 Convenience Discounters Forecourt Hypermarkets Supermarkets Specialists -1.5% Independent
Chart 18 Grocery Retail Value RSP by Channel 2012 (US$ billion 2013 prices) and CAGR 2012-2017
Source: Euromonitor International Passport -0.3% 3.3 Other For more common and popular produce such as apples, pears, plums, oranges, potatoes, tomatoes, carrots, peppers and lettuce, discounters capture around 50% of sales on account of a wide store network, quality product ranges and highly competitive prices. For these produce types, supermarkets usually have a share of 35-45%. Supermarkets have a slight edge in terms of distribution for overseas produce such as exotic fruit and especially organic produce. Still, even for organic produce, the availability in discounters is rising steadily. The online trade of fresh produce in Germany is still a niche market. Although major retailers such as Edeka and Rewe have online sales operations, the share of fresh produce sold via this channel is marginal as demand from consumers has been hesitant. In a recent survey 2 , over 55% of consumers stated concerns over quality and freshness as obstacles to buying fresh produce online on a regular basis.
Discounters are a mixed blessing for consumers
The most important and influential store format in Germany is the discounter with more than 12,000 discount stores in Germany nationwide in 2013. Originally started by retailer Aldi in the aftermath of the Second World War and perfected in subsequent decades, all major retailers now operate at least one discount concept. Market leaders are discount chains Aldi and Lidl with around 4,300 and 3,300 stores, respectively. 2 AT Kearney with the Universities of Cologne, St Gallen and Vienna quoted in absatzwirtschaft.de, 15 October 2013 © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 15 Discounters have progressively extended their product ranges. While 20 years ago they offered important staples and a limited range of other produce, today several have a wide portfolio of private label ranges which extend to virtually all consumer product areas. In the fresh produce department, the available choice can easily match that of a supermarket. Avocados, mangos, kiwis and other exotic fruit are available at low prices, while the more common items such as strawberries, plums and apples are widely available at cheap prices and good quality. Price-wars are the prevailing form of competition in Germany. While beneficial to the consumer in lowering food expenditure, critics have pointed out that this trend has led to a devaluation of the quality of food. For example, the on-going price war over milk, a key grocery items in Germany, has led to margin pressure for the dairy industry with some producing below cost.
Retailers are responding to consumer demand for local sourcing, organic food and
Leading retailers are increasingly highlighting aspects of their products other than just the price. For example, retailers advertise the local origin of their fresh produce to highlight freshness and their environmental sustainability. Notwithstanding the importance of local sourcing, retailers also cater to Germans’ taste for variety of fruit and vegetables, as curiosity and outside cultural influences have led to a more cosmopolitan outlook on cooking and widened consumer tastes. Organic fresh produce is also widely available across all major retail formats, including discounters. Finally, pre-cut and pre-packaged salad is seizing more shelf-space in retail outlets.
Open street markets regaining popularity
Independent shops have seen their numbers decline in the past decade and for most fresh produce their share of sales is less than 5%. The weekly farmers market has seen a renaissance in social importance as consumers are turning to locally produced seasonal fruit and vegetables. Nonetheless, small volumes of produce are sold in this channel. Produce most popular on street markets are seasonal produce such as cherries and strawberries, or staples such as potatoes.
Picture 3 The Famous Viktualienmarkt in Munich
Source: http://mojotravel.wordpress.com/
FOODSERVICE DEMAND FOR FRESH FRUIT AND VEGETABLES
Foodservice mostly untouched by recent economic troubles
In 2012, consumer foodservice benefited from more favorable economic circumstances as Germany did not suffer from economic decline, unlike many other countries in Western Europe. Although full-service restaurants dominate food service
fast food giants McDonald’s and Burger King, along with local players Nordsee and Autobahn Tank & Rast. Many consumers, especially cash-rich, time-poor consumers have contributed to a growing demand for convenience-oriented services. Fast food therefore has grown sales continuously since the first outlets were introduced decades ago and accounted for almost a third of overall foodservice value sales in Germany in 2012. In 2012, several chains saw substantial growth in outlet volume. 0.4% 0.4% 21.0 0.2% 14.1 0.1% 9.1 -0.6% 1.4 -1.1% 2.5 1.9 100% Home Delivery/Takeaway Cafés/Bars Fast Food Full-Service Restaurants Self-Service Cafeterias Street Stalls/Kiosks
Chart 19 Consumer Foodservice Value RSP by Channel (US$ billion 2013 prices) and CAGR 2012-2017
Source: Euromonitor International Passport © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y
Table 3 Top 10 Consumer Foodservice Companies by Foodservice Value RSP with Number of Outlets 2012
Source: Euromonitor International Passport
Top 10 Players
McDonald's Deutschland Inc Autobahn Tank & Rast GmbH & Co KG Nordsee GmbH Burger King Beteiligungs GmbH SSP Deutschland GmbH IKEA Deutschland Verkaufs GmbH & Co Vapiano SE Karstadt Warenhaus GmbH Starbucks Coffee (Deutschland) GmbH Metro AG E U R O M O N I T O R I N T E R N A T I O N A L
Outlets 2012
403 388 340 256 276 46 55 87 160 116
Value Share 2012
2.0% 1.8% 0.9% 0.6% 0.6% 0.5%
0.4% 0.4% 0.4% 0.4%
3.8 179.5 3.4 3.5 16
2.4
3.3% 5.4% -0.2% -0.5% -0.4% Germany EU BRIC OECD
Chart 20 Consumer Foodservice (Outlets per ‘000 people) and CAGR 2012-2017
Source: Euromonitor International Passport
50.0
44.3 -0.3% 18.5 0.4% Germany -1.0% EU Average BRIC Average OECD Average
Chart 21 Consumer Foodservice Value 2012 (US$ billion 2013 prices) and CAGR 2012-2017
Source: Euromonitor International Passport
Strong offer of fresh foods in foodservice
In line with consumers’ expectations of fresh produce in grocery retail, respondents for this report suggest that Germans have a growing expectation of high-quality products and services in consumer foodservice, while also showing demand for novelty and innovation. Consequently, foodservice in Germany tends to use high proportions of fresh produce with organic and locally sourced more evident in the premium segment of the market. Salads and light lunches are on the rise in Germany’s eating culture as the number of retail outlets with salad bars and convenience-style offers of salads and fresh soups has increased dramatically over the past ten years. Consumption levels of lettuce have been particularly impacted with a volume increase of 6.2% between 2007 and 2012. Overall, foodservice had a share of 29% in terms of fresh food sales in Germany in 2011, but this also includes fresh meat, fish and eggs. In 2011, the foodservice sector had a 15% share of fruit sales and 12% share of vegetables sales in Germany. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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INDUSTRIAL FOOD PROCESSING DEMAND
German economy has a strong food processing base
The food processing industry in Germany is large and varied. All major food international food producers are present in the country, including Heinz, Unilever, Nestle and Mars, amongst many others. In addition, several large domestic companies
distributors or wholesalers. Key wholesalers and importers are Dole Germany, Univeg, Andretta Fruchtimport, and Cobana.
Table 4 Major Fresh Produce Processing Companies
Source: Gewerkschaft Nahrung-Genuss-Gaststätten (www.ngg.net)
Company
Apetito Conditorei Coppenrath & Wiese GmbH & Co. KG Danone GmbH Deutschland Hengstenberg GmbH & Co. KG Carl Kühne KG Molda AG Nestlé Deutschland AG Dr. August Oetker Nahrungsmittel KG Raps GmbH & Co. KG riha Richard Hartinger Getränke GmbH & Co. Handels KG RÜMA Feinkost KG (GmbH & Co.) Schwartauer Werke GmbH & Co.KgaA Unilever Deutschland Holding GmbH Zeniths GmbH & Co. KG 2 103 2 045 3 699 4 025
Products
Fruit & vegetable processing Frozen and fresh bakery products Yoghurt & other dairy products Canned fruit and vegetables Canned fruit and vegetables Processed fruit Processed foods, various Frozen and processed foods Foodservice Fruit juices Fruit and vegetables, canned and fresh Marmalades, jams Various processed brands, fruit & vegetables Marmalades, jams In 2012, 5.8% of total turnover for the industry came from fresh fruit and vegetable processing
(Table 5). Fresh produce is used
in multiple ways: orange juice concentrate and apples are turned into juice, fresh potatoes into chips and numerous other potato-based products and all types of vegetables, locally
Table 5 Food Processing Industry 2012
Source: Gewerkschaft Nahrung-Genuss Gaststätten (www.ngg.net) Total Turnover Domestic Sales Total Exports Exports to EU Fruit / Vegetable Processing and the fruit juice industry use most fresh produce volumes.
$ billion
232.4 159.0 73.3 54.9 11.9 grown or imported are turned into frozen convenience products, fresh ready meals or canned foods. Fruit are also used for the production of jams and marmalades, a popular part of the German breakfast culture. Potato processing
Chart 22 Fruit and Vegetable Processing Industry 2012 (US$ million 2013 prices): Juice , Preserves , Potato and Frozen/ Dried Production
Source: Euromonitor International Passport happy to pay these increases.
Price increases have led to lower sales of juice
The German fruit juice industry produced 3.7 billion liters of fruit juices, nectars and fruit-based drinks in 2012. Domestic production volumes decreased by 4.6% in the period 2008 to 2012. Juice makers have had to contend with price increases of raw materials as weather condition in producing countries, and rising currency values in developing countries have seen fruit juice prices rise by up to 30%. Consumers have not been
“Price increases of imported produce from outside the EU are our biggest worry. To produce quality products at lowest prices, we need good, reliable and cheap, sources” –
Import manager at major fruit juice company Lower demand is compounded by concerns about the high sugar content of fruit juices. Per capita consumption has decreased from 35 liters in 2011 to 33.2 liters in 2012. The most popular juices were apple juice with 8.5 liters per capita followed by orange juices with 7.8 kg per capita. Key juice producers include Riha Wesergold, Emig, Granini, Punica, Valensina, and all major retailers with private label brands. Private label juice penetration of the German market is estimated at 80%. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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Potato processing second largest fresh produce processing sector
The potato is one of the most important crops used for processed food production, and is used in a variety of ways, according to the Gewerkschaft Nahrung-Genuss-Gaststätten. In 2012, 6,578,000 metric tons of potatoes were used with 3,036,000 made into starch and 3,395,000 processed into food products. A negligible amount (147 metric tons) was used for animal feed or by distilleries. Frozen foods, and especially frozen vegetables in processed foods such as pizzas or other ready meals are expected to maintain an important market segment as the country’s aging population and single person households are less likely to cook their own meals. New techniques of freezing vegetables maintain nutritional value and vitamins, therefore making them a healthy option for those not inclined to cooking.
Imported fruit and vegetables used in processing
Although in most cases it is hard to distinguish relative volumes of domestic versus imported produce used in food processing, in general locally produced fruit and vegetables are mostly sold to the end consumer via retailing, as this fetches higher prices for farmers and producers. Produce which is below “Handelsklasse 1” (see Trade Regulatory Environment) is often sold to food manufacturers, as it is seen as unsuitable for retail sale. Imported produce used significantly in food processing are oranges for juice, which are all imported anyway. Potatoes are also a produce of which high levels of imports are used, as cheaper imported produce from the Netherlands and Belgium is used here. For the production of pickled vegetables, such as gherkins and cornichons, for example, imports from Turkey, Poland, Hungary and India were used. Overall, 92% of imported fresh vegetables are sourced from countries within the EU, many from Spain and the Netherlands, and are also subsequently used in the production of food products. In 2012, only 1.14 metric tons of processed vegetables were exported from Germany. At the same time, Germany requires substantial amounts of imported vegetables to sustain demand of consumers and the industry. In 2012, the country imported fresh and processed vegetables to the value of US$6.9 billion. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L
FRESH PRODUCE TRADE AND PRODUCTION
19
OVERVIEW
Domestic production of a wide range of fruit and vegetables
Domestic production on average meets 40 to 45% of Germany’s vegetable consumption and around 50% of fruit consumption. Germany has a strong and traditional agricultural sector and grows a large variety of different fruit and vegetables for local demand.
Main fruit and vegetables produced on a commercial scale
Apples, pears, cherries, plums, mirabelles, strawberries and blueberries are the main fruit grown in Germany. Large volumes of grapes are also cultivated but are destined for wine production. Table grapes found in German stores are imported from countries such as Italy, Spain and Turkey, amongst others. Peaches, citrus fruit and exotic fruit such as bananas, mangos, papayas and pineapples are entirely imported. EU countries are the source of peaches, citrus fruit or fruit such as cherries and strawberries outside the domestic season. The exotic fruit with the largest import volume is the banana, with 1.16 million metric tons in 2012. Ecuador (496,547 metric tons), Colombia (284,916 metric tons) and Costa Rica 272,248 metric tons) are the largest importers for bananas.
Fruit and vegetables almost entirely imported Table 6 Production and Consumption: Importance of Domestic vs. Imports 2012 (000’ metric tons)
Source: Gewerkschaft Nahrung-Genuss-Gaststätten (www.ngg.net)
Apples Pears Cherries Plums Peaches Grapes Strawberries Production
844 44 52 57 - - 147
Import
1,395 191 143 43 68 481 164
Domestic consumption
2,239 235 195 100 68 481 311
% consumption of domestic
37.7 18.5 26.6 57.1 - - 47.3
Few vegetables are entirely imported – but imports make up largest share of many
Few vegetables types are entirely imported, but vegetables which are not grown on a large scale in Germany for climatic reasons include green asparagus, zucchini, artichokes, garlic and especially tomatoes. Tomatoes are the most popular vegetable in Germany after potatoes, but domestic production of 61,200 metric tons in 2012 barely covers the consumption of 1.7 million metric tons of fresh and processed tomatoes in Germany in 2012. In 2012, Germany imported 637,100 metric tons of fresh tomatoes with most from the Netherlands, (354,300 metric tons), Spain (163,500 metric tons) and Belgium (58,600 metric tons). Note that tomatoes are also imported in processed form.
Pears – good example how German weather limits supply of a popular fruit
Pears are one example where low domestic production struggles against the quality and volume of imports. In 2012, Germany imported 160,300 metric tons of pears, while local production stood at 33,900 metric tons. Local production has steadily declined from 50,500 metric tons in 2007, due to trees lying fallow in certain years, and adverse harvest conditions resulting from poor weather. Given the proximity of producing countries such as Italy, which exported 56,300 metric tons to Germany in 2012, German farmers have a hard time competing against the juicier produce from Italy. Pears require more sunshine than the German climate can provide and Italian farmers, and those in other southern EU countries, can easily produce more produce of much better quality. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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Weather conditions and seasonality key drivers of import versus local production
Climate is the most distinguishing component in the balance of imports versus local production. Popularity of fresh produce types as well as production costs and the strength of imports come into play for individual produce types. For some fruit, such as pears for example, more lucrative or economically viable fruit may slowly supplant them on German farms given on-going weather vagaries. For other fruit, such as strawberries, German production can be protected against the weather by greenhouses or by planting weather resistant varieties. For pears, the nearby Italian market supplies a steady flow of more attractive fruit. However, this scenario would not lead to similar dynamics for strawberries as German consumers cherish the seasonal character of the fruit and ability to travel well. Even though strawberries, blueberries or cherries could be available all year using imports, the German consumers weighs the options and most often prefers to wait for seasonal produce. Other fruit such as citrus fruit or grapes are unaffected by such considerations as they are not grown in Germany anyway.
Fresh flowers and plants an important market in Germany
Around 21,000 metric tons of flowers arrive annually from Kenya, South Africa, Colombia and Egypt at the airport of Frankfurt, which has a 9,000m increased by 1.8%. 2 warehouse with 20 different climate zones dedicated for flowers. The largest importer of cut flowers and house plants is the Netherlands. Domestic production of cut flowers is stagnating somewhat as rising energy costs hamper profitability. As a result, protected cultivation areas declined by 1.3% in 2013, whereas open cultivation
PRODUCTION
A technologically advanced farming sector well supported by institutions and strong traditions
Agriculture makes up less than 1% of GDP and employs 1.2% of the work force. Farms are generally small, although larger in the eastern states, and principal crops include wheat, barley, potatoes, apples and grapes for wine making. The German farming sector is based on free-market principles. Government provides support in the form of agricultural subsidies which allow farmers to survive in times of hardship, but are not actively directed to improve domestic production as such. Germany has a technologically advanced farming sector with harvesting and production equipment and techniques, irrigation systems, storage systems and other agricultural equipment of the highest standards. Technology and maintenance is also a major cost item faced by farmers. No significant technological shifts are expected in German agriculture as greenhouses are already well established for strawberries and other delicate fruit. Volumes of produce farmed in greenhouses are therefore not expected to change over the next five years, particularly as open farming is still preferred for some types of fruit and vegetables. Government and EU regulations set high standards for production methods and sanitary conditions to ensure safety of food products.
Medium to small sized farms dominate
Germany’s farming sector is dominated by small to medium sized farms. Around a quarter of farms are smaller than 10 hectares and 70% of farms are sized up to 50 hectares. Less than 4,000 farming operations have more than 500 hectares at their disposal. There has been an ongoing decline in the number of farms as generational and cultural changes make themselves felt. Farming life is not for everyone, and younger generations often do not have the same attachment to a family farm to carry on the work. In many cases, land is leased to a neighbor or a wage enterprise, which carries on servicing the land. Only about 1 to 3% of farms per year go out of business because of insolvency. 73.1 69.7 60.5 50.4 23.2 7.7 3.7 20 – 50 Below 10 10 – 20 50 - 100 100 - 200 200 - 500 500 and more
Chart 23 Number of Farms by Hectares 2010 (‘000)
Source: Federal Statistical Office
Farmers organized in cooperatives which are linked into fresh produce supply chains
Numerous regional and local organizations support farmers, allowing easy access to know-how, organizational, financial and general support. The Deutscher Bauernverband e.V. is the main organization representing German farmers. The organization has 18 regional divisions and over 300 local divisions across all federal states. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y Given the tough competition in the farming sector and a focus on price in the German market, creating price efficiency by economy of scale, channeling production efforts and creating collective support is a key formula for German farmers. Cooperatives such as Raiffeisen, one of the largest in Germany, play a key role in this. Cooperatives are also linked into the fresh produce supply chain. E U R O M O N I T O R I N T E R N A T I O N A L 21
Raiffeisenverband
2,452 members in 2014, including producers, agricultural companies, processing companies Fruit and vegetable turnover of US$4.5 billion in 2013 Total 2013 turnover of US$68.1 billion
Production and farming acreage well-spread out across the width and breadth of the country
All major crops, such as potatoes, apples and carrots, are grown across the entire country. By land under cultivation, Lower Saxony has the largest agricultural sector. The southern states of Bavaria and Baden-Württemberg have warmer climates and therefore grow fruit varieties which need more sun, such as pears, strawberries and cherries. 19% of Germany’s strawberry, 47% of the sweet cherry harvest and 29% of the pear harvest came from Baden-Württemberg in 2012.
Chart 24 Flower Output by Federal State 2010 (US$ million 2013 prices) and Cities with Over a Million Inhabitants (Berlin, Bremen and Hamburg are Both Cities and Federal States)
Source: Federal Statistical Office, Euromonitor International Passport
Chart 25 Flower, Fruit, Potato and Vegetable Output by Federal State 2010 (US$ million 2013 prices) and Cities with Over a Million Inhabitants (Berlin, Bremen and Hamburg are Both Cities and Federal States)
Source: Federal Statistical Office, Euromonitor International Passport
Annual production volumes vary with the weather
The most important factor influencing production volumes and harvesting conditions is weather. Late frosts and wet springs are the biggest enemies of farmers in Germany, not only for fruit but also for vegetables. Climate change has made weather patterns more unpredictable. For fruit such as cherries, strawberries, plums and blueberries, late frosts or wet springs can negatively influence the fruiting process by inhibiting plant blossoms. This has led to double-digit percentage losses in harvesting volume in the course of the past five years, with the largest drop for sweet cherries. In contrast, sour cherry production levels have declined as Eastern European markets have increased their market share. Sour cherries are mostly used in the food processing industry, while sweet cherries are destined for the end consumer, therefore commanding much higher prices. Similarly devastating declines were felt by potato farmers in 2013 when a wet spring delayed planting and resulted in a 13.4% drop in harvest volumes. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 22
Apple most planted fruit
Apples are the most important fruit grown in Germany. In 2013, 31,689 hectares were cultivated with apples producing a harvest of 797.5 thousand metric tons. The most popular varieties are Elstar, Jonagold, Jonagored, Gala, Braeburn, Idared and Golden Delicious. The most important apple growing regions are Baden-Württemberg followed by Lower-Saxony, each contributing close to a third of the harvest. Apples are easily stored for up to one year in atmosphere-controlled warehouses and Germany achieves up to 40% self-reliance in terms of domestic supply for annual consumption. Apple production is stable, with fluctuations only occurring due to adverse weather conditions. Between 2007 and 2012, apple production fell slightly from 1,070 thousand metric tons to 972 thousand metric tons, a decline by 9.2% over five years.
The potato is the most important vegetable crop
Potato harvests can also be badly affected by weather conditions. The most important staple of the German diet suffered negative harvesting volumes in 2013, when a late winter and wet spring caused the lowest harvest volume of potatoes in the past ten years. Only 9.2 million metric tons of potatoes were harvested, a reduction of 20% compared to 2012. Lower supply drove retail prices of potatoes up by up to 50%.
Table 7 German Potato Production 2007-2011 3 (‘000 metric tons)
Source: BMELV Statistik
Year
Production Import Export Domestic use
2007
9,468 1,854 4,385 7,547
2008
10,969 1,733 4,266 8,130
2009
10,690 1,821 4,465 7,912
2010
10.963 1,762 5,033 8,038
2011
9,556 1,835 4,625 6,906 Overall, the potato has been a very stable crop in Germany. Despite the area under cultivation decreasing from 548,000 hectares in 1990 to 238,000 hectares in 2012, yield per hectare has increased from 25.6 metric tons to 44.8 metric tons in the same period by improved growing techniques.
Berries and lettuce are increasing in demand and production is attempting to keep up
Sour cherries Sweet cherries Pears Plums Strawberries Apples
12.9 28.8 23.0 34.5 33.9 49.9 35.6 65.3 155.8 156.6
Production shifting to Eastern Europe Declines due to poor weather
Chart 26 Fruit Production 2007 / 2012
Source: Federal Statistical Office, Destatis
972.4 1 070.0
Steady, always popular
(‘000 metric tons)
Overall, harvest volumes of the most common fruit and vegetables are rather stable, notwithstanding fluctuations in the weather. No other significant factors impacted on the reduction of harvest volumes in the review period of 2007 and 2013. Berries increase have grown strongly, especially in 2013, as land under cultivation increased by 7% to 7,300 hectares in 2013, resulting in a 17% in harvest volumes to 32,200 metric tons despite adverse weather. Blueberries with 10,300 metric tons formed the largest share, followed by
“It is a pretty stable environment we are dealing with here. Most changes in production volumes were due to weather, only lettuce has seen an increase because of ‘trends’” –
Bauernverband, Producer Association Deutscher blackcurrants with 6,800 metric tons, redcurrants with 5,800 metric tons and raspberries with 4,300 metric tons.
Table 8 Harvest Volume Key Vegetable Types 2007-2012 (000’ metric tons)
Source: Destatis, Federal Statistical Office Broccoli Iceberg lettuce Lamb’s lettuce Lettuce Spinach Carrots Cucumbers Pumpkins
2007
26.0 118.3 18.7 71.4 61.4 562.3 183.6 41.8
2012
33.7 183.5 15.4 71.1 77.1 592.8 193.6 69.0
% Growth
29.3 55.1 -17.5 -0.4 25.6 5.4 5.5 65.2
Opportunities
Considered a superfood Convenience driving growth Popularity of other lettuce types Universal popularity Universal popularity Universal popularity Novelty inspires growth 3 2012 not yet available from this source © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L
Table 8 Harvest Volume Key Vegetable Types 2007-2012 (000’ metric tons)
Source: Destatis, Federal Statistical Office Zucchini
2007
33.6
2012
41.1
% Growth
22.2
Opportunities
Universal popularity Onions, incl. shallots 377.6 example for different types of lettuce. 484.6 28.3 Universal popularity Production volumes of many vegetables show positive growth from 2007 to 2012 in response to increased demand for 23
IMPORT/EXPORT
German market has opportunities for importers as some half of local consumption is imported
Overall, Germany imports around 50% of its fresh produce. In contrast, exports of fruit and vegetables are comparatively minor, as most is used locally, either fresh by consumers or in food processing. In terms of value, only 21.4% of fruit and vegetable production was exported in 2012. Imports are vital for the German economy in feeding its population and supplying the food processing industry with raw materials. Tropical fruit have experienced a decline in imports, with rising prices among the most important reason. Manufacturers of fruit juices, for example, switch to other fruit types to maintain the profitability of their products. At the same time, concern about reducing the carbon footprint of fresh produce as well as a tendency for buying regional produce are also influential factors in changing consumer appetite for tropical fruit. A large amount of exports from Germany are re-exports into neighboring countries. Due to its central European location, and strong trade links across the EU, produce from countries such as Spain, the Netherlands and overseas arrives in German ports and is re-exported to Eastern European countries, for example. A distinction between domestically produced exports and imported produce which is subsequently re-exported is difficult to make. However, all types of cabbages, onions and especially potatoes as well as bananas are among the highest volume fresh produce re-exported.
Leading trade partners for fresh produce mostly from the EU
Spain, Italy, France and the Netherlands are the most important fresh produce suppliers to the German market and as EU members benefit from the absence of tariffs, adherence to EU quality standards and shorter transportation distances.
Table 9 Imported Fresh Vegetables EU versus Rest of the World (000’ metric tons)
Source: BMELV Statistik (www.bmelv-statistik.de) EU countries Rest of the World
2008
2,807.4 227.8
2009
2,758.1 262.1
Table 10 Imported Fresh Fruit EU versus Rest of the World (000’ metric tons)
Source: BMELV Statistik (www.bmelv-statistik.de) EU countries Rest of the World
2008
1,660.9 502.3
2009
1,660.5 467.7
2010
2,922.1 238.7
2010
1,786.3 399.5
2011
2,881.0 254.5
2011
1,661.2 389.1
2012
2,637.4 236.4
2012
1,667.6 317.5 Spain is the largest importer of fruit into Germany, with an import volume of 706,000 metric tons of oranges and mandarins into Germany in 2012. Spain is also an important source of numerous vegetables which thrive in its warm climate. Proximity and favorable weather make Italy an important supplier for many fruit and vegetables, such as tomatoes, pears, apples, grapes, peaches, plums among others. Turkey has a similar climate but none of the advantages of EU membership. Nonetheless, some table grapes in Germany come from Turkey. The Netherlands has a strong agricultural sector, and ranks highly in supplying tomatoes, apples, potatoes and other vegetables to Germany. Its large and highly sophisticated greenhouse and open farming sector, plus close proximity to Germany have made the country one of the largest suppliers to the market for decades. However, production methods have received some bad press over the years and the stigma of greenhouse products still lingers in consumer perceptions. In winter, larger volumes of produce such as grapes and oranges are imported from southern hemisphere countries, especially South Africa, Chile and Argentina. Bananas are the most important exotic fruit and arrive from South American countries almost exclusively. Ecuador, Colombia and Costa Rica supply 90% of bananas imported into Germany.
Well established trade partners
No significant changes are expected in Germany’s main trading partners or importers of fresh produce. Although China has seen a major increase in the import volumes of grapefruit, for example, the most important trading partner will remain neighboring EU countries such as Spain, France, the Netherlands and Italy. Strong and well-established trading links, not to mention established quality norms set by EU regulations, make EU countries trusted trade partners. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 24
Chart 27 Key Fresh Produce Imports , Import Partners , Exports and Export Partners 2007-2012 (Font Size Indicates Average Annual Trade Volume; Benchmark Font Size is in the Right Bottom Corner)
Source: UN COMTRADE Changes of import volumes from individual countries are influenced by harvesting volumes in the country in question and prices on the world market. A good harvest of oranges in Spain may lead to a reduction in imports from South Africa, for example.
Cost and time of imports compares favorably against Germany’s peers
Importing into Germany is cost-efficient and fast. In 2014, average costs of importing into Germany are projected to be US$940 per container and US$905 for exporting a container, both of which are below the respective EU averages of 1 738 1 655 21 US$1,070 and
940 905
1 070 1 035 1 090 1 070
7 9
11 12 18 10 11 US$1,035. Import times are fast as well, with an average of 7 days to import and 9 to export in the same year. EU averages are 11 and 12 days, respectively. Germany EU Average BRIC Average OECD Average
Chart 28 Cost to Import and Export Doing Business 2014 (US$ per container)
Source: Doing Business 2014 - The World Bank Germany EU Average BRIC Average OECD Average
Chart 29 Time to Import and Export Doing Business 2014 (days)
Source: Doing Business 2014 - The World Bank © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y
SUPPLY CHAIN
SUPPLY CHAIN STRUCTURE
General structure of fresh produce supply chain in Germany
E U R O M O N I T O R I N T E R N A T I O N A L 25
Chart 30 Trade Structure and Companies Operating at Each Point in the Supply Chain in Germany
Source: Euromonitor International from company sources
Supply chain has been put under control of retailers in recent years
The supply chain has undergone consolidation in the past decade in terms of the number of players involved. Whereas traditionally farmers and their cooperatives sold to wholesalers and distributors, nowadays modern retail chains such as Edeka, Rewe and Metro have established direct links with farmers and their cooperatives to source the freshest, and most regional, produce directly. The increasing buying power of retailers and their ambitions to speed up the supply chain in terms of logistics, have led to wholesalers and other intermediary players losing market share. The vast majority of the German market for fresh produce, or an estimated 80%, is handled by the top retailers. Importers such as UNIVEG, Cobana and Dole still play a major part, especially with more exotic produce from overseas. Regional cooperatives such as Raiffeisen or BayWa also control large parts of the supply chain. However in terms of domestic produce, the largest volumes are handled via retailers directly. Retailers may use third party logistical companies for transport, but often logistics are also handled by retailers themselves to extend control over all aspects of the supply chain, especially costs and freshness. Nonetheless, for a lot of seasonal produce such as strawberries, cherries and seasonal vegetables, local wholesalers or cooperatives continue to play a major role as their connections to farmers and producers are strong.
SUPPLY CHAIN CHALLENGES
“Supply chain challenges mainly lie with retailers these days. At the farmers side everything is quite well organised. The challenges lie with getting it all to the right store, and quickly”
– Wholesaler
An efficient supply chain is in place to assure highest quality
The supply chain for fresh produce in Germany is characterized by efficiency at local and national level. A sophisticated road network, technologically sophisticated trucks with cooling and atmospheric control systems handle the delivery and transport of fruit and vegetables. All major farms are connected to a regional or federal cooperative that supports the distribution of their product to purchasers, be it retailers or wholesalers, and contracts with retailers ensure speedy delivery. With local sourcing and seasonality two keys trends for consumers, fast delivery of fresh local produce is considered essential. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 26 For example, Germany’s largest retail Edeka, with 11,900 stores, operates through seven regional cooperatives, which deal with farmers and other producers within their catchment range and source produce from them to guarantee the shortest and most efficient supply chain link. Other retailers such as Rewe have distribution centers around the country handling the supply from local producers to achieve similar efficiency and freshness of produce. There are no significant technological, political or organizational challenges to the delivery of fresh produce in Germany. Players in the industry have long-established and well-honed practices which have established an efficient supply chain. The biggest factors impacting the supply chain are fuel costs, although this has been taken into account and there have been no significant upsets in the past decade in this context.
Food scandals and hygiene are on-going worries inside the industry
An outbreak in 2011 of EHEC (Enterohaemorrhagic Escherichia coli), a violent gut bacterium, in northern Germany which caused the death of 50 people and caused illness in 3,842 people, highlights challenges concerning the traceability of food. The cause of the outbreak remained unidentified for weeks, with cucumbers, tomatoes and other fresh fruit from Spain first targeted as possible sources of the outbreak. As a result, consumers boycotted Spanish vegetables, causing damage to the Spanish fresh produce export industry, one of the key industries and employers in the south of Spain. Eventually, the cause of the outbreak was traced to fenugreek seeds from Egypt, which were used by a growing farm in Lower-Saxony. Other traces of the bacteria were also found in bean sprouts. Food watch and public health organizations claimed that the true source of the outbreak will never be known. Federal government institutions declared the outbreak contained in the summer of 2013. Health institutions have used this incident to raise concerns around a lack of adequate traceability of fresh produce brought into the EU, as better traceability could have prevented loss of life and illness for many consumers. Although the EU had implemented measures to set this in motion as long ago as 2005, no comprehensive system is yet in place, and stakeholders continue to make calls for EU regulations to adapt to global sourcing in supply chains.
Freshness and speed important supply chain objectives
On a domestic level in Germany, speed and freshness, a byword for quality, are the two most important factors which the supply chain has to meet. This is particularly the case for seasonal produce which needs to travel quickly from producer to end consumer via several stages including cooperatives, wholesalers and retailers. Keeping prices low while still maintaining food safety and freshness are important objectives. Ethical sourcing standards are starting to permeate the supply chain, as consumer awareness of issues surrounding fresh produce and food production in general grows. Many consumers want the assurance that their fruit were not harvested by child labor, for example. Along with ethical sourcing, sustainability is also important not only to consumers but stakeholders as well, and includes the level of waste generated along the supply chain.
COLD CHAIN MANAGEMENT
Cold chain management instrumental in assuring freshness
Germany’s cold chain management system is very sophisticated. Regulations are in place which require constant cooling at prescribed temperatures depending on the type of fruit or vegetable to assure freshness for as long as possible throughout the supply chain. All parts of the supply chain have to maintain continuous cooling throughout, and prove they did so. Cooling units in trucks and warehouses are increasingly sophisticated as companies such as 360 Quality specialize in offering unbroken supervision of the cold chain. Global positioning systems (GPS) are in place to assure constant cooling and its documentation throughout the supply chain. Packaging producers and containers exist for specific types of vegetables to ensure produce-appropriate storage and transport to avoid waste and cross-contamination of products. Separation of certain products from each other also assures that one type of produce cannot have an adverse effect on another. Supply chain vehicles, if transporting more than one variety of fruit and vegetables, will have different cooling departments, depending on the requirements for each variety. For example, apples will be transported in a chilled environment of 1 to 4 degrees Celsius, while mangos will be transported at 12 degrees Celsius. Fresh produce is stored in atmosphere-controlled warehouses located throughout the country which also have separate sections so that different produce can be stored at its appropriate temperature. Apples, for example, are usually destined for long time storage under such conditions. After harvest, apples can be stored for up to 12 months in atmosphere-controlled warehouses, although the preferred time is around 6 months. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y
GOVERNMENT REGULATIONS
E U R O M O N I T O R I N T E R N A T I O N A L 27
TRADE REGULATORY ENVIRONMENT
High standard regulatory environment to assure quality and safety of fresh produce
Germany’s membership of the EU is the key driver of trade and food safety regulations for the country. As a leading member, Germany has significant influence in shaping the direction of regulations for the EU.
Germany is a Member of
Food safety is the most important concern of federal authorities. The most important regulatory institutions / authorities for this purpose include Bundesministerium für Ernährung und Landwirtschaft (Federal Bureau of Food and Agriculture) which implements EU policy on a national level, and European Food Safety Authority (EFSA) which supervises all aspects of standards and safety. Veterinary and phytosanitary experts from the Federal Bureau of Food and Agriculture monitor and check food imports at entry points into the country according to EU Regulation 2000/29/EG which lists the requirements and the products that need a phytosanitary certificate for imports into the EU. EU supervisory authorities also check compliance with regulations. On a local level, produce, and especially processed foods, is supervised and checked by local health authorities. Most importantly, a German law requires “Selbstverpflichtung” or self-commitment, meaning all producers of food products have to adhere to checks by licensed food safety laboratories to ensure the safety of their produce. For imports, this is handled at port of entry.
Classifications in place to determine price and quality of produce
For the distribution and sale of fresh fruit and vegetables produce is classified by its quality. Quality standards are split into three trade categories, or “Handelsklasse”, namely “Handelsklasse Extra”, “Handelsklasse 1” and “Handelsklasse 2”. Produce of the finest quality is labeled “Handelsklasse Extra” and the lowest quality produce is marked “Handelsklasse 2”. The classification labels will be printed on boxes and containers in which the produce is transported for receiving retailers to ascertain the quality of the produce. The “Handelsklasse” labeling system is subject to EU quality norms.
Currently no bans on fresh produce
Fruit and vegetables can be sold freely in Germany, although distribution of produce from outside the EU is monitored. Taxes and import tariffs are imposed at port of entry, according to EU regulation 15-80 which deals with the import and regulation of produce from outside the EU. EU and German regulations impose varying quotas and import taxes for fresh fruit and vegetables, depending on the country of origin, which are overseen by German customs at all ports of entry. The value added tax on fresh fruit and vegetables stood at 7% in 2013. No major fruit and vegetable varieties are banned from importation into Germany at present, although exceptions are in place for garlic and produce from similar botanical families, for example chives, which require a special license if imported from outside the EU. Further special arrangements for fresh and chilled mushrooms (champignons) are regulated under EU directive 1979/2006. Imports of fruit and vegetables are subject to EU regulations. German authorities may, however, impose specific guidelines and bans on a short-terms basis in case of any emergencies, such as during the EHEC (Enterohaemorrhagic Escherichia coli) outbreak in 2011. As Germany is a federal republic, individual federal states also have the power to regulate and create laws on a local basis within the bounds of the constitution. However, unless there are specific circumstances warranting a local regulation, these are highly unlikely to go against overall federal or EU rules. When distributing fresh produce inside the EU, several important marketing norms and control directives are in place. The main directives and regulations are found under directives 1234/2007 and 543/2011, both of which are updated frequently.
FOOD SAFETY REGULATIONS
Stringent food safety regulations are assure the consumer
German has a sophisticated food safety regulatory environment ensuring safety standards are met from port of entry throughout the supply chain. One of the leading companies overseeing food safety and standards throughout the supply chain is the QS Qualität und Sicherheit GmbH, which issues the blue QS label found on most fruit and vegetables in retail outlets assuring food safety. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 28 Importers, wholesalers and retailers throughout the supply chain use the IFS certificate systems to control and assure food safety. The EU has an organic food labeling system for processed foods, and the EU organic farming logo is the most distinctive label certifying organically processed foods in German retail outlets. Products can obtain this logo if they contain no more than 0.9% of genetically modified material and 95% of its ingredients are sourced from organic farming. The logo is mostly found on processed foods. For organic fresh produce, regional cooperatives and labeling systems certify organic produce. Due to the fragmented nature and regional production processes of the German farming sector, several different organizations have their own labeling system. Demeter, Bioland and Naturland are among the largest.
Genetically modified a thorny issue for German consumers
Genetically modified foods, and especially fresh produce, are frowned upon and highly regulated by the EU. There is no production of notable size of genetically modified fresh produce in Germany. Overall, over 80% of Germans strongly oppose
“It is hard to imagine Germans warming up to the concept of GM foods – trends go in the opposite direction, more natural foods and so on” –
Retailer the production of genetically modified fresh produce in the country, and farmers and retailers are aware of this, avoiding their cultivation. The EU commission has allowed the use and distribution of genetically modified soy and corn. Any products containing such produce have to be clearly indicated, and they are subject to stringent scientific tests and oversight by the European Food Safety Authority (EFSA). Currently, the EU has allowed 48 genetically modified organisms. The large majority of these are for animal feed and food processing. Member states are allowed to reject the import of these products on a national and individual basis if they have some reason to believe these products are a risk to human health. The issue of traceability comes into play here as well, as being able to trace the origin of fruit and vegetables also allows authorities to gauge whether or not they could be genetically modified. Although most EU countries have a negative view on genetically modified produce, some member states are more lenient. Spain is the largest user of such food stuffs, with 76,000 of genetically modified maize planted in 2009. Stringent country of origin and rules how to track these products are causing difficulties maintaining rules on certification of food stuffs. Given that food processors often use fresh produce from more than one source or country in their products, food products based on fresh fruit and vegetables are becoming harder to control and certify. Recently, genetically modified traces of vegetables were found in baby foods and other products which were labeled as organic. The issues and guidelines for what is genetically modified and what is not are blurring. For example, even organic farmers are technically allows to use CMS-hybrids. CMS hybrids result in plants of one gender only and as a result do not fertilize themselves anymore, which results in higher yields. The issue of whether or not this is already genetic modification is currently a fierce debate amongst consumer watchdog organizations. Products, which have in any way have come into contact with genetically modified materials have to be meticulously certified and labeled according to EU norms. The main label to certify GM-free foods and to reassure consumers is the “Ohne Gentechnik” logo.
Pesticides’ use and registration regulated by EFSA directives
The EFSA determines the use of pesticides and other chemicals in the production of food produce inside the EU. It is responsible for ascertaining the risks and use of pesticides in fresh produce production throughout the European Union. The marketing and use of pesticides, and allowable trace amounts in fresh produce, is regulated by a number of key EU directives. The main directive regarding which pesticides can be used and how to apply them is EU 91/414/EWG. Registration and approval is strictly necessary before their use. EU rules on plant protection products establish a “dual” system: The Commission approves the active substances contained in the products; EU countries authorize the products on their territory and ensure compliance with EU rules. EU review strategies on pesticides have seen a large number of them removed from the market. Of over 1,000 active substances used by member states before 1993, only 26% have passed through the harmonizing processes. Issues relating to residues and allowable traces of pesticides in fresh produce are regulated under EU directive 396/2005. The latest adaption of these directives occurred in November 2009, when a new directive 1107/2009 came into force which harmonized the national registration rules of pesticides. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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REGULATORY OUTLOOK
Most pressing issues for EU imports are traceability and conformity
The most important issue for fresh produce distributed inside the EU is traceability, and the EU has been working on establishing an appropriate regulation since 2005. Recent food scandals such as the horsemeat scandal and the outbreak of EHEC have put new urgency for establishing such procedures. In terms of import tariffs, a liberalization of them, rather than a hardening, is expected for the medium future. Overall, there is a trend towards greater conformity inside EU decision making when it comes to the import, export, production and distribution of fresh produce and food stuffs in general. While certain regulations regarding the size and “look” of fruit and vegetables required for their distribution inside the EU may have been the source of ridicule by adversaries of EU bureaucracy (such as regulations regarding the shape of cucumbers), there is a consideration at the moment to outlaw certain types of seeds to grow fruit and vegetables, privately and commercially. If passed, such a regulation would have wide-ranging implications on the production and import of fresh produce into the EU. The type of vegetables and fruit and from what seeds they are grown would become a major issue for producers and importers. Critics claim that the new directive would hurt diversity of the agricultural system, lead to monocultures and general weakening of the diversity of the agricultural sector, leading to a frailty inside the sector. The more diverse a biological system is, the more it can be resistant to adverse influences. Furthermore, large corporate companies such as Montesant would be the only benefactors of such regulations, monopolizing a key sector of food production and pushing out diversity of the producing economy. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
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FUTURE DEVELOPMENTS
Consumption of fruit and vegetables to grow driven by health trends and supported by a
German economic growth is expected to be positive over the next five years, and consumption patterns are not negatively impacted by macroeconomics. Overall, consistently moderate to strong growth is anticipated across all fresh fruit and vegetable varieties. Government campaigns highlighting the health benefits of increased and sustained fruit and vegetable consumption, and on going campaigns by public and private institutions have increased health awareness and are promoting their consumption. Generally speaking, the public appears to be listening. Efforts to eat less meat, also for health reasons, are also expected to benefit fruit and vegetable consumption. Increasing levels of consumption for fresh produce are expected to open further opportunities for imports, as popular fresh fruit such as grapes, oranges, berries, bananas, apples and pears are expected to face rising demand. Well-established importing countries, mostly EU partners, will be the benefactors of this development. One country likely to export more into the EU in general and Germany in particular is Turkey as its rapprochement towards the EU is progressing. While full EU membership may be some time away, economic deals are on the rise and Turkish produce is becoming ever more attractive to EU markets. Turkey already supplies, for example, grapes to Germany. Decline of imports from some Middle Eastern and North African countries such as Egypt due to the Arab spring and resulting instabilities have led to a drop of imports from this region. Turkey has been one of the beneficiaries of this.
Demographics to change slightly towards a wider influence of cultures and an ageing
Germany’s ageing population is seen as a long-term challenge for economic output and productivity which will change consumption patterns as a whole, as the elderly have less disposable income and greater needs demand for convenience. However, increased migration into Germany from southern European countries of Italy, Spain and Greece as well new member states Romania and Bulgaria may stall the impact of ageing while also introducing different fresh fruit and vegetable consumption patterns.
Retailing looking for more convenience, while the trend for local and ethical products will
The current drive to advertise the presence of local produce in stores is expected to remain one of the most important trends in German retailing. Organic produce is also found in all major channels, including discounters. Sustainability and ethical shopping will make their mark, as shoppers are more aware of environmental and trade issues. Fairtrade is currently starting a major campaign in Germany to drive its logo and products in the market, and its philosophy fits with overall trends towards raised awareness on sourcing and trade. Ethical decisions when buying fresh produce are a recurring theme, whether it is for domestic or overseas produce.
Picture 4 Baden-Württemberg Cherries
Source: http://www.regionalfenster.de/
German farming not expected to see major changes
The German agricultural sector is well-established and stable, which extends to the types of fresh produce planted on a particular farm. As a result the overall structure and production pattern of the German fresh produce sector is unlikely to change noticeably in the near future. However, particularly in response to increasingly unpredictable weather, some farms are establishing economically more productive methods such as overhead foliage for cherry trees or greenhouses for strawberries.
European winters provide import opportunities for fruit from the southern hemisphere
Citrus fruit cannot be grown on a commercial scale because of the local climate and are therefore a major import item. Most come from Spain which sold 706,000 metric tons or 85.2% of total demand for oranges, clementines and mandarins in 2012. During winter months, oranges and grapefruit mainly arrive from southern hemisphere countries such as South Africa, Argentina and Chile, for example. © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .
C O U N T R Y R E P O R T : F R E S H P R O D U C E I N G E R M A N Y E U R O M O N I T O R I N T E R N A T I O N A L 31 The lack of sunshine makes German grapes suitable only for wine production. In 2012, table grapes were imported predominantly from Italy with 118,400 metric tons, followed by Greece and Spain with 29,400 and 26,400 metric tons, respectively. Growers in the southern hemisphere, from South Africa, Argentina and Chile take advantage of the lack of European supply during winter. Strawberries and cherries are amongst the most popular fruit in Germany, but local production is easily compromised by adverse weather conditions. Although local is preferred, in early spring and late autumn, imports from southern European countries extend the season and offer a guaranteed supply. Local production of apples can meet 30% of demand if harvest conditions are favorable. The Netherlands and other neighboring countries have taken the opportunity of providing significant volumes of apples. This is also the case for pears. The largest volumes of pears are imported from Italy, with 56,300 metric tons in 2012, followed by the Netherlands with 29,100 metric tons and South Africa with 18,100 metric tons. Novelty fruit such as pomegranates, blue grapes from Turkey and peach variety paraguyo are also likely to attract attention from German consumers
Import opportunities for specific vegetables
Very few vegetable varieties are entirely imported, and domestic production of many popular vegetables is high. Still some sectors have traditionally always been served by imports. Vegetable imports from EU partners are seen as the largest benefactors of rising vegetable consumption, and in general, the best opportunities continue to exist for EU trade partners. Tomatoes are a very popular vegetable in Germany. Domestic production of 61,200 metric tons in 2012 barely covers consumption of 1.7 million metric tons of fresh and processed tomatoes in Germany. The Netherlands with 354,300 metric tons, Spain with 163,500 metric tons and Belgium with 58,600 metric tons were the main exporters making up the shortfall. Recently, vegetables such as broccoli, zucchinis, aubergines and other Mediterranean vegetables have become ever more popular in Germany given new cooking styles and expanding vegetable diets. Mixed convenience-style salads are becoming popular in retail outlets and could be offered as a value add by exporters. Potato consumption is facing some competition from other staples such as rice and pasta and is in slight decline or stable. Poor harvests and rising prices have contributed to this trend.
Flowers are expected to grow further due to rise in
Giving flowers as a gift or a simple gesture of friendship is a common social and cultural act in German society. Fresh flowers are part of an affluent household, while the rise in the growth of specialist flower selling chains, such as Blume 2000, and similar stores are making fresh flowers cheaper and more widely available. Events such as Valentine’s Day are not yet thoroughly accepted in Germany but younger generations have embraced them.
Barriers and regulation levels will remain high and look
Food safety, traceability and the establishment of common marketing norms for fresh produce will be the most important issues in the near future for the distribution of fresh produce inside the EU. German regulations are expected to follow suit. While trade barriers continue to be slashed wherever possible, in other areas opportunities are potentially cut out as regulations create barriers for smaller players.
Picture 5 Blume 2000 Specialist Flower Selling Chain
Source: http://www.sparspion.com/ © E u r o m o n i t o r I n t e r n a t i o n a l L t d 2 0 1 4 . A p p l i c a b l e t e r m s a n d c o n d i t i o n s o f u s e a n d t h e d i s c l a i m e r a t t h e f r o n t o f t h i s d o c u m e n t a p p l y .