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Which trends offer opportunities or pose threats on the European grains, pulses and oilseeds market?

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Grains, pulses and oilseeds have many opportunities in the food sector, tapping into consumer interest in healthy diets including plant proteins, convenient gluten-free pastas and ancient grain mixes. This broad industry offers opportunities for new nutritional ingredients from different origins, but only when supply is safe and sustainable.

1. COVID-19 is leading to increased consumption and costs

The COVID-19 pandemic has disrupted some of the supply chains of grains, pulses and oilseeds. It has increased the demand for healthier foods, but has also complicated global logistics.

Lockdowns and decreased labour resources complicated logistics and a reliable supply. Meanwhile consumers had to fall back on the offer of supermarkets when restaurants closed down. This caused a run on grain products such as wheat flour and pasta, with empty shelves in the supermarkets as a result. Difficulties in supply and a sudden increase in demand caused prices to fluctuate. Now, almost two years after the start of the pandemic, commodity prices are significantly higher. This is partly due to the strong demand, but also because freight costs have increased. Analysts believe there may be structural changes that include 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 boost of many healthy and shelf-stable foods. It seems the pandemic has strengthened the trend for healthy diets. This is why nutritional grains and protein-rich crops have performed well in the past few years. The search to improve wellbeing has paved the way for new (exotic) grains and seeds, but it is mainly the traditional and recognisable foods that have benefited from the COVID situation. According to industry professionals consumers have started to rediscover beans as a versatile and an affordable source of protein. All this increased consumer attention will allow food companies to further innovate with different grains, pulses and oilseeds.

Increasing freight costs

After the first pandemic lockdowns in the first half of 2020, whole industries had prepared to scale down their operations. But in 2021 the world trade recovered faster than expected. When demand proved to be stronger than ever, shipping companies were not able to keep up. This has led to a high increase in costs for container freight. In one year’s time container prices quadrupled (or more!) and shipping delays became much more common. These problems have been most notable in the east-western trade lines and transpacific trade.

Logistics have become a challenge for many companies. The availability of containers is very low and shipments have become difficult to plan due to delays and increasing prices. Several European distributors and wholesalers that used to import foreign food brands from China or the United States have temporarily stopped their imports.

Raw commodities such as grains, pulses and oilseeds are essential for the food and feed industry. Despite the high freight costs, trade has to continue to fulfil the demand. Without a doubt, consumers will be confronted by price increases. The principle consequence for exporters is that they have to be even better organised in terms of logistics. Experience will count. For some products they will see more local sourcing in the European region to avoid expensive import.

Logistical service providers expect this new reality to continue well into 2022 or beyond. The main problems will be solved once shipping companies are able to reorganise and add both ships and containers on high-demand routes.

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2. Health conscious consumers buy more grains, pulses and oilseeds

European consumers are becoming increasingly conscious of healthy eating habits and dietary needs. Consumers want to feel good about their lifestyle and look for ingredients with nutritional benefits. This provides commercial potential for a large range of grains, pulses and oilseeds, such as quinoa, chia and pea protein. As a supplier, it is important to keep 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 grains, pulses and oilseeds to a large extent:

  1. natural: organic, residue-free, raw food, unprocessed or minimally processed;
  2. plant-based: vegan products, plant-based protein, nutritional food for vegetarians and ‘flexitarians’;
  3. functional: functional foods, superfoods, health benefits, nutrients, dietary fibres, vegetable and pulse protein and omega-3;
  4. free-from: free from products, free from allergens, less 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 8% sales growth of organics in Europe in 2019, according to the latest data from FiBL. Organics are associated with minimally processed products without artificial ingredients, which contribute to a healthy and natural lifestyle.

About 70% of Europeans think that organic products are safer. Almost 80% of Europeans consider organic foods to be better for the environment and produced with a very restricted use of pesticides. Avoiding pesticides is often a main reason for purchasing organic products.

Figure 1: Organic chickpeas with organic EU, Økologisk (Norwegian) and KRAV (Swedish) certification

Organic chickpeas with organic EU, Økologisk (Norwegian) and KRAV (Swedish) certification

Foto by openfoodfacts-contributors per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

How important is plant-based food in Europe?

Plant-based food is one of the biggest trends in the health food segment. It is not only the vegan and vegetarian population who make it a major trend. Europeans in general are eating less meat, with many consumers replacing part of their meat consumption with alternative protein food, in what is called a flexitarian diet.

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 buy more in future. The fact that many supermarkets in Europe have their own vegan brands, shows that they take it seriously. In the United Kingdom, Tesco is to become the first UK retailer to set a sales target for plant-based alternatives to meat, introducing for example Wicked Kitchen, a range of plant-based meals.

Innovation and research play an important role in the application of healthy grains, pulses and oilseeds, but also in making healthy products attractive to consumers. European projects such as 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 developed 100% plant-based kebab, satay and sausages based on soybean, wheat, field beans and rice. These new products raise the demand for protein ingredients such as pulses.

Examples of products that promote protein include the Karma protein porridge with chia and hemp seeds, a premium private label and health-focused brand from Coop (see figure 2); quinoa and hummus chips by the Eat Real brand (see figure 3); and a fermented soya dessert from Sojade (see figure 4). The French-made Sojade has established domestic supply chains for soya, hemp and buckwheat to produce plant-based products.

New products on the European market mainly come 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

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 quinoa chips from Eat Real

Vegan quinoa chips from Eat Real

Photo by javichu per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Figure 4: Fermented soya dessert from Sojade, made with organic soybean from France

Fermented soya dessert from Sojade

Photo by openfoodfacts-contributors with additional modifications by moon-rabbit per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Pulses can play a major role in providing consumers with an alternative protein source. At the moment, the potential in pulses is underutilised. According to Food Navigator, Kraft Heinz considers baked beans the ‘sleeping giant’ of its portfolio. Pulse Canada has said that in 2020, 5% of all new product launches in the world contained at least one pulse. Food innovators are using pulses more and more in 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. 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. Taste and texture are crucial for a positive consumer experience.

Figure 5: Beanit vegan meatballs made from fava bean and pea protein

Beanit vegan meatballs made from fava bean and pea protein

Photo by immun per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Figure 6: Céréal Bio organic puree of coral lentils and pumpkin, sold as source of protein and rich in fibres

Céréal Bio organic puree of coral lentils and pumpkin

Photo by nexty per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

What type of ingredients can you find in functional food?

Functional foods have ingredients with a demonstrable effect on a function in the body or against diseases. There are several grains, pulses and oilseeds that can be used in functional foods or supplements, for example:

  • Barley and oat grain fibre contribute to an increase in faecal bulk, improving digestion.
  • Alpha-linolenic acid (ALA) found in linseeds, chia and sacha inchi contributes to the maintenance of normal blood cholesterol levels.
  • Plant sterols and plant stanols, which are commonly found in vegetable oils, contribute to the maintenance of normal blood cholesterol levels.
  • Protein in pulses contributes to muscle mass growth and maintenance, and bone health.

When you supply an ingredient with special health properties, you can use this quality to target producers of functional foods or supplements. You can also process your product and separate the dietary element to make it easier to use in products, for example, by pressing the oil from seeds. When you produce your own consumer brand, you 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 only at a very low concentration. For suppliers, high-value ingredient crops can be very profitable, but in markets that are not fully mature, prices can be volatile and demand easily oversupplied.

Figure 7: Chia Topping Mango-Lucuma, with buckwheat, linseed, chia and sesame

Chia Topping Mango-Lucuma

Photo by hangy per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

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, fat, free from allergens and adding healthy substitutes are key elements. These efforts often go together with a 'clean label' showing that 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 with quinoa, buckwheat, or 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, such as gluten-free grains, can be profitable. But to benefit from the free-from market, you must be able to completely separate production from allergenics and other contaminants.

Figure 8: Cereal flakes blend of rice, buckwheat, maize, and free from gluten & milk

Cereal flakes blend of rice, buckwheat, maize, and free from gluten & milk

Photo by klaromatik per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

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3. Sustainability and social compliance have become standard practice

Sustainable and ethical production are major concerns in Europe when dealing with agricultural cultivation. The required transparency in the trade of grains, pulses and oilseeds puts great pressure on its producers and suppliers. You must be competitive and sustainable at the same time.

More exposure in the media can make certain food products gain in popularity, but it can also highlight concerns in sustainability and social issues. For example, when prices and exports of quinoa increased rapidly in 2013, it raised concerns about food security in Bolivia, and the same goes about deforestation related to soybean production in Brazil and poor labour conditions in the palm oil industry. These debates have caught the attention of consumers and politicians, and become a serious concern of many businesses. It is one of the reasons why food brands increasingly prefer to source their ingredients from European production.

Justified or not, negative marketing can affect the consumption of 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 with regard to the social and environmental impact of their businesses. That is why import businesses require more proof of good conduct from producers and exporters.

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 part of the founding members.
  • Roundtable on Sustainable Palm Oil (RSPO) with more than 4,000 companies that have committed to produce, source or use sustainable and only RSPO certified palm oil.
  • IDH the Sustainable Trade Initiative for soya and palm oil, which are 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.

Sustainable and social actions are not limited to large companies. Many smaller buyers, dealing with grains, pulses and oilseeds, have incorporated social and sustainable practices into their business policies too. They will likely ask you to sign a code of conduct declaring that you run a responsible business with respect for the local environmental and labour laws. You can expect increasing pressure to show additional documentation and certification as proof of your good conduct.

You can turn the demanding market to your advantage by making sustainability a core competence and stand 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 increasing standards.

The European ‘Green Deal’ aims to make the EU climate neutral

In the coming years the European ‘Green Deal’ will influence how resources are used and greenhouse gas emissions are reduced. The new EU policies on sustainability will prepare Europe in becoming the first climate-neutral continent by 2050. One of the most relevant parts for the food industry is the ‘Farm to Fork’ strategy.

The Farm to Fork Strategy aims to make food systems fair, healthy and environmentally-friendly. It will ensure sustainable food production and address for example the 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’.

Furthermore, actions against global deforestation are also expected. Commodities such as soy and palm oil are known to be responsible for a large part of the world’s deforestation and forest degradation. In 2020, the European Commission has launched a public consultation to assess regulatory and non-regulatory options to minimise the risk that products linked to deforestation are placed on the EU market. A proposal for legislation is in the making.

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 grains, pulses and oilseeds, it is important to look beyond the increasing standards and try to be in the frontline of the developments.

Figure 9: Next level burger based on soy and wheat, with CO2 compensation (climate neutral)

Next level burger based on soy and wheat, with CO2 compensation (climate neutral)

Photo by kiliweb per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

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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 opens up possibilities for ethnic cuisines, storytelling and products that show craftsmanship.

Consumer experience starts with an authentic product, often ethnic or traditional foods, such as couscous (milled durum), risotto (arborio rice), dal (bean paste), hummus (chickpea paste) and tahini (sesame paste). Cross-cultural influences have introduced these products successfully on the European market. But the story behind the product and its maker also matters, reflecting craftsmanship and the origin of the ingredients.

A good example of an authentic product that requires storytelling are ancient grains. Ancient grains refer to ancestral grain varieties that often have superior nutritional value, such as 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.

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 are a good way to offer a unique product. By adding a story to your product you can make your product stand out and influence the consumer's choice. Amazon Health Products, for example, has used the history of sacha inchi seeds and their nutritional importance in pre-Inca and Inca empire cultures.

Figure 10: Eat Natural breakfast cereal with gluten-free ancient grains and seeds such as amaranth, quinoa, and chia.

Eat Natural breakfast cereal with gluten-free ancient grains and seeds such as amaranth, quinoa, and chia.

Photo by kiliweb per Open Food Facts, licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Tips:

  • Make use of the historic value of your product, its traditional consumption, its unique characteristics and the identity of its farmers to brand your 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

To get the most out of grains, pulses and oilseeds, food brands adjust them to modern-day consumer lifestyles. This means making them more convenient. 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 AH’s organic rice waffles with quinoa. The development of private label products is a good indication of the potential and growth of these products in mainstream markets, as is the launch of plant-based fast food by large food business such as 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

Product brands are usually developed within Europe. Added value from third countries is often limited to basic processing including cleaning, milling, crushing or popping. However, if you are able to make a consumer product that is suitable for the European market, you can target specialised distributors that are open to engage 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.

Figure 11: Bolivian pasta brand made from brown rice, amaranth and quinoa

Bolivian pasta brand made from brown rice, amaranth and quinoa

Source: Coronilla

Tips:

  • Visit European trade fairs such as 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, for example, 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 European style. Get inspiration from existing and successful brands you like.

6. Stricter food safety requirements change the role of importers

Europe is a difficult market in terms of food safety rules. These requirements will only become stricter, especially when healthy grains, pulses and oilseeds enter the mainstream markets. Compliance has become a main hurdle for exporters and having experienced partners can make a great 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 products find their way into the mainstream market channels such as large retailers. These main players raise supply standards and demand full traceability. Traceability is a big issue, even more so in organic products, but it is often poorly managed by actors in source countries.

The growing focus on food safety and traceability is gradually changing the role of traditional traders into specialised food supply chain managers. They now pursue food safety protocols and certifications, 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 only become more precise in the future.

The knowledge of specialised importers about products and market requirements is indispensable for exporters of niche products. As an exporter you must become experienced in all food safety aspects, but also look for buyers that can manage your product well.

Tips:

  • Implement a 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).

7. Buyers increasingly prefer local sourcing

There is an increasing preference for locally sourced ingredients. This preference is driven by the interest in sustainability of industry professionals and consumers, and further strengthened by policy makers such as those responsible for the European Green Deal. It is an especially hot topic for organic and pulse crops.

The need for imported grains, pulses and oilseeds will remain, but they will often be second choice to a European-produced crop. As an external supplier, you can still take advantage of the unfulfilled demand that European suppliers cannot meet. If you want to compete with European-grown crops, you must differentiate your product in cost, variety or quality.

European companies believe that local production of organic pulses will increase in the near future, 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. Local products offer a higher level of trust to consumers when it comes to the care for the environment, for example. Traceability of organic crops is also considered to be more complicated outside Europe.

However, Europe has limitations in climate diversity and agricultural area. Local varieties do not always fit the expectations of ethnic markets. The organic production is not sufficient and certain tropical crops are just not feasible for cultivation in Europe.

Europe will continue to depend on imported crops, but expect buyers to become selective at choosing their suppliers or shifting to new supplying countries. Besides the increasing demand for European production, buyers also have interest in new sources of high-quality beans or unique varieties, and become less dependent on China and India.

Tip:

  • Focus on high-quality products which 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 grains, pulses and oilseeds that have potential from your country.

8. Brexit could be a motive for more direct imports

As of 1 January 2021, the United Kingdom has completed “Brexit” and officially left the European Union. A last-minute deal prevented heavy taxation for grain and milling companies between the UK and the EU. However, additional administrative burdens may provide non-European suppliers with a new window of opportunity, mainly to organise their direct supply to the United Kingdom.

The UK and the EU have a long trade tradition. The UK supplies the EU with British wheat and barley. The EU (re-)exports a large number of grains, pulses and oilseeds to the UK. For now, favourable trade tariffs between the nations are maintained. At the same time, 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-European suppliers, for example with the Ukraine. This will allow the UK to source grains for lower prices than EU farmers are asking.

Before Brexit, the UK was able to source imported products via trade companies in mainland Europe, such as kidney beans from Ethiopia, Indian chickpeas and Asian rice from EU rice millers. These trades are expected to become more direct.

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This study has been carried out on behalf of CBI by ICI Business.

Please review our market information disclaimer.

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