Which trends offer opportunities or pose threats on the European grains, pulses and oilseeds market?
The grains, pulses and oilseeds (GPO) sectors harbour many opportunities for traders and exporters willing to tap into the latest market trends that include a growing consumer interest in plant-based foods, healthy snacks and gluten-free convenience foods, plus ancient grain mixes. Market entrants seeking to seize these opportunities must ensure the traceability and social and environmental sustainability of their supply chains.
Contents of this page
- Supply chain disruptions increase costs, but changing consumer preferences create opportunities
- Sustainability and social compliance have become standard practice
- The European ‘Green Deal’ will require stricter environmental compliance
- Authenticity creates market for new flavours and traditional ingredients
- Convenience drives the market for value-added products
- Stricter food safety requirements change the role of importers
- Buyers increasingly prioritise local sourcing
- Brexit could be a motive for more direct imports
1. Supply chain disruptions increase costs, but changing consumer preferences create opportunities
The COVID-19 pandemic and the ongoing Russia-Ukraine conflict have disrupted some of the supply chains of GPO. The conflict has particularly affected wheat, corn, barley and sunflower oil (and meal, the by-product of crushing seeds for oil that is commonly used as livestock feed). And while the pandemic has boosted the demand for healthier and environmentally friendlier foods, it has also complicated global logistics.
Imposing lockdowns to contain the spread of COVID resulted in a shrinkage of labour resources, complicating logistics and supply reliability. At the same time, consumers had to fall back on the offer of retailers, when the food service industry faced severe disruptions with many restaurants having to close. This caused a run on grain products such as wheat flour and pasta, with empty shelves in the supermarkets as a result. Sunflower oil evidenced similar patterns (and empty shelves) when short-term consumer demand increased among fears that supplies from Ukraine, the largest sunflower oil producer in the world at almost 4.5 million tonnes annually, may be completely cut off.
The supply chain disruptions and the sudden increase in demand caused prices to fluctuate. Two-and-a-half years into the pandemic and the armed conflict between Russia and Ukraine have resulted in a sharp spike in commodity prices; particularly the costs associated with shipping and handling have increased. Some market experts believe that a way out of this situation may require structural changes, including shorter supply chains, a de-globalisation of food crops, and companies demanding a higher level of flexibility.
Demand for healthy, shelf-stable products
One of the effects of the COVID-19 pandemic has been the surge of many healthy and shelf-stable food products. The pandemic has increased consumer demand for healthy and plant-based foods, thereby boosting the demand for nutritional grains and protein-rich crops. While the growing trend to improve wellbeing and lessen carbon footprints has paved the way for new (exotic) grains and seeds, it is mainly in the traditional and recognisable food segment that this trend has been felt. According to industry professionals, consumers have started to rediscover beans as a versatile and affordable source of protein. All this increased consumer attention will allow food companies to further innovate with different GPO.
This trend will be likely further enhanced by higher energy prices in 2022, and during the upcoming 2022-2023 winter amid the implications of the Russia-Ukraine conflict for the global energy markets. Higher energy prices may also mean that consumers have less money to spend on animal-based proteins and may again turn to legumes and other plant-based protein sources as a more affordable (and healthier) alternative.
Increasing freight costs
In response to the first round of pandemic lockdowns between March and June 2020, many industries were forced to scale down their operations. But then in 2021, as world trade began to recover faster than expected, shipping companies were unable to keep up with a demand that exceeded pre-pandemic levels. This has led to steep cost increases for container freight. Within a year, container prices quadrupled (or more!) and shipping delays became the norm. These problems have become more acute in the east-west trade lines and transpacific trade.
Logistics became a challenge for many companies, and the 2022 Russia-Ukraine conflict compounded this situation. The conflict disrupted Black Sea export routes, but also resulted in many countries not involved in the conflict setting export bans on grains and pulses, both raw and processed, including wheat, wheat flour, barley, rye, corn, oilseeds, lentils, fava beans and pasta. As of April 2022, Hungary, Serbia, Turkey, North Macedonia and Egypt were among the countries implementing such bans. Likewise, a number of European distributors and wholesalers that used to import foreign food brands from China or the United States have temporarily discontinued their imports. This has complicated the planning of shipments, not in the least because the availability of containers is very low, further causing delays and increasing prices.
Raw commodities like GPO are essential for the food and feed industry. Despite the high freight costs, trade must continue to fulfil the demand, but consumers will face further price increases. The main consequence for exporters is that they must optimise their logistics, and in doing this, experience will prove crucial. As much as possible, traders will prioritise regional suppliers so as to avoid expensive imports. Logistical service providers expect this new reality to continue beyond 2022. The main problems will be solved once shipping companies are able to reorganise and add both ships and containers to high-demand routes.
- Read the CBI news item on how COVID-19 disrupts supply chains for grains, pulses and oilseeds and Cooking oil crisis: Alternative oilseeds are essential. Also, learn about the Rabobank analysts’ view on The Grain & Oilseed Sector in a Post-Covid-19 World.
- Find information on freight rates and the latest logistical developments on Freightos or World Freight Rates.
European consumers are becoming increasingly conscious of healthy eating habits and dietary needs. They want to feel good about their lifestyle, and are therefore looking for ingredients with nutritional benefits. This trend is even more visible amongst the younger generations, which are also increasingly concerned about healthy and sustainable diets and may help shift consumer patterns both through activism and their day-to-day consumption choices. This situation harbours commercial opportunities for GPO considered ‘superfoods’, including quinoa, chia and pea protein. International suppliers seeking to seize these opportunities must bear in mind that healthy ingredients require more attention in terms of preserving nutritional value and cleaner producing conditions.
Consumer awareness has led to a number of health trends that also include GPO to a large extent:
- natural: organic, seasonal, residue-free, raw food, unprocessed or minimally processed;
- plant-based: vegan products, plant-based protein, nutritional food for vegetarians and ‘flexitarians’;
- functional: functional foods, superfoods, health benefits, nutrients, dietary fibres, vegetable and pulse protein, high-protein, low-calorie, omega-3;
- free-from: free from by-products, free from allergens, low-sugar, gluten-free, nut-free, clean label, no additives.
What attracts consumers to organics?
Assumed health benefits and sustainable production are common reasons behind the 14.9% sales growth of organics in Europe in 2019, according to data from FiBL. The FiBL World of organic agriculture 2022 report shows that Denmark leads the organics sector by as much as 13%, closely followed by Austria (11.3%), Switzerland (10.8%), Luxembourg (9.1%) and Sweden (8.7%). Overall, the EU is currently the second-largest market for organic food globally, trailing slightly below the USA (€44.8 vs €49.5 billion).
Consumers also associate organics with minimally processed products, without artificial ingredients, which contributes to a healthy and natural lifestyle. About 70% of Europeans think that organic products are safer, and almost 80% consider organic foods to be better for the environment and produced using very few pesticides. Avoiding pesticides is often consumers’ main motivation to buy organic foods.
Figure 1: Organic chickpeas with organic EU certification
How important is plant-based food in Europe?
Consuming plant-based food is one of the biggest trends in the health food segment. It is not only the vegan and vegetarian population which make it a major trend. Europeans in general are becoming increasingly aware of the implications of livestock farming for the environment and animal welfare. As a result, a growing number of consumers are searching for plant-based alternatives to animal products by adopting a vegan, vegetarian or flexitarian lifestyle.
Around 90% of meat alternatives are consumed by flexitarians. According to The 2020 Food Trends by Food Manufacture, 20% of consumers buy vegan or vegetarian food on a weekly basis and 24% expect to increase their consumption of plant-based foods in the future. The fact that many supermarkets in Europe have their own vegan brands shows the magnitude of this trend. Tesco is to become the first British retailer to set a sales target for plant-based alternatives to meat, and Dutch supermarket chain Albert Heijn has pledged to ensure that by 2030, 60% of proteins sold at their stores are plant-based. To meet their goals, Tesco introduced Wicked Kitchen, a range of plant-based meals, and Albert Heijn has expanded its vegan range to include over 1,150 products.
Innovation and research play an important role in the application of healthy GPO, as well as in making healthy products attractive to consumers. European projects like Protein2Food (2015-2020), the Smart Protein Project and The Protein Cluster stimulate the development of innovative products and new plant-based solutions. For example, the company Evolution Meats is a member of the Protein Cluster and has developed 100% plant-based kebab, satay and sausages based on soybean, wheat, field beans and rice. These kinds of products are showing that plant-based can very well mimic the texture, flavour and protein content of products of animal origin, thereby contributing to raising the demand for high-protein plant ingredients such as pulses. Proof of this is the taking-over of Dutch plant-based meat replacement frontrunner The Vegetarian Butcher by food industry giant Unilever in 2018.
But applications of GPO are not the only meat substitutes for consumers concerned about animal welfare and the environment. Meat grown in a laboratory (also known as cultured meat) is slowly making its way into consumer markets targeting conscious meat-eaters. It remains to be seen whether cultured meat will compete for the market share of plant-based meat alternatives or if it will compete with farm-grown meat. It is likely that retail prices will be decisive, where other consumer preferences such as taste and texture are not.
Products that promote protein include the Karma protein porridge with chia and hemp seeds, a premium private-label and health-focused brand from Coop (Figure 2); vegan red lentil pasta by Albert Heijn (Figure 3); and a fermented soy dessert from Sojade (Figure 4). The French-made Sojade has established domestic supply chains for soy, hemp and buckwheat to produce plant-based products.
New products on the European market come mainly from local innovators and food developers. But as a supplier of protein crops you can benefit from the innovations in plant-based foods. To do this it is important to keep a close eye on the preferences of European food developers and which products are most in-demand as source of protein.
Figure 2: Protein porridge with chia and hemp seeds from Karma by Coop
Photo by kiliweb per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.
Figure 3: Vegan red lentil pasta by Albert Heijn
Figure 4: Fermented soya dessert from Sojade, made with organic soybeans from France
Pulses can play a major role in providing consumers with an alternative protein source. And while there has been a boom in the use of pulses as protein source, their potential remains underexploited. According to Food Navigator, Kraft Heinz considers baked beans the ‘sleeping giant’ of its portfolio. Pulse Canada estimated that in 2020, 5% of all new product launches in the world contained at least one pulse. Food innovators are increasingly using pulses in the design of vegan meals, meat substitutes, snacks and baked goods.
Soy and pea protein are still responsible for most new vegan products in Europe, according to The Vegan Review. But the growing demand for plant protein is also a good opportunity to shift away from these mainstream protein crops and introduce more variety in pulses or new protein sources such as sprouted grains. Diversifying the pulse protein source base can also minimise reputational risks that companies run by using soy – a controversial crop related to deforestation and greenhouse gas (GHG) emissions. This may open opportunities for new source countries that can offer attractive bean varieties with consistent quality.
For example, the Indian start-up Proeon has raised seed capital to set up a research lab in the Netherlands for proteins from a specific Indian chickpea variety, as well as amaranth and mung bean. The Finnish brand Beanit has discovered home-grown fava beans as an ideal ingredient for making meat substitutes, using a patented extrusion process. In exploring new products, taste and texture are crucial for a positive consumer experience.
Figure 5: Plant-based egg replacement made from pea and chickpea protein
Figure 6: Céréal Bio organic puree of coral lentils and pumpkin, sold as source of protein and rich in fibres
Photo by nexty per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported.
What type of ingredients can you find in functional food?
Functional foods have ingredients with a demonstrable effect on a bodily function or against diseases. Several GPO can be used in functional foods or supplements:
- Barley and oat grain fibre contribute to increased faecal bulk, improving digestion.
- Alpha-linolenic acid (ALA) found in linseeds, chia and sacha inchi contributes to maintain normal blood cholesterol levels.
- Plant sterols and plant stanols, which are commonly found in vegetable oils, contribute to maintain normal blood cholesterol levels.
- Protein in pulses contributes to muscle mass growth and maintenance, and to bone health.
- High-fibre content makes mung beans highly digestible and suitable for children and the elderly.
In selling food ingredients with special nutritional qualities, exporters and traders may want to target producers of functional foods or supplements. They can also process their product and isolate the dietary element to make it easier to use in other products. Pulse protein isolates, a market segment with growing demand, are carving a new market channel for suppliers of tropical pulses. Businesses producing their own consumer brand can only use nutrition and health claims that are approved by the European Commission.
Many commercial brands use a special ingredient in their presentation to promote a product’s premium health image, although in some cases the actual ingredient is there only at a very low concentration. For example, one brand claiming to produce ‘ancient grains’ product for breakfast in fact uses more than 50% oats and sunflower seeds, with real ancient grains like amaranth, quinoa and chia accounting for 3%, 2% and 1%, respectively. If a brand aims to build consumer trust, it is better to avoid using misleading information.
For suppliers, high-value ingredient crops can be very profitable, but in markets that are not fully mature (such as some novel foods), prices can be volatile and demand easily oversupplied.
Figure 7: Linseed topping, with sunflower seed and pumpkin seed
How does free-from affect the consumption of grains, pulses and oilseeds?
To address interest in healthy foods, manufacturers develop new products and reformulate existing ones. Less sugar, salt and fat, free from allergens and adding healthy substitutes are key elements. These efforts often go together with a ‘clean label’, showing that artificial chemical additives are being avoided.
Free-from covers the whole segment of foods that do not include unhealthy or allergenic ingredients. For example, wheat is increasingly being replaced by quinoa, buckwheat and other gluten-free grains and pulses. The British Dove’s Farm specialises in gluten-free cereals (see Figure 8), and the Italian company Pedon has developed pulses shaped like rice grains and pastas made of peas, lentils and chickpeas. The Belgian brand Alpro uses soybean in their lactose-free ice cream and drinks. The dairy alternative market is expected to have an annual growth of 7.12% between 2019 and 2024.
Alternative ingredients like gluten-free grains can be profitable. But to benefit from the free-from market, you must be able to completely separate production from allergens and other contaminants.
Figure 8: Cereal flakes blend of rice, buckwheat and maize, and free from gluten & milk
Photo by klaromatik per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported.
- Follow the news on organics on the FiBL website to keep up-to-date with the latest developments in the organic sector.
- Stay informed about news in the plant protein market on New Protein and the developments in food ingredients on the European market by visiting the websites of The Spoon and Food Ingredients First.
- Promote the nutritional characteristics that appeal to consumers when marketing a healthy ingredient, but only make health claims that are allowed by Regulation (EU) No 432/2012 and the conditions that apply to them according to the annex to Regulation (EC) No 1924/2006. Make your product your specialisation.
- Maintain a clean production with food safety management systems such as ISO22000 or BRC Global Standards in place, and avoid cross-contamination and excessive use of chemicals. Also check the CBI buyer requirements for grains, pulses and oilseeds.
- Plan your production and supply carefully. Make sure to offer continuity through a reliable, constant quality and volume, but do not produce without having assessed the market. Find market information and related sources in the CBI study on the demand for grains, pulses and oilseeds on the European market. Visit the Food ingredients Europe fair when you decide to specialise in sub-ingredients and natural additives. Check out the exhibitor list to see what types of ingredients are presented.
2. Sustainability and social compliance have become standard practice
Sustainable and ethical production are major concerns in Europe when dealing with agricultural production and the wider agrifood sector. The required transparency and traceability in the GPO value chains puts significant pressure on producers and suppliers. It is not enough to be competitive, sustainability has become a basic feature of every successful business.
Lots of media exposure can make certain food products gain in popularity, but it can also highlight environmental and social responsibility concerns. For example, in 2013, when prices and exports of quinoa increased rapidly, concerns were raised about food security in Bolivia. Likewise, with the growth of soy-based vegetarian products, consumer awareness grew about soybean-driven deforestation in South America, including the Cerrado, Chaco and Amazon regions. And the same happened with palm oil and the growing concerns about the poor labour conditions that prevail in the industry. These debates not only caught the attention of consumers and politicians and became a serious concern for many businesses, it is one of the reasons why food brands increasingly prefer to source their ingredients from European production.
Whether scientifically proven or not, negative publicity may affect the demand for a specific ingredient as well as the reputation of a brand or product origin. Buyers in Europe are increasingly paying attention to their corporate responsibilities in terms of the social and environmental impact of their businesses. This is why import businesses expect that producers and exporters will demonstrate more proof of their current good conduct and improvement plans.
Leading traders, food brands and retailers are increasingly in the forefront of sustainability initiatives. Besides implementing their own policies, like the Sustainable Soy of the Louis Dreyfus Company, they participate in initiatives such as:
- Round Table on Responsible Soy (RTRS), an initiative to facilitate a global dialogue on soy that is economically viable, socially equitable and environmentally sound. Food retail chain Coop and multi-brand owner Unilever were among the founding members.
- ProTerra, Standard on Social Responsibility and Environmental Sustainability for soy, designed by the ProTerra Foundation, a not-for-profit organisation that advances and promotes sustainability at all levels of the feed and food. Its members include Cargill, Bunge, Alpro, Barry Callebaut.
- Roundtable on Sustainable Palm Oil (RSPO), with over 4,000 companies that have committed to produce, source or use sustainable and only RSPO-certified palm oil.
- IDH the Sustainable Trade Initiative for soy and palm oil, multi-stakeholder initiatives to make trade 100% sustainable with zero net deforestation.
- Sustainable Rice Platform (SRP) unites rice companies worldwide. For example, AMRU Rice in Cambodia helps farmers implement the SRP standard.
Consumers do not expect positive sustainability performance and social engagement from large businesses only. Many smaller buyers trading GPO have incorporated social and environmental requirements into their sourcing policies too. They may ask you to have a code of conduct in place declaring that you run a responsible business in terms of local environmental and labour laws as a bottom line, and strive for higher ESG standards. You can expect increasing pressure to show additional documentation and certification as proof of your good conduct, including your own operations, as well as your entire value chain.
You can turn the demanding market to your advantage by making sustainability a competitive advantage and standing out from other suppliers. However, basic purchase criteria such as price, on-time delivery and product quality are still most important. As a producer or exporter, you must remain price-competitive while complying with increasingly high standards.
- Watch the recording of the CBI Webinar on Speciality and Sustainable rice to learn more about SRP and the opportunities in these niche markets.
3. The European ‘Green Deal’ will require stricter environmental compliance
To meet its climate goals for 2050, the European Commission launched the EU Green Deal (EGD) in 2019. In the rollout of the EGD policies, environmental and sustainability standards are likely to become stricter in the coming years. One of the most relevant parts for the food industry is the Farm to Fork strategy (F2F).
F2F aims to make food systems fair, healthy and environmentally friendly. It will ensure sustainable food production and address issues like sustainable use of pesticides, packaging and food waste. With an organic farming action plan, the European Commission has set a target of “at least 25% of the EU’s agricultural land under organic farming and a significant increase in organic aquaculture by 2030”. The plan aims to stimulate demand and ensure consumer trust, stimulate conversion and reinforce the entire value chain, plus improve the contribution of organic farming to environmental sustainability.
Actions against global deforestation are also expected. Commodities like soy and palm oil are known to be responsible for a large part of the world’s deforestation and forest degradation, particularly in the tropical regions where land conversion causes the most severe damage to local biodiversity and ecosystem integrity. In 2020, the European Commission launched a public consultation to assess regulatory and non-regulatory options to minimise the risk of products linked to deforestation being placed on the EU market. A proposal for legislation is in the making. Commission adoption was planned for the fourth quarter of 2021, but has not yet commenced.
The Green Deal will undoubtedly have an impact on the international food trade. Several EU trade agreements already include rules on trade and sustainable development, for example with most countries in Latin America, as well as Moldova, Ukraine and Vietnam. For suppliers of GPO it is important to look beyond the increasing standards and try to be in the frontline of the developments.
The production, processing and distribution of food throughout the world accounts for a considerable share of GHG emissions. The upcoming United Nations Climate Change Conference (COP 27), which is to take place in Egypt in November 2022, is viewed by many actors as a critical turning point to linking the agrifood sector with climate change. COP27 will feature a Food Systems Pavilion putting food at centre-stage during these crucial negotiations. The climate-related agenda may affect the entire food value chain, altering production practice as well as consumption patterns. With increasing awareness of the role of animal-based proteins in global GHG emissions, demand may gradually shift to plant-based alternatives.
Figure 9: Beyond Burger, based on pea protein and potato starch, soy-free
- Stay ahead of the curve and learn about the possible impacts of the EGD on imports from non-EU countries by checking CBI’s publication EU Green Deal: how will it impact my business?
- Anticipate the growing importance of social and environmental compliance by making your own social responsibility policy and code of conduct. You can do this relatively easily by reading the published values of leading companies and referring to common standards such as the international labour standards or the amfori BSCI Code of Conduct.
- Find out what is important and implement an environmental policy by using the Environmental Implementation Guidelines of the Global Social Compliance Programme (GSCP) and the Consumer Goods Forum (CGF).
- Read the CBI buyer requirements for grains, pulses and oilseeds to see what actions you can take and what type of evidence and certifications buyers require.
4. Authenticity creates market for new flavours and traditional ingredients
Food developers are constantly looking for new flavours and unique ingredients to strengthen consumer experience and address the growing interest in authentic food. This continuous search presents new opportunities for ethnic cuisines from around the world.
Among the effects of cross-cultural interactions, increased mobility and migrations are the introduction of new products to the European market. As a result, ethnic food products such as couscous (milled durum), risotto (arborio rice), dal (bean paste), hummus (chickpea paste) and tahini (sesame paste) have become household items in many European homes. European consumers looking for authentic ethnic products are interested in the story behind the products they consume and their makers. They also increasingly pay attention to craftsmanship and ingredient origin, making food not only a gastronomical but also a cultural experience, particularly when overseas travel remains often hindered after the COVID pandemic.
A good example of an authentic product that requires storytelling are ancient grains. Ancient grains refer to ancestral grain varieties that are believed to have superior nutritional value (even though not all nutritionists support this view). They are also marketed as healthier alternatives to corn, rice and wheat that went through thousands of years of selective breeding, such as the ancient grains quinoa, spelt and einkorn. An ancient grain that is gaining popularity through a strong branding strategy is Khorasan wheat under the trademark Kamut, which has excellent traceability and storytelling. Buckwheat, a gluten-free pseudocereal from the Polygonaceae family, once common in northeastern Europe and Asia, might also have some potential, even though its consumption in the EU is still quite low. It has already received some attention from the EU commission in a project aimed to revitalise cultivation of nutritious, resilient and low-input crops in the alpine regions of Austria and Italy to promote healthy and sustainable diets.
The growing popularity of international cuisines provide additional space to market pulses and promote ‘new’ ancient grains such as fonio and teff. For example, since 2019 the Italian company Obà has received approval from the European Food Safety Authority (EFSA) to commercialise fonio grains as a food ingredient. Another company, Mama Fresh in Ethiopia, has tapped into a traditional, gluten-free food trend with injera, a pancake-like bread made of teff.
The variety of food products will continue to expand. Supplying or using original and authentic ingredients is a good way to offer a unique product. Through well-designed storytelling, you can make it stand out and differentiate from other products, thus gaining consumer interest and market share. Amazon Health Products, for example, has used the history of sacha inchi seeds and their nutritional importance in pre-Inca and Inca cultures.
Figure 10: Eat Natural breakfast cereal with gluten-free ancient grains and seeds like amaranth, quinoa and chia.
- Make use of the historic value of your product, its traditional consumption, its unique characteristics and the identity of its farmers to brand an authentic product. A well-designed website is a good first step in your branding strategy.
- Check the EU Novel Food Catalogue for restrictions to marketing your specific product. If your ingredient has not been marketed in Europe before, it may be a novel food.
5. Convenience drives the market for value-added products
Adjusting to modern-day consumer lifestyles can be an effective way to seize opportunities in the GPO sector. Food brands know this and are therefore launching a growing number of convenience food products. You can use them in nutritious added-value products such as high protein on-the-go snacks or easy-to-cook products.
The demand for convenience food boosts the sales of many healthy snacks, product mixes and prepared foods. In the snack segment you can find cereal bars with pea and rice protein, roasted peas and beans. For cooking, there is an increasing creativity in mixing grains and pulses, such as Lassie cereal mix with whole grain rice and quinoa.
Convenience is normally challenging for traditional dry beans, which need soaking and preparation time. But companies are finding easy and attractive applications, such as precooked microwave stew in pouches to help consumers choose pulse products.
Supermarkets have also added mixed-grain and pulse products to their private-label assortments, for example Tesco’s bulgur wheat, green lentils and barley and Albert Heijn’s organic lentil pasta. Jumbo’s multigrain rice mix, containing precooked white and brown rice as well as barley, wheat and wild rice, is another example. The development of private-label products is a good indication of the potential and growth of these products in mainstream B2C segment players, as is the launch of plant-based fast food by large food businesses like McDonald’s and Nestlé.
Expect further diversification of convenience products in the future. As a supplier, there may be interesting opportunities to explore in adding value for convenience brand products by pre-mixing or semi-processing ingredients.
Added value from developing countries
Traditionally, European food processors develop added-value products from food ingredients produced in third countries. Added value from third countries is often limited to basic processing including cleaning, milling, crushing and popping. However, as a supplier from a non-European country you may seize market opportunities by developing consumer products for which there is a market in Europe. To this end, you can target specialised distributors that are open to engaging in such ventures. Bolivian company Coronilla, for example, has introduced pastas made with local Bolivian quinoa and amaranth in Germany, the United Kingdom and Spain. British company Aduna has been successfully marketing fonio grains based on its purpose-driven mission and on supporting local producers in Africa, including Mali, Malawi, Madagascar and Egypt.
Figure 11: Bolivian pasta brand made from brown rice, amaranth and quinoa
- Visit European trade fairs like SIAL, Anuga or Biofach to find food brand companies that use grains, pulses or oilseeds and to explore the advantages of adding value at origin. Remain flexible towards the option of private labelling. This can be a preference of your client, but it also saves you on branding and marketing costs. Check out the PLMA trade fair for private labelling.
- Keep track of product innovations by regularly reading news sites such as FoodIngredientsFirst, FoodNavigator and New Food.
- When marketing a finished product, target distributors specialised in e.g. fair trade, organic, ethnic or health products. Read the CBI’s tips on how to find buyers for your product.
- Be prepared to invest in international marketing activities and logistics when introducing a final product in Europe, such as participating in trade fairs and warehousing. Also, adjust your product presentation to the European style. Get inspiration from existing and successful brands you like.
6. Stricter food safety requirements change the role of importers
Europe has set up very strict food safety regulations, with rules in place for almost any aspect of food safety, and strict veterinary and phytosanitary border controls. These requirements will only become tighter over time, especially after lesser-known GPO enter the mainstream markets and thus gain more attention from regulators. Compliance has become a main hurdle for exporters and having experienced partners can make a big difference.
Trade platforms such as Alibaba, Tradekey and Tridge, along with easily accessible information online, have made the trade of dry food ingredients become seemingly easy, but the reality is often very different. New grain and pulse varieties and food products based on them find their way into mainstream market channels such as modern retailers (hypermarkets and supermarkets). Although the share of food consumption in these channels varies across EU member states, it is continuously increasing throughout the Union. The proportion of food consumed in retail versus food service (hotels, restaurants, catering) should be also considered, especially with the revival of eating out after the end of COVID lockdowns. These main players from the retail and the hotel, restaurant and catering sectors raise supply standards and demand full traceability. Traceability is a big issue, particularly for organic products, but increasingly so for all food – and yet it can still be poorly managed by actors in origin countries.
An increasing focus on food safety and traceability is gradually changing the role of traditional traders into specialised food supply chain managers. Traders increasingly integrate stricter safety protocols and certifications into their operations, thereby implementing innovative processing to ensure high-quality and clean food products for their clients. Rigorous laboratory checks for chemical and allergenic residues are part of today’s reality. Food safety is an evolving issue that will become even more demanding in the future. Issues tackled by EU legislation already include traceability and labelling, use of GMO, sustainable use of pesticides and their maximum residue levels, plant heath and invasive species, etc.
The knowledge of specialised importers about products and market requirements is indispensable for exporters of niche products. As an exporter you must not only become more acquainted with all aspects of food safety, but also look for buyers that can manage your product well, in addition to marketing your quality, traceability and sustainability efforts in the right way.
- Implement an HACCP-based traceability and food management system such as ISO22000 or BRC Global Standards. This will be a basic assurance for buyers in Europe.
- Check your product for potential contamination and chemical residues before exporting. According to The 2019 European Union report on pesticide residues in food, between 6 and 8.2% of the samples of rice, linseed, buckwheat and other pseudo-cereals showed residues above the legal maximum residue levels (MRLs).
- Read this briefing from Proforest for more information on how to obtain traceability in your supply base and what types of information your buyers are looking for.
7. Buyers increasingly prioritise local sourcing
Consumer preference for locally sourced ingredients has made retailers and food processors reconsider their sourcing priorities. This preference is driven by the interest in sustainability, including lower emissions from local food, as well as less risk of deforestation and landscape degradation in the tropics. This trend is further strengthened by policymakers such as those responsible for the European Green Deal. It is an especially hot topic for organic and pulse crops.
While the need for GPO sourced from third countries will remain, buyers will increasingly prioritise crops produced in Europe or as close as possible to the continent. As third-country supplier, you can still take advantage of the unfulfilled demand that European suppliers cannot meet. If you want to compete with crops produced in Europe, you must not only differentiate your product in cost, variety or quality, but also in environmental and social performance.
Some EU market players believe that domestic production of organic pulses will increase soon, as is the case with other crops that are not typically European. For example, quinoa and teff are nowadays grown in Europe thanks to seed breeding. While other tropical pulses such as mung beans are grown in marginal quantities, successful harvesting of these pulses can set a precedent for European producers wishing to grow larger quantities. Beyond grains and pulses, European growers have been able to introduce some traditionally tropical cultures into cultivation, like tea to the Netherlands. Other crops, like soy, originated in temperate climates and are already fit for cultivation in Europe. Due to concerns about the carbon footprint of imported food, increasingly larger numbers of European consumers prefer foods that are grown locally. Moreover, local foods offer a higher level of trust to consumers when it comes to issues like care for the environment and labour conditions. Traceability of organic crops outside Europe remains a challenge too.
Europe’s climate and the available agricultural area still pose limitations, and varieties of exotic crops do not always fit the taste and smell expectations of ethnic markets. Moreover, organic production is not sufficient and certain tropical crops are just not feasible for cultivation in Europe.
While Europe will likely not end its dependence on imported crops, including that for grains and pulses, it will expect buyers to become selective in choosing their suppliers or shifting to new supplying countries. In addition to the increasing demand for local and regional sources, buyers are also becoming more interested in new sources of high-quality beans or unique varieties, and are looking to become less dependent on traditional markets like China and India. Producers from outside of the EU that are able to prove the environmental and social sustainability of their products (including through third-party verified certification schemes for soft commodities), as well as improved traceability along their value chain, will continue to benefit from European demand despite the ongoing localisation trends.
- Focus on high-quality products that are generally not available from European producers, for example supply mung beans and black-eyed peas rather than peas and fava beans. Check the CBI Market Statistics and Outlook study to analyse some of the GPO from your country that have potential.
8. Brexit could be a motive for more direct imports
As of 1 January 2021, the United Kingdom completed Brexit and officially left the European Union and the single market. A last-minute deal prevented heavy taxation for grain and milling companies between the UK and the EU. However, additional administrative burdens may likely provide non-European suppliers (including from North America, non-EU Europe and Asia) with a new window of opportunity, mainly to arrange their direct supply to the United Kingdom.
The UK and the EU have a long-standing trade history. The UK supplies the EU with British wheat and barley, the EU exports/re-exports a large number of GPO to the UK. For now, favourable trade tariffs between the nations are maintained under the EU-UK Trade and Cooperation Agreement (TCA), which envisages that goods continue to be traded without tariffs and quotas. At the same time, TCA conditions include more comprehensive customs checks and rules of origin requirements. Hence new post-Brexit trade procedures and political tensions complicate the bilateral trade. This makes it more attractive for UK companies to look beyond the traditional supply from the EU.
The British government is establishing new trade agreements with non-EU suppliers, for example with Ukraine. This will allow the UK to source grains for lower prices than EU farmers are asking. British mills are also using grain from North America – the US and increasingly Canada – which significantly increased their market share versus the US. At the same time, bilateral trade agreements with Ukraine may not result in actual increases in GPO imports from that country, as trade routes are still facing disruptions due to the Russia-Ukraine conflict. Following the Russia-Ukraine grain deal jointly negotiated with the United Nations and Turkey, which opened up the Black Sea routes, some Ukrainian corn was exported to the UK, though quantities remain non-significant.
Before exiting the European Union, the UK was sourcing third-country products such as Ethiopian kidney beans and Indian chickpeas via trade companies in the EU, and Asian rice from EU rice millers. Such trade connections are expected to become more direct now. In addition, UK millers can no longer export to the EU tariff-free if 15% or more of the original crops originate from outside of the EU, and even by blowing this margin additional paperwork may raise costs.
- Check your export advantage in supplying the United Kingdom as a non-European supplier on the GOV.UK website: Look into the UK trade agreements with non-EU countries and read the summary of the UK’s new relationship with the EU.
- Check the import tariff for your product in the UK and for the EU in My Trade Assistant of Access2Markets.
Profundo carried out this study on behalf of CBI.
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