Why this is important to Wisconsin businesses: Wisconsin companies can respond to the growing demand for higher-quality products that promote health and wellbeing.
With a GDP of $3.7 trillion, Germany is Europe’s strongest economy. Although economic growth slowed in the second half of 2019, the domestic market remains strong, as domestic demand, especially in the retail sector, has continued to rise, thus producing a positive business environment. This is also reflected in the strong purchasing power of Germany’s 83 million inhabitants, which reached an all-time high of $25,000 in disposable income per capita in 2017 (in comparison: the European average was $18,400 that year). Main reasons for this are low unemployment, rising wages and low interest rates.
Part of the strength of the consumer market is rising demand for food and beverage products. German food retailers reached $268 billion in revenue in 2018. In total, food products worth $74.9 billion were imported that year. In general, the German population is open to new food trends and cultural influences, and is increasingly placing value on food quality, with health and wellbeing gaining in importance as the population matures. This also creates new opportunities for food and beverage producers, especially in the market for “free from” products (such as lactose-free and gluten-free, but also fat-free and sugar-free), which has shown strong growth recently. Similar trends are influencing the growth of the organic food market, which reached domestic market sales of $9.9 billion in 2018. As the German food and beverage industry landscape is strongly fragmented, the barriers to entry are negligible. In addition, the presence of numerous companies along the entire food-processing value chain makes it easy for newcomers to find suppliers, distributors and other valuable partners.
Not only does Germany provide great market potential for processed food, but it also offers an extremely positive market environment for producers of various food ingredients and additives. The size of the local market in combination with changing consumer needs as a reaction to the health and wellbeing trend, as well as steady increases in exports, contribute to strong demand for new ingredients and formulations. In addition, flavors, sweeteners, stabilizers, emulsifiers and fragrances may be used in diverse sub-segments of the industry, thereby increasing the market potential. What’s more, the country’s strategically convenient position at the center of Europe allows companies to use their experience in the German market as a starting point for entering neighboring European markets.
As the largest food market in Europe, Germany offers strong market potential for Wisconsin’s food and beverage producers. The traditionally strong market has recently shifted its focus toward higher-quality products that promote health and wellbeing. This offers new opportunities not only for processed food but also for food ingredients that may be used within Germany’s strong food and beverage processing industry. One great opportunity to learn more about the food industry in Germany and across Europe and to meet relevant market players is ANUGA, the world’s largest trade show for food and beverages, taking place Oct. 5-9, 2019, in Cologne.