An Expert's View about Sales in Spain

Posted on: 18 Feb 2013

This report provides guidance to U.S. companies interested in exporting high-value consumer-ready food products to Spain and includes an overview of the country's economic situation, market structure.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 2/04/2013 GAIN Report Number: SP1243 Spain EXPORTER GUIDE ANNUAL 2012 Post: Madrid Approved By: Robert Hanson Agricultural Counselor Prepared By: Arantxa Medina Marketing and Management Specialist Report Highlights: Spain’s economy remains characterized by soaring unemployment rate and virtually zero GDP growth. In fiscal year (FY) 2012, Spain imported $1.1 billion of agricultural, fish and forest products from the United States, 32 percent down compared to the previous year, although trade did rebound in the last quarter of calendar year 2012. Despite the apparent negative prospects, the dynamic Spanish market still offers opportunities for certain consumer-oriented food items, as well as long-term prospects for other products. This report provides guidance to U.S. companies interested in exporting high-value consumer-ready food products to Spain and includes an overview of the country's economic situation, market structure, and export requirements. INDEX SECTION I MARKET OVERVIEW SECTION II EXPORTER BUSINESS TIPS SECTION III MARKET SECTOR STRUCTURE AND TRENDS SECTION IV BEST HIGH-VALUE PRODUCT PROSPECTS SECTION V. KEY CONTACTS AND FURTHER INFORMATION APPENDIX – STATISTICS A. KEY TRADE AND DEMOGRAPHIC INFORMATION B. CONSUMER FOOD AND EDIBLE FISHERY PRODUCT IMPORTS C. TOP 15 SUPPLIERS OF CONSUMER FOODS AND EDIBLE FISHERY PRODUCTS SECTION I. MARKET OVERVIEW ECONOMIC TRENDS AGRICULTURAL PRODUCTS IMPORTS ($ Million) (1) 2008 2009 2010 2011 2012* 2013** Total Agricultural, Fish and Forestry Products 40,500 33,005 34,218 39,917 36,700 36,500 Total U.S. Agricultural, Fish and Forestry Products 1,882 952 1,318 1,525 1,100 1,400 Total Food Products 37,101 31,887 32,559 38,017 35,400 35,000 Total U.S. Food Products 1,730 911 1,322 1,535 1,000 1,300 Total Fish and Seafood Products 7,041 5,837 6,412 7,174 7,000 6,500 Total U.S. Fish and Seafood Products 127 104 114 122 113 110 (1) Global Trade Atlas ( (*) Estimate (**) Forecast Unemployment in Spain is the highest in the European Union, reaching 25.02 percent in late 2012 and topping 26 percent by the end of the year. The Spanish economy’s excessive reliance on the construction sector along with the global economic crisis severely hit the country, causing unemployment to rise from 8.3 percent in 2007 to 20.1 percent by the end of 2010. This situation has negatively affected retail food sales, consumer confidence and overall retail sales performance. Discount retailers and other lower-price outlets are making the most of the recession as a growing number of consumers become increasingly price-sensitive. Changes in Spain’s domestic market regulations, including more liberal Sunday shopping laws, are expected to give a boost to slow retail sales. Spain has a diversified distribution structure for food products, ranging from traditional distribution methods -- whereby wholesalers sell to small shops that cater directly to the public -- to large multinational supermarkets and retail stores. Department stores, hypermarkets, shopping centers and very specialized outlets are introducing the customer fidelity concept, which usually involves issuing client cards, cumulative discounts and special offers for frequent customers. Innovative sales techniques are becoming increasingly popular. Vending machines have spread throughout Spain over the past decade. Direct marketing by mail order, telephone, TV or e-commerce is growing considerably. The European Union (EU) establishes the rules and regulations governing acceptable sanitary, phytosanitary, general trade, and labeling practices in Spain. As a result, U.S. exporters already exporting to other EU countries most likely already know and can meet most of the requirements for exporting to Spain. The key for a U.S. exporter wishing to enter this market is to find an agent or distributor, or to establish a subsidiary. An experienced representative in Spain will likely be familiar with all the different consumption patterns and preferences in each of the country’s 17 autonomous regions. The Office of Agricultural Affairs in Madrid is dedicated to helping U.S. food and agricultural product exporters access the Spanish market. Please contact us at: Foreign Agricultural Service Office of Agricultural Affairs U.S. Embassy Madrid Serrano, 75 – Box 2000 APO AE 09642 28006 Madrid Spain Tel.: +34-91-587 2555 Fax: +34-91-587 2556 Email:; Web: ADVANTAGES AND CHALLENGES FACING U.S. PRODUCTS IN SPAIN Advantages Challenges Spain’s food industry relies on imported Spain’s financial situation, two main effects on retail: ingredients, many from the U.S. sinking domestic demand, lack of credit for companies. Tourism is a strong and ever-growing sector that Lack of consumer awareness of U.S. brands and provides retail, food and drink sales. varieties of U.S. products. Good image and reputation of U.S. products. Competition from neighboring EU countries, where tastes and traditional products may be well known. Good network of agents and importers to help get U.S. exports face higher transportation costs and product into the market. difficulties in shipping mixed or smaller container loads. Consumers are increasingly health conscious, EU labeling, traceability, and packaging laws. demanding products not sufficiently present in the market. Distribution structure is modern and many High import tariffs impose a price disadvantage on companies cover both Spain and Portugal. non-EU based companies. Spanish Market for U.S. Agricultural Products SOURCE: Global Trade Atlas Competition within Spain’s Food and Agricultural Product Import Market SOURCE: Global Trade Atlas SECTION II. BUSINESS TIPS FOR EXPORTERS Local Business Customs Success in introducing your product to the Spanish market depends on acquiring local representation and personal contact. The advantages of local representation include market knowledge, up-to-date information and guidance on business practices and trade law, sales contacts, and market development expertise. Spain has a number of sales channels ranging from traditional distribution methods – whereby wholesalers sell to small retail shops that sell to the public -- to large multinational supermarkets and retail stores. However, personal relationships are still very important, especially within smaller organizations. There is no substitute for face-to-face meetings with Spanish business representatives in order to break into this market. The decision-making process within a Spanish company may be different from that in the United States. An initial "yes" usually means that the company will study the situation, and not necessarily that they will buy the product. Once a deal is struck, the Spanish company will likely expect the U.S. firm to translate into Spanish all commercial brochures, technical specifications and other relevant marketing materials. Decision makers at Spanish firms may speak English, but paperwork should be in Spanish. The Spanish market is composed of a number of regional markets serviced by two major hubs, Madrid and Barcelona. The vast majority of agents, distributors, foreign subsidiaries and government- controlled entities that make up the economic power block of the country operate in these two hubs. Dealers, branch offices, and government offices found outside these two hubs will almost invariably obtain their supplies from their Madrid and Barcelona contacts rather than engage in direct importation. Market Entry Strategies Market entry strategies for US products intending to enter the Spanish market should include: 1. Market research in order to assess product opportunities 2. Advanced calculations of the cost of introducing the product in the Spanish market, in order to prove its competitiveness in the local market. 3. Identify an experienced distributor or independent reliable agent to advise on import duties, sanitary regulations and labeling requirements. 4. Explore purchasing arrangements of the larger retail channels. General Consumer Tastes and Preferences According to Euromonitor, the recession is expected to shift some consumer habits. The economic downturn had a significant impact on Spanish consumers, with most consumers trading down on their shopping habits. Consumer confidence continued to fall in 2012. According to the Consumer Confidence Index (CCI) published in October 2012 by the Centre for Sociological Research (CIS), consumer confidence is at its lowest historical levels. The CCI is monthly assessment of recent developments and expectations of Spanish consumers related to family finances and employment used to anticipate their consumption decisions. The negative economic expectations, high unemployment, shrinking family incomes, the continued increases in prices are important factor affecting this index and affecting consumer spending. In order to change this tendency, some leading retail chains offer an increasing number of new and innovative services intending to soften the impact of recession. As consumers are more price-sensitive, store brands are becoming more popular, offering better value than branded products. Food Standards and Regulations For more information on food standards and regulations, please consult the Food and Agricultural Import Regulations and Standards Report (FAIRS) and the FAIRS Export Certificate Report for the EU and Spain at Also, please check the U.S. Mission to the European Union web page at for helpful information on exporting U.S. food and agricultural products into the EU. General Import and Inspection Procedures Spain follows the Harmonized Nomenclature and Classification System (HS) and applies import duties according to a maximum and minimum rate schedule. The minimum tariff rate is applied to goods originating in countries entitled to the benefits of most-favored nation treatment -- that is, members of the World Trade Organization (WTO), including the United States, and countries with which the EU has signed trade agreements. In some instances, Free Trade Agreements negotiated between the EU and other countries provide for tariff-free access to the European market – leaving U.S. exporters at a disadvantage. The local importer has primary responsibility with the Spanish Government for imported food products once they enter Spanish territory. Therefore, the Spanish agent/importer should guide the U.S. exporter through the entire process of marketing a U.S. food or agricultural product in Spain. The following documents are required for ocean or air cargo shipments of food products into Spain: Bill of Lading and/or Airway Bill Commercial Invoice Phytosanitary Certificate and/or Health Certificate, when applicable Import Certificate Most food products require an Import Certificate issued by the competent authority. The Import Certificate is obtained by the Spanish importer and/or the agent involved in the transaction and is intended for tariff classification purposes. Please keep in mind that if the product you are exporting into Spain does not comply with EU harmonized regulations, Spanish customs or health authorities may not allow entry of the product. For more information on import and inspection procedures in Spain, please see Food Standards and Regulations within this report. SECTION III. MARKET SECTOR STRUCTURE AND TRENDS Food Retail Sector The Spanish retail food market is highly diversified. Hypermarkets/supermarkets, convenience stores, major discount stores and specialized stores coexist with traditional corner grocery stores and open-air markets. Yet, the total number of retail outlets decreased over the past decade and the consolidation of the retail food industry continues. In Spain, hyper and supermarkets account for more than 70 percent of total food sales. There is increasing competition in the scope and range of product offerings, including ready-to- eat and/or ready-to-cook foods, take away meals, and home delivery - and the prices and services retailers offer consumers. An increasing supply of imported products has intensified competition among suppliers and retailers. EU Member States are the major suppliers of consumer-ready products to other EU countries. Market Structure: U.S. Exporter Importer; Broker; U.S. Distributor; Agent; Representative Wholesaler for Europe Retail Food Sector For more information on the Spanish Retail Food Sector, please consult the retail sector reports for Spain at HRI Sector The HRI sector expanded significantly during the mid 80’s and 90’s and into 2008, as a result of the profound social and economic changes unleashed upon Spain’s accession to the EU in 1986. In 2007, HRI expansion was hard hit by the economic, real estate and financial crises. As Spain is expected to be one of the last EU countries to recover from the current recession, the HRI downturn is expected to continue throughout well into 2013. A figure to illustrate this fact: in the last 5 years, 12,000 bars and restaurants closed down due to the economic crisis. Spain is one of the top tourism destinations in the world, with increasing numbers of tourists every year, boosting demand for meals in the HRI sector. Tourism, particularly foreign tourism, is one of the few sectors bringing optimism to the Spanish economy. From January to October 2012, Spain received 52.1 million international tourists, up 3.1 percent over the same period of 2011, according to the survey conducted by the Ministry of Industry, Energy and Tourism. The main origins were the United Kingdom, Germany and France. Outside the EU, Russian tourists increased by 41 percent when compared to the same period in the previous year. This is good news for the HRI sector, since foreign demand compensates for the decline in national demand, due to the economic downturn and uncertainty and the high unemployment. National tourism demand has decreased by 25 percent in the first half of the year. Due to Spain’s high unemployment rate, it is expected that less people will be dining outside of their homes, and those who go out, will look for cheaper establishments. Thus, fast food chains have benefited from the financial crisis, taking up consumers looking for cheaper food prices but reluctant to stop eating out. Market Structure: U.S. Exporter Importer; Broker; Agent; U.S. Representative for Distributor; Wholesaler Europe Cash-and-Carry; Hypermarkets; Supermarkets HRI Sector For more information on the Spanish HRI Sector, please consult the HRI sector reports for Spain at Food Processing Sector Spain boasts a highly sophisticated food processing sector. Although the situation of the Spanish economy is affecting demand and investment, the food processing industry has managed to offset this by achieving excellent performance in exports. Food industry sources point out that throughout 2012, household consumption of food and beverages will continue to show signs of weakness due to the loss of purchasing power and falling disposable income. Also, the VAT increase beginning in September 1, 2012 will contribute to consolidate the ongoing decline of food expenditure. Statistics on Spain’s food processing sector indicate that gross production in 2011 increased by 3 percent compared to 2010 to € 83.77 billion. As a reference, sector data for 2011 are as follows: The Spanish food processing sector generated 16 percent of Spain’s total industrial sales, accounting for about 7.6 percent of the national gross domestic product. The sector is comprised primarily of small companies--about 96 percent of the 30,000 food processors are small and medium-size companies, employing a total of 446,300 workers, which accounts for 17 percent of all industrial employment. Market Structure: U.S. Exporter Importer; Broker; U.S. Distributor; Agent; Representative Wholesaler for Europe Food Processing Sector For more information on the Spanish food processing sector, please consult the food processing sector report for Spain at SECTION IV. BEST HIGH-VALUE PRODUCT PROSPECTS HS Product 2011 2011 5 Year Key Constraints Attraction for Code Category Market Spanish Average U.S. Exporters Size Imports Import (Volume)* ($ Growth Million)* (% Volume) 0303 Frozen Fish 178 TMT $850 1.4% Heavy competition Good reputation and from other EU Member reliability of U.S. States and domestic producers. suppliers. High per capita consumption Spanish economic of fish. situation. 0304 Fish Fillets and 849 TMT $839 2.6% Heavy competition Good reputation and Other Fish Meat from other EU Member reliability of U.S. (Minced, Fresh, States and domestic producers. Chilled or suppliers. Frozen) High per capita consumption Spanish economic of fish. situation. 080212 Almonds 73TMT $283 4.7% Aflatoxin requirements. Domestic consumption of tree nuts is increasing due to Spanish econom their utilization in the ic confectionary industry. situation. 080231 Walnuts 34 TMT $144 3% Competition from other US walnuts, both shelled 080232 EU countries, mainly and in-shell, are making France. inroads in Spain due to increased awareness of the health benefits of tree nuts. 080250 Pistachios 7 TMT $68 -8% Competition from Iran Domestic consumption of and EU importers, such tree nuts continues to as Germany, who re- increase. U.S. pistachios export this product to have a higher quality image Spain. than Iranian, the major competitor. Despite the total negative growth figure, imports from the US have increased in the last 5 years (average growth for the US was 6 percent). 120100 Soybeans 3,175 TMT $1,762 9% Price sensitivity and Spain is a net importer of volatility. grains and oilseeds for feed consumption. Competition from Brazil. Source: Global Trade Atlas (GTA) SECTION V. KEY CONTACTS AND ADDITIONAL INFORMATION If you have any questions or comments regarding this report or need assistance in exporting to Spain, please contact the Office of Agricultural Affairs in Madrid: Local Address: Foreign Agricultural Service Office of Agricultural Affairs U.S. Embassy Madrid Serrano, 75 – Box 2000 28006 Madrid Spain U.S. Mailing Address: Office of Agricultural Affairs U.S. Embassy Madrid Unit 8500, Box 2000 APO, AE 09642 Tel.: +34-91-587 2555 Fax: +34-91-587 2556 Website: Email: Please consult our home page for more information on exporting U.S. food products to Spain. Importer lists are also available from our office to exporters of U.S. food products. A list of trade associations and useful government agencies is provided below: Spanish Trade Associations FIAB - Federación de Industrias de Alimentación y Bebidas (Spanish Federation of Food and Beverage Industries) Website: Email: FEHR – Federación Española de Hostelería (Spanish Federation for HRI Sector) Website: Email: ASEDAS – Asociación Española de Distribuidores, Autoservicios y Supermercados (Spanish Association for Distributors and Supermarkets) Website: Email: ANGED – Asociación Nacional de Grandes y Medianas Empresas de Distribución (National Association of Midsize and Large Distributors) Website: Email: Spanish Government Agencies Ministerio de Sanidad, Servicios Sociales e Igualdad (Ministry of Health, Social Services and Equality) (Responsible for: Imported Foodstuffs, Contaminants and Compound Residues, Health Certification, Port Inspection and EU Alerts) Website: Email: Agencia Española de Seguridad Alimentaria y Nutrición (AESAN) (Spanish Food Safety and Nutrition Agency) Website: Email: Ministerio de Agricultura, Alimentación y Medio Ambiente (Ministry of Agriculture, Food, and Environment) Website: Email: APPENDIX I. STATISTICS A. Spain’s Key Trade and Demographic Information Agricultural Imports From All Countries ($Mil) / U.S. Market Share (%) $29,000/3.1% 2012 1 * Consumer Oriented Agricultural Imports From All Countries($Mil)/U.S. Market Share $13,900/3.2% (%) 2012 1 * Edible Fishery Imports From All Countries ($Mil) / U.S. Market Share (% 1) -* $6,100/1.9% Total Population (Millions) / Annual Growth Rate (%) - 2011 47.2/0.4% Number of Major Metropolitan Areas (over 800,000 population) 7 Per Capita Gross Domestic Product 2011 $34,300 Unemployment Rate (%) – October 2012 25.02% Per Capita Food Expenditures - 2011 $2,027 Labor force (million) - 2011 23.1 Exchange Rate (US$1 = 1 Euro) – Nov 2012 €0.78 (1) Source: Global Trade Atlas (GTA) *Estimate B. Spain’s Food Imports (US$ Millions) Commodity Total Imports Imports from U.S Market Share Worldwide the U.S. (%) 2010 2011 2012* 2010 2011 2012* 2010 2011 2012* CONSUMER- ORIENTED 13,815 15,168 13,900 327 411 440 2.4 2.7 3.2 Snack Foods 1.3 (Excluding Nuts) 955 980 920 0.8 0.7 0.1 0.1 0.1 Breakfast Cereals and 0 Pancake Mix 209 221 200 0 0 0.0 0.0 0.0 Red Meats 0.6 Fresh/Chilled/Frozen 1,054 1,161 1,020 0.6 1.4 0.1 0.1 0.1 Red Meats 0 Prepared/Preserved 363 428 394 0.1 0 0.0 0.0 0.0 Poultry Meat 350 385 345 0 0 0 0.0 0.0 0.0 Dairy Products 6.0 (Excluding Cheese) 1,392 1,493 1,350 0.1 3.0 0.0 0.2 0.4 Cheese 1,103 1,205 1,050 0.2 0.6 0.7 0.0 0.0 0.1 Eggs & Products 75 88 100 0.2 1.3 1.6 0.3 1.5 1.6 Fresh Fruit 1,247 1,280 1,150 0.9 1.5 0.6 0.1 0.1 0.1 Fresh Vegetables 684 698 488 0.7 1.1 1.2 0.1 0.2 0.2 Processed Fruit and 5.5 Vegetables 1,215 1,398 1,340 8.6 6.9 0.7 0.5 0.4 Fruit and Vegetable 0.9 Juices 280 314 267 0.3 0.3 0.1 0.1 0.3 Tree Nuts 554 660 660 296 371 393 53.4 56.2 59.5 Wine and Beer 401 553 600 1.0 0.7 1.4 0.2 0.1 0.2 Nursery Products & Cut 7.0 Flowers 222 239 215 4.2 7.5 1.9 3.1 3.3 Pet Foods (Dog and Cat 1.6 Food) 236 247 230 1.1 1.4 0.5 0.6 0.7 Other Consumer- Oriented Products 3,472 3,819 3,500 12 14 15 0.3 0.4 0.4 FISH & SEAFOOD PRODUCTS 6,412 7,174 6,100 114 122 113 1.8 1.7 1.9 Salmon 280 269 200 12 6 0.1 4.3 2.2 0.1 Crustaceans 1,620 1,778 1,350 48 53 39 3.0 3.0 2.9 Groundfish and Flatfish 545 570 570 0.6 0.5 0.6 0.1 0.1 0.1 Molluscs 1,329 1,590 1,350 9 17 22 0.7 1.1 1.6 Other Fishery Products 2,639 2,965 2,670 44 45 46 1.7 1.5 1.7 AGRICULTURAL PRODUCTS TOTAL 25,996 31,033 29,000 1,108 1,318 900 4.3 4.2 3.1 AGRICULTURAL FISH & FORESTRY 34,218 39,917 36,300 1,318 1,525 1,000 3.9 3.8 2.8 TOTAL Source: GTA * Estimates C. Spain’s Top 15 Food Import Suppliers SPANISH IMPORTS OF SPANISH IMPORTS OF FISH AND SEAFOOD CONSUMER-ORIENTED AGRIC. PRODUCTS PRODUCTS (US$ 1,000) (US$ 1,000) 2010 2011 2012* 2010 2011 2012* France 3,236,872 3,621,247 3,310,000 Morocco 490,923 600,024 500,000 Germany 1,865,119 2,026,913 1,850,000 Argentina 500,331 483,653 390,000 Netherland s 1,501,397 1,648,855 1,450,000 China 398,756 448,269 360,000 Italy 905,020 1,117,955 1,150,000 Ecuador 326,573 388,255 400,000 Portugal 1,069,843 889,401 860,000 France 328,432 372,087 370,000 Belgium 717,815 776,539 650,000 Portugal 324,760 367,973 320,000 Netherland Ireland 630,226 717,081 650,000 s 339,060 362,073 290,000 UK 416,209 460,452 439,000 UK 304,551 315,216 255,000 United States 327,168 411,158 410,000 Namibia 206,045 252,848 255,000 Denmark 345,225 370,396 310,000 Denmark 265,413 232,535 160,000 Peru 240,568 306,491 280,000 Chile 187,801 225,427 175,000 Brazil 217,063 254,165 270,000 Italy 210,648 197,910 130,000 Morocco 228,240 239,410 216,000 India 191,111 194,127 215,000 China 202,379 220,854 185,000 Sweden 151,332 191,556 150,000 Poland 195,090 206,349 220,000 Vietnam 162,100 171,454 135,000 2,024,30 2,370,30 1,995,00 Other 1,717,419 1,901,008 1,750,000 Other 5 9 0 13,815,65 15,168,27 14,000,00 6,412,14 7,173,71 6,100,00 World 3 4 0 World 1 6 0 Source: GTA * Estimates
Posted: 18 February 2013

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