Food Processing Ingredients Sector

An Expert's View about Food , Beverages and Tobacco in France

Last updated: 27 Feb 2011

With more than 3,000 processors, the French Food Processing Sector is valued at $207 billion dollars. Innovative product ingredients that can be promoted as beneficial for diet and health offer the best new opportunities for U.S. exports to France.

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: 12/21/2010 GAIN Report Number: FR9057 France Food Processing Ingredients Food Processing Ingredients Sector Approved By: Daryl A. Brehm Prepared By: Laurent J. Journo, Patricia Baptiste, Lashonda McLeod Report Highlights: With more than 3,000 processors, the French Food Processing Sector is valued at $207 billion dollars. Innovative product ingredients that can be promoted as beneficial for diet and health offer the best new opportunities for U.S. exports to France. The main imported ingredients for processing are meat products, fish and seafood, fruits and vegetables based products, beverages, wine and alcohols, milk and dairy products, and cereal based products. Post: Paris SECTION I. MARKET SUMMARY France?s food processing sector offers U.S. food processing ingredients an excellent export market, as there is strong growth in consumption of processed food products. In 2008, there were 3,076 food processing companies. The French Ministry of Agriculture estimates the general turnover at $207 billion dollars. Exports in the food industry sector are ahead of the ones for the leading industrial sector, automobile manufacturing. This places France?s food industry among the top three in the European Union. In 2008, the French food processing represented 1.7 percent of the gross domestic product (GDP); however, the share has steadily decreased since 1980 when it represented 2.6 percent. Source: Agreste/ commerce extérieur agroalimentaire In 2009, processed food product production rose .8 percent. The productivity of fruit and vegetable based products contributed 4 percent to this growth. Products which included fats soared by 8 percent, due to a good oilseed crop and because of biofuels demand. In contrast, for dairy products, production declined 4 percent, due to the drop in milk prices milk paid to producers. In conjunction with this decline, animal food products production fell 7 percent. Despite the expanding production of soft drinks and beer, the external demand for wine and alcohol dropped sharply. The trading surplus for the food industry declined in 2009, falling from $7.9 billion in 2008 to $5.3 billion in 2009; falling 21 and 18 percent, respectively, for milled grain products and beverages. Years 1995 2000 2008 2009 Billion $ Exports Raw Products 7.8 9.08 19.8 15.6 Processed Products 21.1 25.1 51.9 46.0 Total 28.9 34.2 72.6 61.6 Imports Raw Products 5.8 6.6 14.1 13.0 Processed Products 16.2 18.9 44.8 40.5 Total 22.1 26.1 59.2 53.8 Balance Raw Products 2.0 2.3 5.8 2.2 Processed Products 4.7 6.1 7.7 5.4 Total 6.7 8.5 13.6 7.8 Source: Agreste/ commerce extérieur agroalimentaire French Food Processing Industries, 2008 Industries Number of Companies Turnover (M$) Meat and Meat Products 811 46,260 Fish and Seafood 106 4,330 Fruits and Vegetables 185 11,461 Fats and Oils 30 5,188 Dairy Products 305 37,747 Mill Industry 109 9,475 Bakery Products 358 14,961 Miscellaneous Food Products 483 34,570 Animal Feed 215 16,955 Food Industry Products 2,602 183,952 Beverages 474 32,885 Total Food Processing Industry 3,076 216,838 Source: French Ministry of Agriculture Progress in food technology, marketing innovations, and exports of finished food products have all contributed to France?s increasing demand for food ingredients. Innovative products, low fat, organic, and healthy products are in high demand. Food ingredients in general are imported freely by the private sector into France, but some face phytosanitary and other food safety restrictions at the EU level. Additives are subject to special authorization if they are not on the EU?s list of approved additives. Tariffs and other labeling requirements may cause problems for some U.S. exporters. Please refer to the FAIRS report FR9021 at the following website http://www.fas.usda.gov/scriptsw/AttacheRep/legacy.asp and to the FAS U.S. Mission to the European Union website http://www.fas.usda.gov/posthome/useu/. Advantages and Challenges facing U.S. Products in France AVANTAGES CHALLENGES Consumers demand for innovative, low fat, Food safety and phytosanitary restrictions affect healthy, organic products imports of fresh produce and certain food ingredients France is a major producer and exporter of Certain food ingredients (such as enriched flour) finished processed food products are banned or restricted from the French market. Food technology developments and marketing Germany, the United Kingdom, as well as French innovations spur higher demand for food manufacturers are main competitors to U.S. ingredients products. Growing popularity of theme restaurants gives Government subsidies help competitiveness and rise to higher demand for U.S. food innovation ingredients. SECTION II. ROAD MAP FOR MARKET ENTRY A. Entry Strategy To enter the French market it is important, indeed essential to have local and personal contacts; these are key factors for market entry. According to the exporter and the products, a local representative can assist the importers/buyers, distributors, and agents. Local representatives provide up-to-date market information and guidance on business practices and trade laws. In general, French food processing industry players attend regional and international food ingredient trade shows. The Health Ingredient Show http://hieurope.ingredientsnetwork.com/ and the Food Ingredient Show http://fieurope.ingredientsnetwork.com/ are held periodically in Paris. The next Food Ingredient show will be held November 29 ? December 1, 2011. B. Market Structure Most French processors buy their food ingredients through brokers and local wholesalers. Some of the larger companies have direct relationships with larger foreign suppliers. Food processors supply to France?s retail and food service industries, which account for roughly 70 and 30 percent, respectively, of the sector?s overall sales. The most common entry strategy for small and medium-sized U.S. companies is dealing either directly with a local wholesaler or broker, or indirectly through an export agent or consolidator. In the United States: U.S. suppliers exports through Forwarding Agent U.S. Custom In France: Freight Forwarder French Custom Health Inspection French Importer Processor Wholesaler Retailer Processor Retailer C. Company Profile In 2008 there was 3,076 food processing companies in France. The products ranged from processed meats and fish, canned foods, bakery and cereals, dairy, confectionery, animal feed, ingredients, and beverages. These food processors? end-use channels are the retail sector, as well as the hotel, restaurant, and industrial (HRI)/food service, which buy directly or through wholesalers. This table also includes U.S. food companies that have foreign direct investments in France. France?s Major Food Processing Companies, 2009 Company Name & Type of Food Food Number of Production Location Processor Sales Employees (billion $) Danone (production and marketing of 21,101 86,976 France fresh dairy products, packaged water, baby food and clinical nutrition) Lactalis (dairy products) 11,971 36,000 France Pernod Ricard (manufacturing and 10,145 19,000 France distribution of wines and spirits) Bigard (meat processor) N/A 10,000 France Terrena (distribution, agricultural 4,907 11,264 France supply, animal and plant production) Tereos (specializes in processing beet, 4,801 14,000 Spread over three continents cane and grain) of Europe, America and South Africa (French brand) Cargill France (food, agricultural, 4,647 131,000 Across Europe, North and financial, industrial and services) South America, and Asia (U.S. group) Bongrain SA (milk) 4,618 N/A France Nestlé France (products and beverages 4,370 N/A Switzerland for human consumption and animal feed) Soufflet (collection of plant materials 4,250 N/A France and transforms them for the food industry) IMT Entreprises (French retailer) 4,084 N/A France Moët Hennessy (luxury industry, 3,859 77,302 France wine, spirits?) Champagne Céréales (Grain 3,538 750 France processor) Sodiaal (milk production) 3,501 3,487 France Unilever France (consumption of 3,161 N/A U.K-Netherlands hygiene, personal care and nutrition) Fromagerie Bel (cheeses baked or 3,128 11,500 France half-cooked) Agrial (Food and agricultural 3,057 7,715 France cooperative group) Kraft Food France (coffee and 3,028 N/A USA chocolate) LDC (poultry) 2,908 N/A France Coca-Cola Entreprise (soft drinks) 2,816 2,400 Entremont Alliance (dairy products, N/A 4,185 France hard cheese, milk powder, butter) Heineken France (brewer) 2,295 Netherlands Coopagri Bretagne (cooperative agro- 2,285 6,000 France supply, food and special distribution) Cooperl Arc Atlantique (specialized in 2,166 N/A France the production and slaughter pigs) Bonduelle (vegetable processing) 2,146 N/A France Source: RIA Magazine D. Sector Trends The following factors help to explain the competitiveness of French companies internationally: Advanced technology in food processing has influenced the food processing sector, allowing large changes in areas such as design, manufacturing, packaging, management, and control quality. A high level of productivity has kept companies competitive. High brand and quality recognition, gourmet reputation. For new food trends, we note a strong growth in consumption of processed products. Consumer expectations are increasingly oriented to health, fad diets, and nutrition. The food model, as we have seen, is in evolution. In recent years, there have been a sharp decrease in time spent preparing the meals, a significant decrease in the duration of meals for lunch, and a growing amount of television watching during meal time. III. COMPETITION The main competition for U.S. suppliers are lower priced products from Iran and Turkey for nuts and North African countries for other dried fruits. Processed food products, such as confectionery, sauces and dressings, and soft drinks are developing at a fast rate and the U.S. presence for these products is well developed. Familiarity with French consumers? taste and texture preferences, as well as proximity to the market, give Belgium, the United Kingdom, and Germany competitive advantage. In 2009, France generated the second largetst surplus for the food industry in the EU, valued at 5 billion dollars. Source: Agreste/ commerce extérieur agroalimentaire Trade Balance Deficit 1990 2000 2008 2009 in million $ Fish and Seafood -1,000 -1,561 -2,842 -3,036 Fruits -1,033 -904 -2,801 -2,432 Fruit and Vegetable Based Products -544 -793 -2,132 -2,057 Tobacco -649 -1,059 -1,569 1,549 Floriculture -488 -701 -1,394 -1,346 Coffee, Tea, Spices -444 -645 -1,332 -1,321 Animal and Vegetal Oils and Fats -277 -380 -1,994 -1,269 Meat and Meat Products -676 248 -804 -1,050 Source: Agreste/commerce extérieur agroalimentaire In 2009, ranking behind Germany, the Netherlands, and the United States, France became the fourth largest exporter of food products in the world; it was the largest exporter in the early 2000s. Source: Agreste/commerce extérieur agroalimentaire The main imports are fruits, fish, crustaceans, feed or grains and nuts. World French Imports Years 1990 2000 2008 2009 Total (Billion in $) 18,590 25,718 59,192 53,964 including Meat and Meat Products 2,743 2,637 5,582 5,266 Fish and Seafood 1,651 2,377 4,470 4,300 Fruits 1,875 2,138 4,954 4,278 Vegetable and Fruit Based Products 267 1,691 4,072 3,849 Beverages, Wine and other Alcohols 1,011 1,549 3,900 3,630 Milk and Dairy Products 863 1,977 3,627 3,318 Cereal Based Products 820 1,307 3,529 3,250 Vegetables 1,105 1,396 2,320 2,949 Source: agreste/commerce extérieur agroalimentaire IV. BEST PRODUCTS PROSPECTS A. Products Present in the Market which have Good Sales Potential According to industry sources, despite the growth in the use of soybeans, wheat maintains its wide preference, particularly in catering products. Gluten and wheat proteins remain among the most widely used vegetable proteins. Wheat proteins are versatile and can be found in 44 percent in of the bakery goods products, 16 percent in catering products, and 12 percent in cookies and snacks. As for soybeans, there is a specialization of soya protein and 65 percent of processed meat products contain soybean ingredients, while 13 percent go into bakery products, and 11 percent in diet products. Best product prospects are almonds, pistachios and dried fruits (dates, apricots, prunes) which are primarily used for industrial baking by the major food processors. B. Products Not Present in Significant Quantities but which have good sales potential There is less use of other types of vegetable protein products, such as peas. Proteins are used in the lupine diet (43 percent), bakery products (32 percent) and meat (25 percent). As for the pea protein, it is mainly used with meat products. Processed food manufacturers will find sales potential in such food additives as thickeners, stabilizers, food supplements, and spices. French consumers? growing interest in products beneficial to the health and diet craze, are putting pressure on French manufacturers to come up with new products. Functional foods and their ingredients will hold significant growth potential. C. Products not present because they face significant barriers The French government has banned or restricted the concentrations of certain food additives. Three European directives apply in all member states, which establish a list of food additives (dyes, sweeteners and other additives) that can be used for human consumption. To determine if an additive can be included in this list, three criteria are taken into account: the technological need, the consumer utility and safety of the substance in question. Please contact the FAS US Mission to the European Union for additional information on EU food addititve regulations: http://www.fas.usda.gov/posthome/useu/. V. POST CONTACT AND FURTHER INFORMATION For further information regarding exporting U.S. food products to France, please contact the Office of Agricultural Affairs: Office of Agricultural Affairs American Embassy 2, avenue Gabriel 75382 Paris Cedex 08 Tel: (33-1) 43 12 2245 Fax: (33-1) 43 12 2662 Email: agparis@fas.usda.gov Homepage: http://www.usda-france.fr
Posted: 26 February 2011, last updated 27 February 2011

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