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Strong EU exports driving stable food and drink industry

By Anthony Fletcher , 08-Sep-2006

Increased exports of certain food and drink products have revived the industry and helped to achieve an impressive trade balance.

EU sales of beverages remain the leading sector of the food and drink industry. After years of uneven performance, exports of wines and spirits recorded growth rates of 5 per cent and 9 per cent respectively in 2005.

Sales of soft drinks also grew significantly and reached €1.1 billion. Meanwhile, the chocolate, biscuits and confectionery sector experienced a decrease in its trade surplus in 2005 (lowest surplus since 2000), due to the stagnation of its exports and a regular increase of imports.

In total, exports grew by 5.2 per cent in 2005, the highest recorded annual increase since 2000. Meanwhile, imports of food and drink products grew less than in 2004.

The EU food and drink industry now has a trade surplus of €4.5 billion.

"Exports of food and drink products amounted to €47.6 billion in 2005," said Jean Martin, president of CIAA, which represents European food and drink industries in Brussels.

"With 22 per cent of all EU exports, the US is the number one customer for European food and drink industries. For the first time, Russia is the second country of destination, overtaking Japan."

Among the main countries of destination, the Commonwealth of Independent States (CIS) recorded the highest growth rate for the second time (+12 per cent in 2005 and + 13 per cent in 2004). Martin said that exports to China increased by an impressive 24 per cent in 2005 to reach almost €800 million.

The results suggest that the European food industry is in a relatively strong position. There have been fears that Europe's food and drink sector has been in danger of losing its competitiveness; the Confederation of Food and Drink Industries in the EU (CIAA) has voiced the opinion in recent months that the industry needs more help from the European Commission if it is to face the increasing competition from Asia, South America and the US.

As a result, the European Commission has promised financial backing for a number of food schemes designed to promote agriculture products in the EU, designed to help producers compete in an increasingly crowded marketplace.

The immediate future therefore looks positive. For the first four months of 2006, exports registered strong growth and were up 14 per cent with respect to the same period in 2005, mostly due to increased sales of numerous foodstuffs such as wines, soft drinks and chocolate.

Imports showed a similar trend, up 13 per cent over the same period last year.

The EU food and drink industry sector is the largest manufacturing sector in the 25-member bloc, with a turnover value of around €800bn in 2003 and employs four million people. The sector purchases and processes 70 per cent of the EU's agricultural production. Exports of food and drink products add up to €45bn a year.