1. The EU agrofood sector: facts and challenges
IP Erasmus
June 25th 2010

2. P 9 à 15 rapport EU
25 à 57

3. Agrofood- Agroindustry?…
Industry dealing with the supply, processing and distribution of farm products.
(Source: PHC)
Agro Food….. For human food purpose A F I
FARM
INDUSTRY
FOOD
Alimentation, ingredients, processing aids, neutraceuticals
ENERGY
Carburants, Electricity, Heat
MOLECULES
Pharmacy, Hygien,
Cosmetics, Detergents…
MATERIALS
Construction, Paper, Textile,
Plasturgy, Metallurgy, Packaging

4. EU Agrofood sector– Impact of CAP
Definitions
EU AFI: snapshot
EU Agrofood sector– Impact of CAP
Evolution and consequences
EU AFI : today , tomorrow … challenges
What do we observe today?
Strengths & Weaknesses
Threats & Opportunities
An illustration: the meat & poultry meat area

5. EU Food & Drink characteristics
EU Agrofood sector
Snapshot
EU Food & Drink characteristics

6. World exports of Agri Food products
Total: 1127,7 mio$
P.prod: 913
% intra region PA
519,3
435,4
81%
178
134,1
42% 39
32%
213
164
56%
53,5 27
33%
125
111
15%
Poids de UE
Donner infos sur évolution des autres zones Asie/ Am Latine
WTO 2007 6

7. 965

8. EU Food & Drink A heavy sector
Largest EU Turnover
965 b € ,2%
Largest EU employer
4,4 million

9. EU Food & Drinks What’s in?

10. Share of main sectors in the EU Food & Drink exports -2008

11. EU Agrofood sector A few « takeaways »
Value added: 2% EU GDP
Largest Manufacturing sector in the EU - 13,5% employment
12,9% EU Turnover b € ,2%
Fragmented market: companies, predominantly SME’s
Shrinking share in 17,5% global export markets
Insufficient R&D budget: 0,37%
SME 48,7% turnover: 63% employment
4,4mio employees
99% enterprises emply less than 249 people
Changing primary sector
A diverse food processing sector
A major competitor to added value
A powerful distribution sector
A leading employer
A significant contributor to trade
R&D efforts…?
Now: a period of structural adjustment

12. Evolution and consequences
EU Agrofood sector
Impact of CAP
Evolution and consequences

13. History of CAP Settled in the 60’s to modernize European agriculture
Clear objectives:
Modernize agriculture
Allow farmers to be competitive
Basic principles:
Very high prices comparatively to world prices
Guaranteed by intervention
No quantity limit for sales to intervention

14. CAP and Agriculture CAP and AFI businesses Europe self-sufficient
Quick improvement of productivity of agriculture
Farm restructuring slow  many middle-size farms kept
Land occupation
Rural exodus slowed down
( 60’s,70’s)
Success for intervention systems, resulting in huge
… excess of production
… expenses for CAP
and critics:
from third countries
from consumers and importing countries within the EU
CAP and AFI businesses
Such protective environment has been comfortable : guaranteed prices help to have predictable business
…With perverse effects
High prices for cereals lead to expensive inputs for meat products : beef, pork and poultry
No necessity to be competitive : Europe is protected and restitutions help to competitiveness
Trade barriers are very efficient to protect from imports
from third countries due to distorted competition
Predictability of business……As prices kept stable
-Competitiveness: expensive inputs
-No need to be competitive
Trade barriers
Restitutions

15. Food companies policies90
90’s  07
07
CAP  strategy of volume for many companies
Subsidies “addicts” are:
Weak in innovation
Not “incented”to create brands and added value, except multinationals
Easy return
Intra EU trade
Large single protected market- SME
In the sectors where CAP was implemented, many food companies have been modelled on a strategy of volume instead added value
No necessity to add value with marketing and innovation
Emergence of big co-operatives which deal with subsidies and deliver products to intervention : they only have to manage a strategy of volume, permitted by growth of production
Addiction to subsidies
Weakness of marketing expenses an R&D : less necessary
Few companies invest to create brands and added value, except multinationals
High prices for raw material gives an easier return, it favours trade between EU member states
For instance :
Total world cheese trade : 1,6 MT
Intra EU cheese trade : 3,4 MT
Similar for sugar
The strength of the single market allows small companies to be maintained without external competition

16. Need for many companies to change their strategy
The changes in the 90’s
90’s 90
90’s  07
07
EU begins to reform CAP
Lower farm prices and direct subsidies to farmers are implemented
Limitation of restitutions
Changing scope for AFI
From 2000, less access to intervention
Need for many companies to change their strategy
Due to external (and budgetary !) pressures, EU begins to reform the CAP
Lower farm prices and direct subsidies to farmers are implemented
Limitation of restitutions
From 2000, less access to intervention
…Big changes for many companies which were not ready
The limitation of restitutions changes the scope of food industry :
Less competitive on basic products
Less access to third countries markets
The products with high added value and brands are only able to compete
Necessity to turn to EU domestic market
But which products to be sold if the company has always dealt with commodities ?
For many companies within the EU, the time has come to change their strategy
Three simple solutions :
Create added value : shifting from subsidised commodities to consumer products
Concentrate in big companies within Europe
Delocalize outside Europe
Some « small » problems :
Which products ?
Which brands (private labels ?)
Which approach to retailers ?

17. EU Agrofood vs Production90
90’s  07
07
Production structures weakened in some areas
Agricultural activity perceived less attractive
Many small farm structures
Consequently, “high” prices to be paid to farmers
Price decreases lead to a weakening of the structures of production in countries where the restructuring has not been strong enough (France, Germany)
Agricultural activity is less attractive, and producers are prompted to change their production with new decoupling rules
Many farmers think agriculture has less future and want to give up

18. EU AFI companies policies90
90’s  07
07
Different strategies
Delocalization
Concentration
Outsourcing
Within a difficult context
Less subsidies
Increased competition from 3rd countries
Many companies facing difficulties
Too many SMEs – Restructuring has still to go on
Mergers, emergence of large players
The changes are considerable for many companies
Delocalization for sugar and poultry
Concentration for all basic industries
Outsourcing for multinational companies
These changes have to be managed in the framework of a global reform with less subsidies, and increased competition from third countries
Many companies in difficulties : mergers and creation of big players

19. EU AFI companies:challenges90
90’s  07
07
Find new outlets within EU
Nutrition challenges in sugar, dairy, meat industry
Weak competitiveness on world market for commodities
A strong image of quality products from Europe
Strong network of middle-sized companies with high added value
Emergence of large AFI cies
Strong and competitive retail sector
At the turn of the century, food industry faces new challenges :
Necessity to find new outlets within EU
New challenges about nutrition in sugar, dairy, meat industry
Weak competitiveness on world market for commodities
Weak competitiveness on prices due to small agricultural concerns
Agrofood industry is able to cope with these challenges :
A strong image of quality products from Europe
A strong network of middle-sized companies with high added value
The surge of big companies in many sectors which are able to compete and develop
A strong and competitive retail sector

20. Possible consequences?
2007 shock
90’s 90
90’s  07
07
Catalysers for price increases
Competition for land ( biofuels)
Speculation on cereals
Climate
Decoupling had strong effects
Possible consequences?

21. A few questions for the future90
90’s  07
07
Localisation of production will still change
In these conditions, where to process ?
Prices will remain high
Added value is more than ever a priority
Strong domestic market is still strong and vast, with high purchase power consumers
Localisation of production will still change
For instance, where is the potential for milk production ?
In Holland, Denmark and Poland
In these conditions, where will be our factories ?
Prices will remain high…mainly for meat products which will be disadvantaged
Added value is more than ever a priority taking into account the new competition from developing countries
However, the domestic market is strong and vast, with high purchase power consumers

22. Takeaways Weak competitiveness in terms of raw material
EU has to improve its performances in terms of structure and price
But holds assets, among which:
Added value, even if has to be further pushed
Image
Consumers

23. EU A.F. I.
Today… and tomorrow
Challenges

24. What can we observe today?
EU A.F.I.
Today… and tomorrow
Challenges
What can we observe today?

25. EU Food & Drink industry ranks low
Frowth real value a dded of a specific ibdustry in total FI 6 Reflects competiton for production factors between different industries within a country
Balassa index – reflects export specialisation level
Growth of export share –Refects outcome of the competitive process
Growth of real labour productivity- Affects unit labour cost and this way the relative prices
Growth of real value added felects industrial dynamism
Competitiveness of the EU Food industry LEI

26. EU Food & Drink industry ranks (usually low) by sectors
Competitiveness of the EU Food industry LEI

27. Open to the World Market EU: a major exporter – Intra EU share is hig
% processed products vs agric prod
Agric. Products – export moi$ 2007
Latam
Eur NA
Asia
AME
% export-intra zone

28. Shrinking share in world trade TOP 10 exporting countries – Food products 1967 – 2007
18,1%
31,3%

29. Emergence of Brazil and China in Food&Drinks exports

30. Trade balance still positive but…
Trade balance still positive but….. Trade balance of Food & Drinks industries 1999: base 100

31. To be even more accurate.. EU Food & Drink trade balance 2000-2008 (b€)
I 48,2b€
I 57,1b€
Balance 3, puis 2 en puis 1,1 en 2008

32. Importance of Intra EU trade Share of EU in Food imports by EU member states – 1967/2007

33. Selective evolution per sector EU Food & Drink sector’s balance 2005-2008 – b €

34. Is « in »… open competition
World AgriFood companies- Top 30 by Food & Drink sales WW
Eur Sales – 189 b€
WW Sales – 557,5 b€
34%

35. TOP 30 WW AFI companies

36. Top 30 European AFI companies by european Food & Drink sales

37. EU Agrofood
Today… and tomorrow
Challenges
What can we see today?
Why?

38. Value-added is medium, but still growing
VA/ emp - € -2006 US
Canada
Japon
Australia
UE25
Brasil
China
92,3
75,3
65,3
59,2 58
25,5
12;8
Indice base Growth of value added/ employee - CIAA 2008

39. Weak in labour productivity ( worldwide comparison) 1000€/ employee – 2008
285 US EU China 49
Mostly due to SMEs
2005, Eurostat, SBS

40. Labour productivity growth
Weak in Labour productivity compared with other industries 1000€/ employee
Labour productivity growth
(%)
-1,5%
+0,1%
L Prod grwth
F&D 2,6% entre 96 et 2000; 2,2% entre 2000 et 2005, 0,9% entre 2005 et 2007, -1,5% 2008
2005, Eurostat, SBS

41. Insufficient R&D expenditures
CIAA Report 2009

42. EU Food &Drinks low in economies of scale
Highly fragmented market
99, 1% companies are SME employing < 250pp
But…. high in economies of scope
Cultural differences between
Specialized SMEs
Consumer preference for differentiated and healthy products

43. To sum up…. Strengths & Weaknesses
Small size companies
Economies of scope
Economies of scale
Attractiveness: labour, €
Labour productivity
Value added
Too low RD expenditures
Small size companies
Economies of scope
Cultural differences
Attractiveness: labour force, €
Value added
Trade driven
In open market- large companies in competition
Pressuire on SMEs which have persistent lack of resoitce: fnancial K, workforce and time, little RD cap of tyheir own
Trade driven
Exports & Trade balance down
In open market- large cies in
competition

44. Opportunities & threats
EU Agrofood
Today… and tomorrow
Challenges
Opportunities & threats

45. Population: a low « growth » EU 25 population -1980-2050
Eurostat

46. Population: less spendings in HH expenditures 1995 -2008

47. Impact of retailers in EU

48. Increasing scale of the retail chain Sales evolution in food retail and food processing 2001/2008
Global markets: global F I structure, July 29th www ers.usda.gov
USDA

49. Increasing scale of the retail chain Seen from another angle Ex: price evolution along the food chain ( monthly price indices)
It is a trhreat if industry scale isnt at the same lecvel

50. A threat? Comparative trends in retailing sector and AFI ( Paris stock exchange-01/91: index 100)
Sce: Datastream

51. « Cost » of raw materials?
Alimentation – Self sufficiency
Alimenta tion – exportation
First non food markets
Energy -Carburants
1950
2000
2050
Detergents- Clothing.. …
Competition from other uses
Competition from other countries for food uses
GMO issue
ACCESSIBILITY
HIGH PRICES
PRICE VOLATILITY
Trade « weapon »

52. Administrative « burden »
Regulatory processes in EU: cost, timeframe
Difficulties for companies to deal with
A way to differentiate
Response to ( some class) of customer expectations
Food safety/ confidence: biosafety, traceability, clean products,image, transparency..
Ethics: animal welfare…
Provided the chain can afford it

53. EU Food regulation Entry ticket
Labelling
From 323€ to 6155€/ label
Compulsory nutrition labelling
NOVEL Food
From 4,8mio€ to 35mio€
GM rice: 3,55 / 7,5 moi€
Traçeability non listed soya GMs:
1-2,8 b€
GMO – Zero Tolérance
CIAA Règlementation
Etiquetage
Etiquetage nutritionnel obligatoire: cout significarif pour 62% des entyreprises ss 2 moi eur..
Novel foods: en 2007 environ 7 demandes EU contre 24 en US – Cout d’une application 4 à 24 moi d’EUR incluant cours de RD…Rajouter couts EU efficacité/ décurité de 0,5 à 4,5 moi eur et des couts règlementaitres de 0,3 à 0,75 moi eur
Longueur procédure acceptation + 2,5 à 3 ans
Couts des incertitudes légales/ délai…. Jusqu’à 5 moi d’EUR
OGM – cout estimé EU pour trouver des traces de GM non autorisés Soja est estimé entre 1 et 2,8 mrds dEUR- Incertritude légale importatreurs,
Aout 2006 – traces de riz non approuvé - ds US long grain- 90% des imports arretes – Cout pour les TOP 15 Riz EU entre 3,5 et 7,5 moi d€ - Endettement
Cost

54. To sum up…. Opportunities & Threats
Fragmented market
Cultural differences
Societal issues
Health & lifestyles
Sustainability
Animal welfare
Increasing income
Central & Eastern Europe: new growth poles
Ict supply management
Low population growth
Mature market showing signs of saturation
Bargaining power of retailers getting stronger
Pressure on SMEs
Restriction to RM availability
CAP, WTO…
Non food demand
Volatility of markets
EU Food law procedures

55. chain rationalisation
Political & pressures:
CAP Reform…
Long term demand potential
Safety
Rising regulatory costs
"Zero risk“- Law
Emerging markets
Outside
Inside EU
WTO-Rising imports
Liberalization of trade
Hard Discount
& Retail Branding
Horizontal & vertical
consolidation
AFI companies
Developped markets
Low consumption growth- mature
Safety-health
Retail driven supply
chain rationalisation
Trade weapons
Social expectations
Ethics
Retailer concentration
& internationalisation
Cost reduction
Rising feed, labour, fuel
aggravated by currency
Marketing
Segmentation
NPD
KFC increases their “Halal Trial” in UK to 74 outlets
Risk
management
Higher volatility in feed ingredients and exchange rates conditions 55

56. Challenges in a new globalized environment
Growing populations in emerging countries
Shifts in population structures & lifestyles
Change in policies
Liberalization of trade
Low levels of labour productivity
INsufficient levels of RD investment
Consumer preferences are changing
Financial crisis
Price volatility
Ongoing consolidation of the food supply chain in favour of retailers
Consumer concerns about price, food safety and health
Social expectations/ ethics
ICT
Biotechnologies

57. AFI companies Profitability/ sector
Nestle
Unilever
Conagra
Kraft
Heinz
Danone …
Boissons Coca 20%!!
BA: Diageo 17%, Perbnod 9%
Multiproduit ( 3 à 5 métiers) 25 entreprises sur 100 dt Danone 11%, Kraft 12% Heinz 11%
Pas de vorrélation entre Taille marché, profitabilité/ productivité,, technologie/ sophiostication marketing
1) Hypothese de la position dans la filière – Proximité du consommateur ( BA/ BRSA)
Strayégie de rapprochement.. On verra plus tard
2) Composirion du portefeuille produit – firmes multriproduidt
3) Compétences managériales
Driverfor Profitability …….Position in chain 57

61. Social responsibility
A few keywords
Social responsibility
Consumer choice
Collaboration
AgroLogistics
Innovation
Sustainability
Competitiveness
Clustering
Moving society

62. Pressuire on SMEs which have persistent lack of resoitce: fnancial K, workforce and time, little RD cap of tyheir own

65. Population & GDP growth
Sce IMF-UN

68. Evolution main areas in GWP parité de pouvoir d’achat 2005
Evolution main areas in GWP parité de pouvoir d’achat 2005* 1960 – 2008 (% GWP)

69. Evolution des PIB réels* par habitant 1960 – 2007 – US base 100

70. Major concerns for the future
Globalisation
Cheap transport
Cheap information transport
LOw transactioncosts
Structural change
Mass production
Economies of scale
Change in trade patterns
EU decrease in shares of the world market: emerging economies, barriers, custom p^roceduires
ACess to good quality/ competituvely prived RM
Competitoveness?
Change in consumer preferences
Diversified? High quality, ffordazble
Sustanability etcics
Biotechnologies

72. AgroFood chain: specificities
Producteurs Ingrédients Transformateurs Distributeurs
PUSH
PULL

73. Taux de croissance du PIB par tête en parité de pouvoir d’achat 2005
Taux de croissance du PIB par tête en parité de pouvoir d’achat 2005* (en %)

78. World exports by product category 1990-2007 -- Mio $ Sce: WTO

79. Power of retailing Value in Agro-Food (EU)

80. World exports by region 2007 -- Mio $ Sce: WTO

82. Composition des échanges agro-alimentaires mondiaux
Milliards de dollars courants
* Hors échanges internes à l’Union Européenne. Source: FAO-OCDE. 82

83. Specialisation de la France Chelem-CEPII

84. Position de l’UE 15 dans le commerce agro-alimentaire
Milliards de dollars, moyennes 84

85. Composition du commerce agro-alimentaire mondial
Em % da la valeur des
exportations tous produits agricoles. 85

86. Part des principaux produits agroalimentaires exportés
en pourcentage de la production mondiale
Moyennes des années
en %. Source : FAO 86

87.      Dynamique de différenciation des produits
Nouvelles exigences
des consommateurs
(qualité intrinséque et
extrinsèque)  
Certification 
Intégration de
filière
Rôle croissant dans l’organisation
du commerce mondial de produits
agroalimentaires. 
Internationalisation
de la distribution 
Impératif de
traçabilité et
segrégation 
Nouveaux produits
(biotechnologies)  
Intégration de
filière 87

88. Stakes for Agrifood companies
New consumers
Rising expectations
Retailers
Weight & Internationalisation
New products GM
Nanotech
Product volumes
Emerging countries
Product quality
Certifications ( intl – private)
Ageing population
Health
Norms/ Regulation - EU
Safety
Traceability/ segregation
Reassurance
Transparency

89. International markets
Energy/ biofuels
Social network
International markets
Speculation
Acess to food
Production
Internationalisation
New consumers from emerging countries
Concentration
Product quality
Retailers
Certifications ( intl – private)
Health
Ageing population in developped countries
Transparency
AFI Processing companies
Traceability/ segregation
Food Safety
Norms/ Regulation – Ex: EU
Reassurance
Differenciation
Choice
Brand management
Products

90. Nouveau fonctionnement des filières
Hier 
Relations traditionnelles de marché entre les opérateurs fondées
Sur l’optimisation des coûts et de la logistique
Industries
d’intrants
Agriculteurs
Eleveurs
Collecte
Stockage
Industries de
transformation
Distribution
Normes de
qualité
Procès de
production
Securité
alimentaire
Transparence
totale
Biotechnologie
Certification
Aujourd’hui 
Coopération, coordination entre agents, decisions communes,
Intégration de filière.
Industries
d’intrants
Agriculteurs
Eleveurs
Collecte
Stockage
Industries de
transformation
Distribution 90

91. Rôle clé des entreprises de la distribution
Coordination des
filières
Internationalisation
Filières intégrées
(producteurs agricoles,
collecteurs, transformateurs,
distributeurs), agents
travaillant en concertation
pour assurer la traçabilité et
organiser le processos de pro-
duction em fonction d’um
cahier des charges élaboré par
le distributeur.
Création de mécanismes de
Certification internationale
Alliances entre groupes de
la distribution
Altération en profondeur du fonctionnement des
Filières internationales. 91

92. Turnover of food processing ind

93. Conditions d’accès au marché de l’Union européenne
Normes légales de production dans l’UE
Obligation de respecter :
- Législation sur la production agricole et l’élevage.
- Interdiction de l’usage de certains intrants (hormônes)
Lois sur la protection de l’environnement et le bien-être
des animaux.
- Obligation de traçabilité.
Regime de importação
- Normes techniques de l’Union européenne,
Inspections vétérinaires et sanitaires,
Barrières tarifaires.
Législation nationale et européenne
Législation
européenne
Normes
complémentaires
crées par les
distributeurs
et les alliances globales
de distributeurs
Exigences imposées aux fournisseurs
Européens et non-européens
Première phase :
Normes de qualité intrinsèque, HACCP,
traçabilité, etc...
Nouvelles exigences imposées aux fournisseurs européens et non-européens.
(Préservation de l’environnement et de la biodiversité, bien- être des animaux, responsabilité sociale, absence d’OGM, commerce “juste” ou “fair trade”). 93

94. Stratégies de différenciation des produits agricoles.
Première option : diversification de l’offre de dérivés (ex : biodiesel). 
Seconde option : valorisation des qualités intrinsèques du produit (tendreté,
saveur, valeur diététique, éléments organoleptiques) et relier à la région
d’origine. 
Troisième option : valorisation des qualités extrinsèques du produit (impact
sur l’environnement, gestion de la biodiversité, responsabilité sociale, bien
être des animaux, etc..). 
Quatrième option : Utiliser les apports des biotechnologies (qualité des aliments,
alicaments, aliments-vaccins, qualité des fibres, etc...). 
Cinquième option : stratégie de marques 94

95. Essor des classes moyennes urbaines en Chine
Millions de dollars de 2000
Millions de ménages urbains
Ménages pauvres (revenu annuel inférieur à 3000 US$).
Classe moyenne inférieure (revenu annuel entre 3001 et 4800 US$).
Classe moyenne supérieure (revenu annuel entre 4801 et US$).
Classes aisées (revenu annuel supérieur à US$).
Source: McKinsey company, 2006.

96. Idfa 2009

97. French Agro-Food Industry
M.Pourrias, Gödöllo, June 2010

98. Meat sector

99. EU-25 Annual sales/ employee-m€ annual sales exc VAT-m € F&V Dairy
Beverages
Sugar
Meat
F&V
Grain
Fish
Added value/ annual sales exc VAT-%

100. Dairy Annual sales/ employee-m€ annual sales exc VAT-m €
Added value/ annual sales exc VAT-%

101. Meat Annual sales/ employee-m€ annual sales exc VAT-m €
Added value/ annual sales exc VAT-%

102. F&V
Annual sales/ employee-m€
Added value/ annual sales exc VAT-%

103. Beverages

104. Top players in the agri food industry
11 european companies among top 30 world
2nd- Nestle
6th – Unilever
11th – Anheuser Busch-InBev
12th- Groupe Danone
14th- Heineken NV
541 b euros for top 30
Les 10 fo nt: 181,6 soit 33%

106. Competitiveness of the EU Food industry

107. EU food industry SWOT Weak in economies of scale
WXeak in labour ptroductivity

109. Sources
Competitiveness study
CIAA 2009

111. Meat Direct export/ annual sales exc VAT-% annual sales exc VAT-m €
Grain
Beverages
Oth Food
Dairy
F&V
Feed
Fish
Meat
Added value/ annual sales exc VAT-%

114. European Agri Food Sales 2008- 965 b €

115. TON of food ind °03

116. Comparison Zones

117. Production value 2003 moi €

118. France 138871 sur 785244 soit 17,7% Food-no 2 apres DE Meat No1
Fish No 2 ap ES
FV 3 apres DE et ES
Olis 4
Dairy 1 devant DE
Ceraols 1 ex aequo DE
Bevergages 2 derrier DE
Sigar 1

120. France

121. European Food Industry

123. Eu Main issues ksf Grow labour productivity Develop economies of scope
Encourage product innovation ( eu food law)

124. FRANCE

125. France

126. A strong sector – 12% of the value-added of the french industry
Among top 3 Europe players
Companies –  people- 130 b € and 26b€ value added
Performances of SME in AFI are deteriorating, but offset by a handful of large multinationals
VA 29 mrds eur
personnes incluant artisans ( charcuterie – boulangerie)
Germany-France-UK

127. Profiyability of french afi in line with everage for main developed countries,whereas profitabilityof french sm atypical as witnessed by profit ratio and market capitalisations
More advantageous positions for largset suppliers ( high mS, product diuifrentiation, sophisticated advertising and brand management strategies)and ones occupyng prpoduct niches

128. France Agri Food Main characteristics

129. France Export sales m€ Number of companies Beverages Oth Food Dairy
Meat
Grain
Last Fats & oils
Feed
F&V
Fish
Annual sales exc VAT m€

130. FRance Direct export/ annual sales exc VAT-% annual sales exc VAT-m €
Grain
Beverages
Oth Food
Dairy
F&V
Feed
Fish
Meat
Added value/ annual sales exc VAT-%

132. per employee of the french food industry

133. Fra,ce rank Among the top 100 agrifood companies WW
Danone, Lactalis, Pernof Ricard, Terrena, In Vivo

134. 2009- Fortune ex °+ modif Revenues B$ Profits b$ Profits % FCP FP Bev
Cargill
Nestle
Unilever
Pepsico
Kraft Foods
Archer Daniel Midlands
Bunge
Coca Cola
Mars
Wilmar International
Tyson Foods
Anheuser busch InBev
Groupe Danone
Coca Cola Enterprises
Heineken Hlg
Kirin hlgs
116600
101565
59313
43251
42867
69816
52574
31944
29145
28130
23568
22277
21807
21005
18604
3333
16670
7358
5142
2910
1802
1064
5807
1531 86
1885
1922
-4394
154
776
2,9
16,4
12,4
11,8
6,8
2,6 2
18,2
5,2
0,3 8
8,6
0,7
4,2 RK 48
121
175
177 93
138
259
300
313
387
413
422
442
498

135. Intra EU Competitiveness of the meat processing industry. I
Raw materials.
Pigmeat, poultry &beef
Volatile markets (animal health situation)
Concentration of the slaughter industry.
Imports limited
Labour productivity.
Traditional processes.
Small production runs
Sales
A few EU/world wide appreciated products.
Most national/regional products.
Very limited number of customers. (Retail concentration)
Low return on investment.

136. European Revenues B$ Profits b$ Profits % RK 48 121 175 177 93 138 259
300
313
387
413
422
442
498

137. Meat Fish Fresh & processed FV OIls & fats Dairy
( Rabobank 2009)
Tyson foods
Cargill
Nippon Meat Packers
Smithfield
Danish Crown
Vion gp
Swift & Co
Pilgrim’s pride
Sara Lee foods
Hormel foods
Grampian-13
Glanbia-15
LDC-21
Marine Harvest
Icelandic
Unilever
Young’s Bluecrest
Thai union fp
Pescanova
Trident seafoods
Cermaq
The Bolton group
Alfesca
Dole
Chiquita
Fresh Del Monte
Nestle
Pomona
Bocchi gp/ Univ
Bocavor
Bonduelle
Mc Cain
Frans Zentis
Rauch Fuchsafte
Montedison Spa
Nisshin oils meals
Bunge int ltd
Raisio gp
ConAgra inc
Ajinomoto co
Cargill inc
Danone
Lactalis
Friesland/ Campîna
Fonterra
Dean foods
Dairy Farmers of A
Arla
Kraft
Parmalat
Saputo
Bongrain
Meiji
Morinaga
Land o Lakes
Nordmilch

138. Grain & flour Starch Beer Spirits Wine
ADM
Cargill
ConAgra
Bogarasi
Soufflet
Nisshin
VK Muhlen
Meneba
Intermill Paris
Cereal F P
General mills
Baystate
Bunge
Rank Hovis
Cargill-Cerestar
Roquette
Avebe
Tale & Lyle
Corn products
National Starch
Syral –T&L
Agrana
In Bev / Anheuser Busch
Heineken
Sab Miller
Carslberg/ Scottish & Newcastle
Molson Coors
Modelo
Tsintao
Kirin
Diageo
Pernod Ricart
UB Group
Bearn Glob S &W
Bacardi
Suntory
Constellation brd
Vands
Brown Forman
Gruppo Campari
E & J Gallo
Fosters gp
The Wine gp
Castel freres
Bacardi-Martini
Concha y Toro
UCCOAR
Henkel Soenhlein

140. Sugar Sudzucker Danisco Tereos Royal cosun Nordzucker British sugar
Azucerera
Pfeifer & Langen
Polski Cukier
Co Pro B

141. sources
Key issues for the agrifood sector Ministry of Agriculture & Fisheries
Agri Food industry margins in France – Tresor-economics -No 53 March 2009

142. The disadvantages of CAP
The intervention systems have been successful and efficient
…but so much efficient that they have brought out huge excess of production
…and consequently huge expenses for CAP
…and critics from third countries due to distorted competition
…and critics from consumers and importing countries within the EU
Was it good or bad for food industry ?

143. Politically, it was a success
The successes of CAP
Europe has become rapidly self-sufficient
The productivity of agriculture has been rapidly improved
The farm restructuring has been slow, allowing to maintain many middle-size farms
Responding to the necessities of land occupation
Slowing the rural exodus during the 60’s and 70’s
Politically, it was a success

144. R&D - % of industry output for Food & Drink industries

146. EU food & Drink sector’s balance 2005-2008 ( b€)

147. Share by sector of international trade ( excl. energy) 1967 – 2007

148. Main household expenditures in EU

149. Balance AgriFood chain 1967-2006 % of agrifood products trade – Constant price and exchange rate
Sce- CEPII-Chelem

150. Share of the house hold expenditure on Food & Drinks

152. 12,9% EU Turnover
965 b € ,2%

153. Turnover of food processing ind

154. Share of the top 3 retailers

155. CAP and Agri Food businesses
2007
90’s
Biofuels- Competition for land
RM prices booming
Consequences of decoupling
CAP starts to be reformed
Direct subsidies to farmers
Lower farm prices
Restitutions are limited
Again
How to compete?
New outlets within EU
Challenges in nutrition
Competitiveness weak on world markets
How to compete?
Added value
Concentration
Delocalisation
from third countries due to distorted competition
No necessity to add value with marketing and innovation
Emergence of big co-operatives which deal with subsidies and deliver products to intervention : they only have to manage a strategy of volume, permitted by growth of production
Addiction to subsidies
Weakness of marketing expenses an R&D : less necessary
Few companies invest to create brands and added value, except multinationals
High prices for raw material gives an easier return, it favours trade between EU member states
For instance :
Total world cheese trade : 1,6 MT
Intra EU cheese trade : 3,4 MT
Similar for sugar
The strength of the single market allows small companies to be maintained without external competition
The limitation of restitutions changes the scope of food industry :
Less competitive on basic products
Less access to third countries markets
The products with high added value and brands are only able to compete
Necessity to turn to EU domestic market
But which products to be sold if the company has always dealt with commodities ?
Volume strategy
Trade between EU members

157. Shares of the major Food & Drink exporters

159. Private label share of retailers

162. Meat consumption per head/ meat type
Sce: FAOstat data

163. EU decreasing competitiveness
Competitiveness of the EU food industry – A, economic and legal assess – European communities 2007

168. Europen Food industry

169. Competitiveness of the EU food industry – A, economic and legal assess – European communities 2007

172. 10 most innovative sectors in Europe 2007-2008

173. World AgriFood companies Top 30 by Food & Drink sales WW
Eur Sales – 189 b€
WW Sales – 557,5 b€
34%