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January 13, 2016

Food industry reports its worst results for four years – Housewife in the kitchen is an endangered species

Berlin, 13 January 2016. “Following its worst annual results for four years the food industry in Germany is under enormous pressure. Falling retail prices are a threat to the innovativeness of the industry and, in the medium term, to its international competitiveness. It is essential that politicians do not exacerbate this situation with regulations that force up costs. We need economic policies that meet the industry’s requirements and take into account the needs of all sections of the value added chain. Instead of being dictated to by the state, efforts should be made to encourage the growth potential of medium-sized businesses, and to create fair competition. The appreciation of foods could be improved by means of a realistic consumer policy and unbiased social education. We do not want subsidies, we want an effective policy”, commented the chief executive of the BVE, Christoph Minhoff, with reference to the industry’s balance sheet for 2015.

The food industry is suffering from pressure on earnings and falling sales

According to initial estimates, in 2015 the German food industry achieved sales of 166.3 billion euros, making these the worst annual results for the last four years. Compared with the previous year sales in this sector fell by 3.4 per cent. Among the contributing factors were the sharp decline in the selling price received by food manufacturers, with a 2.3 per cent decline domestically and a 2.2 per cent decrease on foreign markets. The quantity of sales fell by 1.1. per cent. Food production declined too, with a seasonally and calendar adjusted reduction of 1.3 per cent in the production index. Other reasons for the decrease in sales have been the continuing stagnation domestically (-5.7 per cent) and weak export figures. Although the ratio of exports improved and is now at 33 per cent, intensified competition from abroad and more obstacles to market access led to a 0.1 per cent decline in food exports to 54.3 billion euros. As a result exports failed to increase for the first time in 16 years.

Weak demand, the ongoing high cost of wages, energy and raw materials, the increasing pressure of competition and dwindling profit margins in international business are imposing greater pressure on the food industry’s earnings and strengthening the negotiating power of a more consolidated retail sector. The pressures on prices that have arisen are responsible for the continued consolidation within the industry. A lack of growth is an obstacle to lasting innovation.

Despite its economic woes the food industry continues to be a stable and reliable employer. The increased need for skilled workers in this sector is being driven by the demands for modern, safe and sustainable production, and over 9,000 new jobs were created in the food industry in 2015.

To ensure continued competitiveness and growth it is vital to develop new sales markets, rein in regulation and bureaucracy, improve fair trade practices, support investment in greater sustainability and quality, encourage more appreciation of food, provide better information and training, and provide access to affordable means of production. Obstacles to trade must also be reduced, and bilateral trading agreements concluded with expanding markets such as that of the USA.

Consumers are shopping and cooking less

In quantitative terms the demand for foodstuffs in the retail sector has declined by 3.8 per cent. The consumers’ everyday world is an unstructured one, they are pressed for time and constantly on the move. This all has a significant influence on their cooking and eating habits.

The number of meals eaten at home is decreasing all the time. Only one third of the 29-49 age group eat their midday meals at home, and only four out of every ten children aged between three and five have lunch at home. Apart from the time aspect there is frequently little motivation to cook a meal. As revealed by a recent study conducted by the BVE and Gfk: only 34 per cent of German consumers now cook regularly, and 42 per cent of them hardly cook at all. Of those people who do cook regularly and pay close attention to the food that they eat, an increasing number are choosing high quality food.

The growing importance of a healthy diet and diversity

The proportion of consumers who pay greater attention to the food that they eat, value sustainable and healthy nutrition and are prepared to pay more for it, has risen to 27 per cent. “Increasing numbers of consumers appreciate good quality food. They not only reduce the amount of waste, but are keen to obtain more information and are willing to pay higher prices for better quality. It is vital that this trend becomes more widespread, to ensure that quality-based food production in Germany continues to be profitable”, according to Minhoff. The potential for a greater appreciation of the value of food already exists, and today as many as 75 per cent of consumers attach increased importance to the influence of diet on one’s health. Various dietary trends and alternative products are being tried out to an increasing extent, leading to a 93 per cent rise in sales of lactose-free dairy products over the last four years, for example, as well as an 88 per cent improvement in sales of meat-substitute products. At the same time it is important to be able to more effectively link various dietary and consumer styles. “Good food is adaptable”, explains Minhoff, “and every nutritional trend can be enjoyed these days in one’s own kitchen, or can be easily obtained from the local supermarket. Over the past six years sales of ready-made meals have almost trebled.”

BVE tests the cookery skills of visitors to the IGW

Four times each day well known chefs will be on the stand of the BVE and BLL at the International Green Week to prepare meals with visitors to the fair. Practical examples will be used to demonstrate how tasty meals can be prepared using fresh and ready-made products, how to reduce the amount of waste when preparing meals, and the rules that should apply in order to maintain the highest standards of hygiene when cooking. There will also be an interactive survey, open to all, to determine what kind of cook they are.

Employing some 570,000 people in 5,850 businesses, the food sector is the third largest industry in Germany, reliably supplying 81 million consumers with good quality food at reasonable prices. The export ratio of 33 per cent also demonstrates that customers around the world appreciate the quality of German products.