Food Industry in European Union

The food and drink industry is one the most important and dynamic industrial sectors in majority of the member countries of the European Union. The food industry in European Union has a vast base, the vastness of the industry is emphasized by the fact that the industry comprises of about 310, 000 companies engaged in diverse sectors of the industry.  The food industry in European Union has huge job opportunities; it provides employment to about 4 million people.

The European Union’s food and drink industry accounts for an annual turnover in excess of 900 Billion Euros. The different sectors within the industry are responsible for contributing to the bulk of the exports from the European Union. The sector creates a large volume of finished products in some of the most competitive, international and domestic markets. In spite of this huge contribution, there is plenty of scope for investment; the foreign investors can exploit this opportunity and earn valuable returns on their investments.

The rapid development of trade regime in the European Union, which has placed the EU at par with other foreign countries and the establishment of the preferential agreements have given the food and drink industry in the European Union a major boost. These agreements allow the foreign players investing in the sector to have free access to explore the foreign markets and expand their business base.

Red tapism, lack of opportunities for research and development, insufficient funding and stiff regulation to access the raw materials are few reasons cited by the foreign companies for their apprehension to invest in the food industry of European Union (EU).

To counter these problems the European commission is strongly making efforts to attract foreign investors in European Union and is implementing investor friendly trade and business policies. Through out the process of formulating and implementing the policies the European commission strived to strike a fine balance between encouraging competitiveness amongst the foreign players investing in the food sector in European union and ensuring safety to their investments.

Food industry in EU countries:

France: The food industry in France is one of the major sectors that contribute a large share to the French economy. The industry is the largest contributor to the French annual financial turnover. The French food industry has continued to grow consistently since 2002. In 2002 the food industry of France accounted for total sales of about 134 billion Euros. The sales further increased up to 3.8% in 2005.
Over the years the food industry in France is growing by leaps and bounds, there are more than 160,000 restaurants and food chain outlets including cafes and fast food outlets spread across every nook and corner of France.

Several big Global players like McDonalds, Star Bucks and Dominos have invested heavily in France and are doing great business. Even though these global players have captured a large share of the food market in France, there is plenty scope for new players to invest in this sector.
Business analysts suggest that the food industry in France is expected to grow at about 4.5% annually in the future. The snack and fast food sector is expected to surge by 13%, whereas, the restaurants and café shops are expected to grow by 7.5%.

Italy: Italy, the land of pizza is known for its world class cuisines. Italian locals love food and they have penchant for healthy and good quality food, and they are willing to pay any price for it. The changing habits of food consumption of the Italians and the growing purchasing power of the locals have revolutionized the food sector in Italy; the locals today due to the fast pace life and work culture, people prefer consuming more frozen and ready made packaged foods. The food industry is one of the most important industrial sectors in Italy that contributes significantly to the country’s economy. It is the 3rd most important and largest sector industry in Italy, contributing about 9.5% to the total annual turnover of Italy behind textile and mechanical sectors.

The food industry in Italy is mainly dominated by the hotel and restaurants sector. It is a very lucrative and rapidly growing sector with large chain located mainly in cities and commercial centers like airports, motorways and shopping malls.

Dairy products, wine and processed meat are amongst the leading sector that contributes greatly to the Italy’s food industry turnover. As per the 2003 reports, dairy products accounted for about 13,500 million Euros, while wine and processed meat contributed 7,390 and 7,165 million Euros respectively. The bulk of the Italian food imports (about 77%) are from the member countries of the European Union with Germany leading the pack contributing to about 20% of the Italy’s food imports, it is closely followed by France and Spain contributing about 15% and 10% respectively. Thus, there is plenty of scope for foreign companies to invest in Italian food sector, in manufacturing of dairy products, food packaging especially processed meat and several other allied activities.

Italy being a member of the European Union, the country has the same tariff structure that is applicable in other EU countries. The rates vary considerably depending on the type of the sub-sector. To attract maximum foreign investment in the sector, the government of Italy has started privatization program and is offering new opportunities for foreign investors. The government of Italy is following the foot steps of other European nations and is offering tax incentives to small and medium sized companies to invest in the Italian food industry. The Italian Institute for Foreign Trade also provides help foreign companies to set up business in Italy.

Several global players like KFC (Kentucky Fried Chicken), a popular fast food restaurant chain known for its chicken and Nestle a popular dairy company have invested heavily in Italy and are doing well catering to the Italian market.

Resources:

The Invitalia and Invest in France Agency, the central agencies of the respective countries, work towards promotion of foreign investments in different sectors in the country. The agencies provide the investors with comprehensive information concerning the investment climate, market conditions, legal framework and subsidies available in different sectors.
 

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