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What competition do you face on the European market for edible nuts and dried fruit?

Takes about 12 minutes to read

To be competitive on the European market, a first step would be to implement food safety systems. Investing in new processing technologies, which will result in high-quality products and the preservation of all functional ingredients, can be the next step to success when competing with substitute products.


1 . What are the opportunities and barriers when I try to enter the market?

Food safety certification is already a must

Due to complex challenges in today’s food supply chain, almost all food retailers request a food safety certification scheme. There are currently more than 200 different certification schemes for fruit and vegetables sector in the European Union. The preferred and most widely recognised certification schemes in the sector of dried fruit and edible nuts are BRC, FSSC 22000, IFS and SQF certification.

CSR is slowly integrated with product quality and safety requirements

Corporate social responsibility (CSR) is slowly integrated with product quality requirements. In the long-term foresights, suppliers of food safety and CSR certification will dominate the market because importers will not have a lot of time to find new suppliers or money to invest in their codes of practice. This process means that already certified companies will be more easily selected as a supplier, which could lead to more business for a smaller number of suppliers.

Tips:

  • Introduce Hazard Analysis and Critical Control Points (HACCP) system into your daily practice. Even if HACCP is not obligatory in your country, you must comply with European food safety regulations. It is highly recommended to go one step further and certify your production with the latest versions of internationally recognised standards such as FSSC 22000, BRC or IFS. Invest in a certificate that is commonly requested by importers in your target market.
  • For more information on legislative and buyers requirements, read our study of European buyer requirements for processed fruit and vegetables.
  • For tariff levels that apply to your country and your competitors, use ITC’s Market Access Map.
  • Do regular contaminants checks on products before exporting. Carefully check with the European importer that the laboratory sampling of your products is accredited and recognised by the European authorities and buyers. Being recognised as a mycotoxin-free company is a great advantage, not only for your company but for the whole country.
  • Ensure that official controls in your country include verification of compliance with hygiene requirements at least equivalent to the European regulations.
  • Certain systems for sustainable standards/certification can help you to enter the European market. It is recommended to improve your competitiveness by becoming CSR certified through one of the certification schemes such as Fairtrade, SMETA and BSCI or ISO 26000, especially if your product is aimed for repacking and reaches retail buyers. You can negotiate with your target buyers to co-finance a CSR scheme for long-term cooperation.

2 . What are substitute products?

Chips and baked savoury snacks remain strong competitors to nuts and dried fruit

The snack industry in Europe is dominated by potato chips. The largest market for savoury snacks within Europe is in the United Kingdom, which is estimated to be worth around € 4.1 billion. The largest markets for potato chips, crisps, savoury snacks and snack nuts per capita are the United Kingdom, the Netherlands, Norway and Spain. The consumption of savoury snacks across Europe varies from country to country, but an average of around 3.6 kg is purchased per year per capita.

Private-label products are beating branded products

Although consumers are searching for cheaper products, some of the packers have a “dual-track” strategy and operate in both the private-label and the branded segment. Moreover, many retailers offer opportunities for buying unpacked dried fruit and nuts.

Fresh fruit is a strong competitor to dried fruit

Dried fruit as a sweet snack is usually consumed between the main meals. There are many national campaigns to encourage the consumption of several portions of fresh fruit and vegetables daily. Those campaigns are often supported by fresh fruit and vegetables companies.

Tips:

  • Use the healthy food trend as your unique selling point. Promote dried fruit and edible nuts as healthy snacks in your offer, on your websites and via social networks. Nuts are often used in snacks, biscuits, chocolates and bakery products. The current market trend is “health”, as consumers look for alternatives to “unhealthy” products such as biscuits and savoury snacks made of potatoes or flour. Unprocessed nuts are often seen as healthy, so this niche market certainly has growth potential.
  • Advertise your dried fruit and edible nuts offer as natural and, if possible, free of additives.
  • Invest in technologically improved drying and processing technology that can help your products to be perceived even as healthier. Try to eliminate by-products of baking and frying such as acrylamide, and use natural sugars such as fruit juice for the infusion of certain dried fruit instead of white sugar.
  • See whether you can offer your products at a lower price. Since the costs of production in Europe are rising, consider using cheaper processing facilities at additional stages of production.  
  • Examine the performance of your products in the context of their sector (savoury snacks) and substitute products (for example, fresh fruit and vegetables). See whether your products are declining or increasing in sales and find out what caused the changes in sales.  

3 . How much power do I have as a supplier when negotiating with buyers?

Buyer power

Retail requirements are increasing

The requirements set by the European retail are already high and will increase. Particular attention is paid to traceability and sustainable and responsible sourcing. Retail supplying companies, including the European processing industry, must provide detailed information on their sourcing. This fact means that exporters from developing countries must more effectively register where their products come from.

The European processing industry increasingly depends on dedicated suppliers

The processing industry is always looking for ways to lower the costs of supply and processing. This situation means that there is a search for partnerships, joint ventures and even partly backward integration in order to ensure a constant quality and supply, which is needed for the end products. 

There will be increased demand for sustainable food ingredients

This development implies that items which are produced under good labour conditions or products which are organically produced or have a low CO2 footprint could increase in value. Such a situation is in line with the sustainability strategies that are being introduced by large companies. Their messages to the outside world inform the consumer and other parties that they are acting responsibly. This process means that they also expect such aspects from their suppliers and even their supplier’s subcontractors.

Tips:

  • Cooperate with other exporters in your country; join forces to export to the European market.
  • Try to partner up with local importers in order to have the right equipment for processing and to meet the different requirements of European buyers.
  • Investigate who the major buyers are and try to arrange long-term contracts with them for a constant supply of edible nuts or dried fruits. Use trading agents if your company is new on the European market and if your country is not well recognised as a supplier of a certain product.
  • Be a reliable and professional partner within your partnership or joint venture. Be aware that buyers are demanding in their selection of partners; professionalism is a must.
  • Invest in packaging equipment if you aim to supply to retail chains. With the possibility to offer different packing formats and produce recyclable packaging, you increase your chances of becoming a supplier to private-label brands of European retail chains.

Supplier power

Increasing bargaining power of suppliers for specific products

The bargaining power of suppliers (farmers) towards exporters from developing countries is slowly increasing. Information is becoming more easily accessible to farmers thanks to modern communication tools such as smartphones and computers.

In general, the cyclical nature of raw material markets will continue and markets will change from being dominated by buyers to being dominated by sellers. In the long term, it is expected that some products will be insufficiently available. New land for production is sought after and farmers are gaining power.

The concentration of specific products in a small number of countries gives them a strong negotiation power; for example, hazelnuts and dried grapes from Turkey or almonds from the USA. As a result, any new product origin with high-quality produce has a good competitive position as a welcome alternative to the dominant players.

The demand from emerging economies puts Europe under pressure. People are becoming richer (including the development of a middle class in the BRICS and Next Eleven countries), leading to a higher demand for imports from developing countries. The growing global demand results in price increases.

Brazil is still facing a severe recession partly due to the fall in demand from China and the lower prices for raw materials. China itself is also experiencing weaker growth, while both imports and exports have been decreasing. Nevertheless, emerging markets offer you good opportunities in the medium term.

European eating patterns

European eating patterns may change, which increases suppliers’ bargaining power. The influence of different cultures (more “ethnic” restaurants) means that new dishes are eaten, some of which will contain nuts, as in the Asian cuisine. Although this part of the market will expand, it will probably not become mainstream. However, it could have an impact on nut consumption, as consumers may try the dishes at home as well. This situation will result in a higher demand and an improved position for exporters from developing countries. 

Tips:

  • Consider bundling your supply with other suppliers from developing countries, as European processors want to ensure the continuity of supply. Note that the European processing industry has some strong players.
  • Eating patterns and dishes differ across Europe. Try to find out which kinds of nuts are eaten where and how. This information will determine your position in that specific market.
  • Look at the worldwide demand to strengthen your position within the chain. The demand from emerging economies is putting pressure on the availability of ingredients for food manufacturers in Europe. This fact could strengthen your position.

4 . Who are my rivals?

Developing countries are losing a small part of the market share to competitors from the United States

The total imports of edible nuts and dried fruit increased over the last several years. This growth is especially high within the edible nuts sector in the last year. However, the import growth rate in the last five years was higher from other developed countries (14%) than from developing countries (7%). This import structure is greatly influenced by the significant increase in imports of almonds from the USA.

Figure 1: European imports of dried fruits and edible nuts by main origin, 2012–2016, in k €
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Source: ITC Trademap

The European market for dried fruit and edible nuts is concentrated

Over 70% of all the European imports of dried fruit and vegetables are represented by only four countries: Germany, the Netherlands, Italy and Spain. There are a number of well-established players (importers, agents and food manufacturers) in those countries. Dutch companies form the main European import hub for American and Asian countries.

All leading European importers of edible nuts and dried fruit have increased their imports and consumption. Italy and Spain noted the highest annual increase in rate of imports. In Italy, there was a high increase in import value of hazelnuts due to increasing prices from Turkey. Although Spain had a significant increase of almonds from the USA, the country imported fewer almonds in 2016 than in 2015.

The imports of edible nuts and dried fruit are led by suppliers from developing countries, with the exception of Spain, which is importing large quantities of almonds from the USA (Figure 2).

Figure 2: Main European importers of dried fruit and edible nuts, 2016, in k €
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Source: ITC Trademap

New origins for edible nuts and dried fruit are appearing on the European market

For edible nuts, your main competitors are the USA (almonds and to a lower extent walnuts), Turkey (hazelnuts) and Spain (almonds). For dried fruit, they are Turkey (dried grapes and dried apricots), China (dried vegetables and mushrooms) and the USA (dried grapes, prunes and cranberries). Strong competition for other products includes China (walnuts and pine nuts), Vietnam (Brazil nuts), Argentina (prunes), Chile (prunes and dried grapes) and the Philippines (desiccated coconuts).

Among the leading suppliers, Vietnam (mainly cashew nuts), Australia (almonds and walnuts) and USA (almonds) note the highest annual growth. Several new supplying countries in the sector for dried fruit and edible nuts are also strengthening their position on the European market; for example, cashew nuts from western African countries, Pakistan and Indonesia, groundnuts from Nicaragua, walnuts from eastern Europe or dried grapes from Iran and Uzbekistan.

Tariff rates vary and some countries benefit from preferential agreements

Depending on your exporting country and the existing trade agreements with the European Union, applied tariff rates may differ when exporting to Europe.

Examples include walnuts with an applied tariff of 4% for China and 0% for the other main suppliers, hazelnuts (3.2% for the USA, 3% for Turkey and 0% for Chile and the other main suppliers), dried grapes (0% for Turkey and Chile, but 2.4% for the USA and Iran), dried apricots (0% for Turkey and Afghanistan, but 2.1% for Tajikistan and other GSP countries). In other cases, such as with desiccated coconuts, there is no difference in applied tariffs between countries.

Figure 3: Leading external suppliers of dried fruit and edible nuts to Europe, 2015, in k €
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Source: ITC Trademap

Tips:

  • Continuously monitor the trade between Europe and competing countries. In the past years with low harvests in leading producing countries, European buyers looked for new alternatives. Some European importers even invest in new producing countries to secure a stable supply. In the long term, the production of dried fruit and vegetables and edible nuts may become less concentrated.
  • Add value with substantiated health claims. The superfruit category is a new category where competition is not so fierce compared to mainstream products. You can use this opportunity and offer quality superfruits even if you are new to the market.
  • Compare your offer to that of the largest European suppliers for specific products. Find out why certain products are imported from specific countries.
  • Check the current import tariffs at the EU Export Helpdesk site. Choose “my export” and enter the CN code to find the import duties.

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