Entering the European market for black pepper

Food safety certification combined with reliable and frequent laboratory tests creates a positive image for pepper exporters to Europe. Sustainable production and implementation of corporate social responsibility standards will provide additional advantages for emerging suppliers. The strongest competitors to new pepper suppliers are Vietnam, Brazil, India and Indonesia.

1. What requirements should black pepper comply with to be allowed on the European market?

In addition to the quality requirements mentioned in the section below, please refer to our study about buyer requirements for spices and herbs for a general overview of buyer requirements in Europe.

What are mandatory requirements?

All foods, including black pepper, sold in the European Union must be safe. This applies to imported products as well. Additives must be approved. Harmful contaminants, such as salmonella, pesticide residues, and excessive levels of mycotoxins or preservatives are banned. It should also be readily obvious from the labelling whether a food contains allergens.

Official border control for black pepper imported to the European Union

Official food controls include regular inspections that can be carried out at the moment of import or during all further stages of marketing. In case of non-compliance with the European food legislation, individual cases are reported through the Rapid Alert System for Food and Feeds (RASFF), which is freely accessible to the general public.

You should be aware that repeated non-compliance with the European food legislation by a particular country may lead to special import conditions being placed on that country or even suspension of imports from that country. Those stricter conditions include laboratory test results for a certain percentage of shipments from specified countries. Regarding black pepper, since May 2021, 50% of all shipments from Brazil to the EU are under stricter import control.

In 2020 and until the publishing of this study (October 2021), 120 shipments of black pepper from Brazil were rejected at the EU border due to the presence of Salmonella. Because of the high Salmonella contamination risk, sterilisation after import is a regular practice by European spice companies.

Contaminants control in black pepper

The European Commission Regulation sets maximum levels for certain contaminants in food products. Frequently updated, this regulation sets limits for general foodstuffs, in addition to some specific contaminant limits for specific products. The most common requirements regarding contaminants in pepper relate to microbiological contamination with foreign bodies, Salmonella, mycotoxins, and pesticide residues.

Contamination with foreign bodies

Contamination with foreign bodies is one of the biggest food safety issues concerning pepper on the European market. Therefore, it is particularly important to check the cleanliness of peppercorns before exporting. Major foreign body contaminants in pepper include dead insects, insect body parts, excreta of animals (such as mice, rats, cattle, birds, and insects), sand, mud, glass, or metal particles from agricultural machinery. Extraneous matter includes other parts of the pepper plant such as dried stems and leaves.

There is no official limit for foreign bodies in pepper shipments to Europe. Most European buyers define their own specification requirements or follow the cleanliness specifications of the American Spice Trade Association (ASTA), which defines the maximum levels for the presence of dead insects, excreta, moulds, and other foreign matter. The Quality Minima Document (pdf) of the European Spice Association does not allow the presence of any foreign objects greater than 2mm in diameter, while the limit of extraneous matter is set to 1% by weight.

Microbiological contaminants

The most common type of microbiological contamination and border rejection for black pepper is the presence of Salmonella. The presence of Salmonella is specifically related to Brazilian black pepper. In Brazil, black pepper is grown on small family farms and dried directly in the sun by the growers. As sun drying takes place in the open air, this increases the risk of infestation with Salmonella by animals and birds. Salmonella can also be transmitted to pepper via irrigation with unsafe water, the use of untreated manure as fertiliser, and harvesting with dirty hands.

Analytical test results on the presence of microbiological contaminants are a common part of the product specification. Pathogenic bacteria, such as Salmonella or Listeria, must be completely absent. The presence of aerobic bacteria, Escherichia coli, yeasts and moulds can be tolerated in very small quantities depending on the national legislation of the target market and specific buyer requirements.

To prevent contaminating pepper with insects and microbiological contaminants, you should have preventive measures in place. These could include heat treatment or fumigation. If you use fumigation, you must only use officially approved disinfectants. The EU has banned methyl bromide and ethylene oxide. Still, European buyers are finding residues of these banned substances in pepper. It is therefore strongly recommended to heat treat (sterilise) the pepper, as it is a much safer procedure than fumigation.

Mycotoxins

The presence of mycotoxins (aflatoxins and ochratoxin A) is another reason for banning black pepper from the European market. The level of aflatoxin for black pepper must be below 5 μg/kg for aflatoxin B1 and 10 μg/kg for the total aflatoxin content (B1, B2, G1 and G2). For ochratoxin, the maximum level is 15 μg/kg. Proper drying (below 12% moisture), and storage/transport in a low-humidity atmosphere are some of the most important preventive measures to decrease the risk of mycotoxin contamination of pepper.

Pesticides Residues

The European Commission has set maximum residue levels (MRLs) for pesticides in and on food products. Products containing more pesticide residues than allowed will be withdrawn from the European market. The European Commission regularly publishes and updates a list of approved pesticides that are authorised for use in the EU. The European Farm to Fork Strategy aims to reduce the use of pesticides by 50% before 2030.

Irradiation

Irradiation of pepper is not often used, but it is authorised by the European Union as a way of sterilisation. Irradiation must take place in approved facilities and irradiated foods must be labelled. However, European consumers dislike irradiated food. Buyers in Europe are increasingly asking for radioactivity contamination tests for imported pepper. Food irradiation legislation, maximum permitted levels of radioactive contamination, and the European Commission’s radiation protection legislation are the basic regulations for laboratory tests for the detection of increased levels of radioactivity in pepper.

Product composition

Buyers and European authorities can reject products if they have undeclared, unauthorised, or too high levels of extraneous materials. There is specific legislation for additives (like colours, thickeners) and flavourings that lists what E-numbers and substances are allowed. Authorised additives are listed in Annex II to the Food Additives Regulation. Food additives are not allowed in the production and trade of whole pepper. For ground pepper, anticaking agents may be used such as cellulose or mineral salts to prevent the creation of lumps.

Unfortunately, fraudsters also target black pepper, as well as several other spices. Replacing peppercorns with other materials is not common, but it does happen. In the whole pepper trade, food criminals sometimes try to cheat buyers by mixing black pepper with papaya seeds. Papaya seeds and black peppercorns appear nearly identical to the naked eye. In the trade of ground pepper, adulteration includes mixing pepper with buckwheat, coffee-bean skins, millet, chili powder or black pepper husks. European importers use microscopic techniques and laboratory tests to detect adulteration of black pepper.

Packaging and labelling requirements

Packaging used for pepper must protect the flavour, colour, and other quality characteristics of the product. The content of the packaging must correspond to the indicated quantity on the label.

In the case of retail packaging, product labelling must comply with the European Union’s regulation on the provision of food information to consumers. This regulation defines nutrition labelling, origin labelling, allergen labelling and a minimum font size of 1.2 mm. Retail packs must be labelled in a language that can easily be understood by consumers in the European target country, so generally in the country’s official language. This explains why European products often carry multiple languages on the label.

In addition to this regulation, since 1 April 2020, all food in retail packs in Europe must be labelled with an indication of origin. For example, if pepper is imported from India but packed in France, the packaging still needs to indicate the origin of the pepper. This is usually done by indicating “Packed in France”, but a simple mark next to the lot number is also used, such as ‘Produce of India’/’Origine de l’Inde’/’Prodotti del India’.

Pepper is not on the list of allergens, but peppercorns can sometimes come into contact with allergens (such as grains or nuts) if they are grown in the same field, which is called cross-contamination. Allergen contamination can also occur because of shared transportation, storage, or production equipment.

What additional requirements do buyers often have?

In addition to the mandatory requirements, many other specific buyer requests have become equally important. These include compliance with food safety, quality, and sustainability standards.

Quality requirements

Several factors determine the quality of pepper, some as subjective as taste or flavour. Other quality criteria relate to the pepper cultivar, such as the size of the fruit or pungency. However, the same cultivars can have different qualities, even when produced in the same country, as quality is influenced by agricultural practices, climatic conditions during the production season, and post-harvest operations.

The EU has not officially set a quality standard for pepper. European traders and processors commonly use quality parameters set by organisations such as the European Spice Association (ESA) and ASTA, the Codex Alimentarius Standard for Black, White and Green Peppers, ISO specifications for black and white pepper, and the International Pepper Community (IPC) standard specifications for black, white and green pepper. Pepper can be classified into three quality categories according to several physical and chemical parameters.

Generally, good pepper should have a bulk density of 500–600g per litre. Low bulk density indicates a higher proportion of immature berries without kernel (so called ‘light berries’) and undeveloped berries (so called ‘pinheads’). Pepper should have at least 1.5% volatile oil (contributing to aroma) and 3% piperine (contributing to the pungent taste).

The most common parameters for quality specification of pepper include:

• Cleanliness or purity: Pepper must be free from diseases, foreign matters, foreign odours, and any other disorders. The European Spice Association (ESA) proposes that the maximum presence of external matter should be below 1% of the weight for all spices. The ASTA Cleanliness specification uses more criteria to determine the cleanliness of pepper such as the presence of dead insects, excreta, foreign matter, and peppercorns damaged by mould or insects. The Codex Standard also proposes a maximum presence of black peppercorns in white pepper and in green pepper. Furthermore, the standards set a maximum for the presence of light berries and pinheads of less than 2 mm in diameter.
• Size of peppercorns: Whole pepper is sorted by size, which influences the price of the product. The most detailed sizing classification was developed by Indian pepper producers, who classify peppercorns in more than 10 categories. Most of the Indian quantities belong to several categories called ‘malabar’. Berries larger than 4 mm are classified into three categories called ‘Tellicherry’. The largest and most expensive category of berries larger than 4.75 mm is called ‘Tellicherry Garbled Special Extra Bold’ (TGSEB). TGSEB pepper must also have moisture lower than 10% (very often up to 7%) and it should be very clean.
• Piperine content: The alkaloid piperine is the main pungent component present in pepper. According to the Codex Standard, the piperine content in black pepper must be at least 2% for whole pepper and 3.5% for ground pepper, while in white pepper this is set at a minimum of 3% for whole pepper and 4% for ground pepper. In the Codex, the minimum piperine content for the first class is set at 3.5%, while this is 4% in the IPC standard. However, buyers may require an even higher content, such as 5%.
• Ash content: Ash refers to the inorganic residue remaining after burning the organic matter in a pepper sample. Determining the ash content is an important quality attribute and the Codex and IPC Standards use maximum ash content to classify pepper in three quality grades. According to the Quality Minima Document of the European Spice Association, the maximum content of total ash for black pepper is set at 7%, for white pepper at 3.5% and for green pepper at 3%. The acid-insoluble ash limit is set at 1.5% for black pepper and at 0.3% for white and green pepper.
• Moisture content: The maximum moisture content for pepper set by the Quality Minima Document of the ESA is 12% for black and white pepper, and 13% for green pepper. Still, buyers may request a lower moisture content such as 7-11%.
• Mesh or particle size: When pepper is exported in powdered form, it is ground to pass through a sieve of a specific diameter. Sieves are often specified in micron sizes and typical requirements demand that 95% to 99.5% of ground pepper passes through the specific size of the sieve.  
• Volatile (essential) oils: As described above, the essential oil content is important for the sensorial characteristics of pepper. Pepper quality is higher when the percentage of ash is low and the essential oil content is high. For the European market, the minimum essential oil content should be 2ml/100g in black pepper, 1.5ml/100g in white pepper and 1ml/100g in green pepper.

Food safety certification

Although food safety certification is not obligatory under European legislation, it has become a must for almost all European food importers. Most established European importers will not work with you if you cannot provide some type of food safety certification.

Most European buyers will ask for a Global Food Safety Initiative (GFSI) recognised certification. For pepper, the most popular certification programmes recognised by GFSI are:

• International Featured Standards (IFS)
• British Retail Consortium Global Standards (BRCGS)
• Food Safety System Certification (FSSC 22000)

Please note that this list is not exhaustive and food certification systems are constantly developing.

Although the various food safety certification systems are based on similar principles, some buyers prefer one specific standard over the other. For example, British buyers often require BRCGS, while IFS is more common for German and French retailers. Also note that food safety certification is only a basis to start exporting to Europe. Serious buyers will usually visit or audit your production facilities before buying.

Packaging requirements

Pepper is mostly exported in sealed polyethylene bags, which can be covered by paper bags or placed in carton boxes. The size of the bulk packaging varies depending on the buyer’s requirements, but it is often 25kg. The dimensions of the selected packaging size should conform to conventional pallet sizes (800mm x 1,200mm and 1,000mm x 1,200mm). Please note that in some European countries, labour health and safety legislation allow workers to lift a maximum of 20kg, so smaller weights of packaging are increasingly being used, such as 10kg–20kg.

The net weight of retail packaging is usually between 20g and 40g. Retail packaging includes glass containers, plastic bags, plastic containers, and paper bags. Transparent glass containers are particularly popular, as they enable consumers to see and visually inspect pepper before buying. Especially popular retail packaging is in the form of single use grinders.

Private safety and sustainability requests

Although most European retailers will support the above-listed certification schemes, many of them will have additional requirements. Many supermarket chains will contractually oblige suppliers to meet comprehensive quality assurance requirements, including unannounced inspections at processing facilities.

One of the more recent trends is to ask for laboratory tests proving that specific pesticide residues are present in significantly lower quantities than legally required. Some buyers may provide a list of pesticides and a specific integrated pest management programme that must be followed if you want to export to specific clients.

Many importers will ask you to follow their own specific code of conduct. Most European retailers have their own codes of conduct, such as Lidl, Rewe, Carrefour, Tesco and Ahold Delhaize.

What are the requirements for niche markets?

Organic pepper

Organic certification schemes are increasingly popular in Europe. Although until recently, organic production was reserved for niche markets, organic products are now becoming mainstream. However, certain types of organic certification such as ‘biodynamic’ (Demeter or BDA) can still be considered niche requirements.

To market pepper as organic in Europe, it must be grown using organic production methods in accordance with European legislation. Growing and processing facilities must be audited by an accredited certifier before you may put the European Union’s organic logo on your products, as well as the logo of the standard’s holder, such as for example, Soil Association in the United Kingdom, Naturland in Germany or Agriculture Biologique in France.

Be aware that the new EU regulation on organic production is expected to enter into force in 2022. The new rules will allow for mixed farming and combined conventional and organic production, provided that the two are sufficiently separated.

Sustainability and Corporate Social Responsibility (CSR) certification

Sustainability is a broad term with many aspects and there is still no recognised sustainability certification covering all aspects. Until recently, sustainability certification was aimed at special niche buyers on the market, but it is now becoming a mainstream request, similar to organic certification. One increasingly used aspect is to publish CO2 emission rates on products, but it is difficult to have reliable measurements for those claims. However, some private certification schemes are in development. Currently, the most famous certification schemes focus on environmental impact and ethical (CSR) aspects.

Companies have different requirements for corporate social responsibility. Some companies require adherence to their code of conduct, or one or more of the common standards, such as the Supplier Ethical Data Exchange (SEDEX), Ethical Trading Initiative (ETI), and the Business Social Compliance Initiative’s code of conduct (BSCI).

Currently, the most famous sustainability certification schemes are Fairtrade, which focuses on ethical practices, and Rainforest Alliance, which focuses on environmental impacts. Fairtrade International has developed a specific standard for herbs, herbal teas and spices for small-scale producing organisations. This standard defines issues related to traceability, management and production practices, and labour conditions. According to this standard, a premium price of 15% over and above the negotiated price between producer and seller must be established.

There are currently (as of October 2021) 28 Fairtrade-certified pepper producers in India, Sri Lanka, Madagascar, Thailand, Vietnam and Cameroon.

To improve sustainable production and sourcing of spices and herbs, a group of mainly European companies and organisations formed the Sustainable Spice Initiative in 2012. The main objective of this initiative is to strive for fully sustainable spice production and trade in the sector. For an overview of sustainable initiative developments in the European spices market, read our study on Trends in the European Spices and Herbs Market.

Ethnic certification

Islamic dietary laws (Halal) and Jewish dietary laws (Kosher) propose specific dietary restrictions. If you want to focus on these niche markets, consider implementing Halal or Kosher certification schemes.

2. Through what channels can you get black pepper on the European market?

The European food industry uses significant quantities of pepper in a wide variety of products, such as meat, fish and vegetable products, spice mixtures, sauces, soups and ready meals.

How is the end market segmented?

The largest user of black pepper in Europe is the food processing industry, followed by retail, foodservice and food ingredients (additive segments). Most pepper is imported as whole, and sterilised and crushed after import.

Figure 1: End-market segments for pepper in Europe

Source: Autentika Global

Food processing segment

The food processing segment is the largest consumer of pepper in Europe.

• Spice mixtures and ingredient producers – These companies are specialised in the production of spices and seasonings for different applications. They are constantly investing in research to develop custom formulations for food processing companies and help launch new attractive flavours. They produce either dried or liquid spice ingredients. Some examples of spice mixture and ingredient companies are AVO (German producer, part of the European group), Meat Cracks, Kerry Ingredients, IFF, Faravelli Group, Food Ingredients Group, Kalsec, EHL Ingredients and Ion Mos.
• The meat industry is an important user of black pepper, often not supplied directly but through spice and food ingredient companies. However, some larger groups of companies may import black pepper directly. An example of such a group is OSI Food Solutions. Black pepper is used, for example, in the production of sausages and other meat specialities. However, meat processors more commonly use customised mixtures (with pepper as one of the ingredients).
• The European sauces and condiments industry is also an important user of black pepper. However, the market is dominated by international brands such as Kraft Heinz, McCormick, Maggi (Nestle) and several brands of Unilever (eg. Knorr, Calve, Colman's, Conimex and several others.)
• Other industries include a wide variety of ready meals and many other products. For example, the vegan meal industry is developing quickly in Europe (e.g. The Vegetarian Butcher is a new plant-based food brand of Unilever)

Retail segment

European (often national) brands and private labels share the retail and food-service segments. Some leading brands in Europe include Fuchs (Germany), Ostmann (Germany), Schwartz (United Kingdom), Ducros (Spain, France, Belgium, Portugal), Euroma (Netherlands), Verstegen (Netherlands), Cannamela (Italy), Santa Maria (Scandinavia), and Prymat Group (Poland). Fuchs group and McCormick are the global and European market leaders, present in Europe with several brands.

The retail sector can be further segmented into several subcategories:

• Retail chains - The increasing market share of private labels is the main development for the leading retail chains. Companies that hold the largest market shares in Europe are Schwartz Gruppe (Lidl and Kaufland brands), Carrefour, Tesco, Aldi, Edeka, Leclerc, Metro Group, Rewe Group, Auchan, Intermarché, and Ahold (Delhaize and Albert Heijn brands).
• Specialised spice shops – Spice shops usually belong to the high-end market segment and offer a wide range of spices from different origins. They commonly sell spices measured by weight, but also have their own branded products. Some of them have grown into specialised chains such as Alfons Schuhbeck, named after the German celebrity chef, with many shops across Germany. Examples of specialised spice shops in Europe include Jacob Hooy (the Netherlands), Épices Rœllinger (France) or Spice Mountain (UK).
• Specialised organic and health food shops – These are specifically relevant for suppliers of organic certified pepper. Many organic shops are part of specialised organic food retail chains, especially in Germany, such as Biomarkt, DM or Alnatura. Organic food including pepper is also sold in specialised health food stores together with food supplements, herbal teas and other health products (such as Holland & Barrett in the UK, Ireland, the Netherlands, and Belgium). Some organic retailers import directly.
• Online retail – Online retail is currently dominated by the leading retail chains. Specialised online retailers selling food online are still rare, with UK-based Ocado being the most notable example. The COVID-19 pandemic, and the consequent measures imposed in many countries in Europe, have dramatically increased online retail orders in Europe. An example of a specialised online retailer is JustIngredients.
• Ethical shops – These are a niche segment, which provides opportunities for Fairtrade and ethical certified suppliers. Sales of Fairtrade certified products are strong in the United Kingdom and Scandinavian countries. Some examples of shops that sell ethically produced, Fairtrade and cruelty-free spices are Hecosfair (France) or RISC World Shop and Global Refills (the UK).

Food service segment

Specialised distributors supply the food service channel, which includes hotels, restaurants, catering, and institutions. These distributors can import pepper directly, but they often buy from wholesale bulk importers. The food service segment often requires specific packaging of pepper, which is different from bulk or retail packaging. For example, 300g-1kg packs. Examples of distributors supplying the food service segment with pepper are Metro Cash & Carry and Brake Brothers.

Through what channels does a product end up on the end-market?

The most important channel for black pepper in Europe is represented by specialised spice importers. Some of the leading importers have already established a permanent presence in pepper-producing countries, either through their own sourcing offices or even their own production facilities. Sometimes black pepper can be placed on the market through agents, or directly supplied to food processors or food service companies. Many established wholesalers also have packing facilities and usually supply private label pepper brands.

Importers / Wholesalers

Importers and wholesalers can be general spice importers or further specialised in specific roles. Some now exclusively deal with ingredients intended for the processing industry, while others pack pepper for retail chains. Some importers also deal with a broader range of products apart from spices, such as beans or seeds.

The position of importers and food manufacturers is under pressure from retailers. Higher requirements from the retail industry determine the supply chain dynamics from the top down the chain. This pressure translates into lower prices, but also into added-value aspects such as ‘sustainable’, ‘natural’, ‘organic’ or ‘fair trade’ products. Transparency in the supply chain is needed. To achieve this, many importers develop their own codes of conduct and build long-lasting relationships with preferred suppliers from developing countries.

Figure 2: Trade channels for black pepper in Europe

Agent/broker

Brokers and agents are intermediaries who bring buyers and sellers together. They charge a commission for their services. European pepper buyers can be agents, but they are mostly distributers and processors. Agents and brokers are interesting if you have a specialised product (such as high quality or sustainable) for which buyers are harder to find. The role of the agent is slowly changing due to the increased transparency and other legal and customer requirements.

Other channels

For an overview of different food processing segments and retail using black pepper, read our chapter above.

What is the most interesting channel for you?

Specialised importers seem to be the best contacts for placing black pepper on the European market. This is especially relevant for new suppliers, as supplying the retail segment directly is very demanding and requires a lot of quality and logistical investments.

However, packing for private labels can be a good option for well-equipped and price-competitive producers. Still, private-label packing is often done through importers that have contracts with retail chains in Europe. As the cost of the workforce in Europe is increasing, importers of black pepper sometimes search for opportunities to pack brands in developing countries if they can assure full traceability and quality control.

3. What competition do you face on the European black pepper market?

Vietnam, Brazil, India and Indonesia are the four main competitors for pepper supplying countries to Europe, accounting for more than 90% of the market. Especially Vietnam is the supplier to keep an eye on, because it is the world’s leading producer with an increasing production, attractive prices and stable quality. Although Vietnam is the leading supplier to Europe, black pepper imported from Vietnam is not always of Vietnamese origin. This is because Vietnam imports, processes, mixes and re-exports pepper from several other producing countries too.

Which countries are you competing with?

Vietnam: the leading European supplier

Vietnam dominates the global production and supply of pepper. Vietnam accounts for approximately 40% of the world’s pepper production. The production of pepper in Vietnam fluctuates depending on the season, but it is usually in the range of 200 to 280 thousand tonnes. Dak Lak and Dak Nong provinces contribute to around half of Vietnam’s pepper output, followed by Dong Nai, Gia Lai and Ba Ria-Vung Tau. In Vietnam, most pepper is harvested between January and April.

One of the problems Vietnam is facing is high price fluctuation. Due to large production and oversupply, prices were very low in 2019 and 2020 and many farmers have given up pepper production due to low profitability. This led to a production decrease of 10-20%. Prices were increasing again in 2020/2021, but the Vietnam Pepper Association advised farmers in 2021 not to expand their pepper crop to avoid the risk of oversupply. To maintain a stable supply and utilise the country’s large production and cleaning facilities, Vietnamese processors import significant quantities from Brazil, Indonesia, Cambodia and Malaysia. This means that black pepper exported from Vietnam is often a blend of different origins.

Vietnam is the largest global exporter of pepper. Export quantities in 2020 were estimated at 258 thousand tonnes, worth €549 million. The main export market for Vietnamese pepper is the USA, with a share of 21%, followed by China (18%), the United Arab Emirates (5%), India (5%) and Germany (4%). The export of pepper from Vietnam to Europe increased at a high rate and reached 39 thousand tonnes in 2020. Within Europe, the largest market for Vietnamese pepper is Germany with a 39% share, followed by the Netherlands (24%), the UK (20%) and France (17%).

Brazil: increasing production

Brazil accounts for 25% of the global pepper trade. The states of Para and Espírito Santo are the leading producers of pepper in Brazil, accounting for a 90% share, followed by Bahia and Maranhão. Production in Brazil fluctuates but the trend is increasing production. In 2020, Brazil reached a record crop of 88 thousand tonnes.

After a two-year period of high prices in 2015 and 2016, Brazilian farmers increased their producing area. Many farmers switched production from coffee to black pepper, as a more profitable crop, especially in Espírito Santo. The black pepper harvest in Brazil occurs from August to October in Pará and July in Espirito Santo. One of the main issues limiting the Brazilian export to Europe is the presence of Salmonella.

The export of pepper from Brazil has been increasing at a high annual rate of 30% since 2016, reaching 89 thousand tonnes in 2020. The main market for Brazilian pepper is Germany with a 15% share, followed by Vietnam (14%), the USA (13%), and Morocco (8%). Within Europe, Germany accounts for the largest share of Brazilian pepper imports (more than 60%), thanks to the strong presence of German company Fuchs Gruppe in Brazil. Other leading European importers of Brazilian pepper are the Netherlands, France, Spain and Italy.

More than 98% of pepper in Brazil is produced and exported as whole and 2% as crushed or ground. In addition to black pepper, Brazil is famous as the leading world supplier of pink peppercorns (Schinus terebinthifolia), which are very popular in multicolour pepper mixes in Europe and worldwide.

India: balancing between imports and exports

Production of pepper in India fluctuates, but it is commonly around 60 thousand tonnes. As domestic consumption is very high, India actually imports more pepper than it exports. The main pepper production region in India is Karnataka, accounting for around half of total output, followed by Kerala and Tamil Nadu. The harvesting season in India is usually at the beginning of the year. Indian farmers grow several varieties of pepper, which ripen at different times, to deal more efficiently with pests that appear at different times.

Since 2016, Indian pepper exports have been fluctuating, reaching around 18 thousand tonnes in 2020. The USA is the main market for Indian pepper with a 30% share, followed by the UK, Canada, Sweden, and Spain. Within Europe, the main market for Indian pepper in 2020 was Sweden with a 21% share (890 tonnes), followed by Germany (19%), the UK (14%), Spain (14%), and the Netherlands (10%).

India imports between 20 and 30 thousand tonnes of pepper per year. The leading supplying countries are Vietnam, Sri Lanka and Indonesia. To protect local farmers, the Indian government has imposed a minimum price of 500 rupees per kg and an import duty of 70% for imported pepper. This measure did not lead to the expected outcome and India was faced with the illegal entry of cheap black pepper through neighbouring countries, which led to lower prices.

Indonesia: white pepper leader

Indonesian production of pepper slightly decreased over the past 5 years, to around 61 thousand tonnes in 2020. This production decrease was caused by low pepper prices, which led many farmers to switch production to more profitable crops such as cassava. Harvest in Indonesia lasts from July to October. Lampung is the largest producing area, accounting for approximately half of total Indonesian production, followed by Bangka Belitung Islands and Kalimantan.

Indonesia is famous for its production of white pepper, covering around 50% of the global white pepper market. Around one third of all pepper in Indonesia is produced as white. The leading producing region of white pepper is Bangka Belitung Islands, where white pepper is known as Muntok white pepper. Other main producing areas of white pepper are Kalimantan and Sulawesi.

Since 2016, the export of pepper from Indonesia has been increasing at a stable rate, reaching 58 thousand tonnes in 2020. Vietnam was the main market for Indonesian pepper with a 36% export share, followed by China (19%), the USA (11%), India (9%), and Germany (3%). White pepper accounted for more than 40% of Indonesian exports. Within Europe, the largest market for Indonesian pepper in 2020 was Germany with a 34% share, followed by the Netherlands (28%) and France (24%).

Cambodia: emerging organic supplier with protected geographical origin

Due to favourable climate and soil conditions, Cambodia is able to produce organic pepper. The main growing region is Battambang, followed by Kampong Thom and Rattanakiri. Due to its unique flavour and aroma, Kampot pepper is officially recognised by the Cambodian government and the EU as a product with a Protected Geographical Indication (PGI), also known as Poivre de Kampot in France. In Kampot province, most pepper is produced organically by smallholders. Pepper production in Cambodia is estimated at 18 to 20 thousand tonnes.

Export of pepper from Cambodia has been gradually increasing, reaching 3.5 thousand tonnes in 2020. The main importer was Vietnam (47%), followed by Germany (31%) and Singapore (15%). Cambodia increased its export to Europe from only 41 tonnes in 2016 to 1.2 thousand tonnes in 2020. Within Europe, most Cambodian pepper is imported by Germany, which alone accounts for a 92% share.

Sri Lanka: high quality pungent pepper

In Sri Lanka, pepper is cultivated on around 40 thousand ha of land. The main producing districts are Matale, Kandy, Kegalle, Kurunegala and Nuwara Eliya. Total production fluctuates around 20 thousand tonnes. Sri Lankan black pepper has a high piperine content, which fetches a premium price in the international pepper trade. High piperine content is of interest for the pepper oil producing companies, many of which are based in India. This explains the large share of Sri Lankan export to India. Most Sri Lankan pepper farmers are smallholders with less than 2 ha of pepper cultivation.

In 2020, Sri Lankan pepper exports reached 8.9 thousand tonnes. Most of this was exported to India (81%), followed by Germany (8%), the USA (2%), and Spain (1%). Export to Europe is still relatively small, accounting for 981 tonnes in 2020. Within Europe, Germany is the largest importer of Sri Lankan pepper with a 70% share, followed by Spain (14%) and the Netherlands (6%).

Which companies are you competing with?

Vietnamese companies

Vietnam currently has about 200 pepper processing and trading enterprises, of which fifteen leading enterprises account for 70% of the country's total export volume. Foreign-invested enterprises account for nearly 30% of the export market and include companies such as Olam (Singapore headquartered, international presence), Nedspice (the Netherlands) and Harris Freeman (a US-based company where the Harris Spice division is a part of the Indian Jayanti group).

Olam International is the largest pepper supplier in the world. The company has two pepper manufacturing locations, in Brazil and Vietnam. In Vietnam, Olam is the only player in the pepper industry to have a fully integrated supply chain; from growing pepper on its own farm to producing sterilised ground pepper ingredients. Olam’s pepper plantation in Vietnam is located in Gia Lai province, with an area of 275 ha. They use four pepper varieties. In production, Olam uses certified disease-free planting material, which is key to good yields and stable quality.

Olam uses an integrated smart agriculture system in the production of pepper. This system uses automatic drip irrigation, weather stations and real-time monitoring. Thanks to real-time monitoring, this smart system can predict the appearance of phytophthora (fungus type disease) and implement timely protection measures. Olam uses natural steam sterilisation and multi-stage cleaning while processing the pepper with extended grinding equipment to match all customers’ needs. Thanks to its single variety offer and in-company steam sterilisation facility, Olam is able to provide a consistent quality to buyers.

Phuc Sinh is the second largest black pepper exporter from Vietnam after Olam. In addition to pepper, Phuc Sinh produces coffee, desiccated coconut and several other spices. The company has advanced processing lines, and it exports to many European countries. Other notable Vietnamese pepper exporters include Sinh Loc Phat Corporation, Intimex, Petrolimex International Trading, Unispice and Haprosimex JSC.

Brazilian companies

More than 50 companies participate in the export of pepper from Brazil. Many exporters are not producers or pepper processors, but only act as trading companies. In addition to Vietnam, Olam Group is also present in Brazil, growing pepper on its own plantations of 365 ha in Bahia.

Grancafé claims to be the largest black pepper exporter from Brazil. The company is headquartered in the state of Espírito Santo and has five branches throughout Brazil. In addition to black pepper production, the company exports coffee, cocoa and cloves. Other significant exporters include Sacconi (the second largest in Brazil), Medeiros, Tropoc (part of the Fuchs Gruppe), Katz spices, Almada, Agrospice, and Golden Agrícola.

Indian companies

According to the Spice Board of India, more than 150 companies export black pepper from India. Some of the foreign investors, such as McCormick (the USA) or Nedspice (the Netherlands), have an important role in black pepper exports from India too.

Jayanti is one of the leading Indian pepper exporters. Jayanti is an integrated company acting as a farmer, processor and exporter. The company is a famous chilli supplier, but they also produce pepper in India in Karnataka. Its processing facility in Tamil Nadu is one of the largest state-of-the-art spice plants in Asia. This factory can clean, grind, blend, roast, steam-treat and package 15 thousand tonnes of spices and herbs per year. Besides acting as a wholesaler and exporter, the company has its own brand Only in India.

AVT McCormick is a joint venture of the USA companies A.V. Thomas and McCormick. The company is situated in Kerala and is one of the leading spice processors of India, exporting to more than 40 countries. The company is investing in sustainability activities such as helping local communities, taking care of the environment (organic production and Rainforest Alliance certification) and educating farmers. The company has the annual capacity to produce 25 thousand tonnes of steam-sterilised spices and 7 thousand tonnes of blends.

Examples of other strong Indian pepper exporters are Herbal Isolates, Bafna Enterprises, PDS Organic Spices, Kishor spices and Jabs International.

Companies from other pepper producing countries

• Indonesia: Indoharvest Spice, Jaya Alam Sentosa, Tripper Bari, Platinum Citra Raya, Perdana Syria Niaga
• Sri Lanka: Bio Foods, Cinnatopia, CBL Natural Foods, Gruppo Canella, Synthite, (a subsidiary of an Indian processor of value added spices such as oils, oleoresins, extracts, etc), Ruhunu Foods
• Cambodia: La Plantation, Sela Pepper, Farm Link

Which products are you competing with?

There are no substitute products for pepper. Due to widespread pepper availability, the food industry, culinary experts and retailers are not searching for any kind of substitute. Probably the only real substitute is black pepper oleoresin, which is used in the food industry as a colouring and flavouring agent.

4. What are the prices for black pepper?

Precise margins for each actor in the pepper seed supply chain are imprecise because they depend on many factors. Most pepper is sold as an ingredient for the foodservice and food processing industries and price margins related to retail prices are not the best way of gaining market insights. There is no strict rule, but generally, the highest prices in export are paid for Malaysian pepper, followed by Indian, Indonesian and Vietnamese pepper, while the lowest prices are paid for Brazilian pepper.

Export prices show frequent fluctuations, mostly depending on the production volumes in the main producing countries, primarily Vietnam, Brazil and Indonesia. Over the last decade, export prices gradually increased and reached a peak in 2015 of nearly €9/kg (FOB) for black pepper and nearly €14/kg for white pepper. Since 2015, export pepper prices decreased until 2019 and began to increase again in 2020, from around €2.2/kg up to current levels (September 2021) of €3.65/kg (average price for pepper of Vietnamese origin).

Retail prices in European supermarkets vary per brand, type and packaging of black pepper. The highest retail price is paid for multicolour pepper packed in transparent glass mills. Commonly, prices of packs of glass containers are higher than packs of plastic containers and bags.

The price of ground pepper is higher than that of whole peppercorns. Also, white and green pepper are more expensive than black pepper. The price per kilo of whole peppercorns sold under established European brands in common retail packs of 40 g to 50 g is usually €40/kg – €60/kg, although some pepper (e.g. Tellicherry) fetches even higher prices.

The price breakdown below is a very rough indication and only demonstrates the margins throughout the retail segment, which in itself is only part of the market. Supply to the industry and foodservice segments has a different structure and the final price is lower because it does not include retail margins. Many factors contribute to the price; like quality, variety, origin, sterilisation costs, food safety certification costs, taxes, sales, and network margins.

Table 1: Pepper retail price breakdown

Steps in the export process	Type of price	Example, margin addition and price breakdown (€/kg)	Share of the retail price
Raw material price	Farmer price	2.5	5%
Transport to factory, cleaning, processing, quality control, packing and export of whole pepper	FOB price	3	6%
Storing, finance, insurance, handling and shipping	CIF price	3.5	7%
Processing, cleaning, sterilisation, grinding, quality control and retail packing 40-50g.	Final production price	7	14%
Selling packed product to retailers	Wholesale price (including value-added tax)	15	30%
Retail sales of the final packed product (retail container of 20 g in supermarkets)	Retail price	50	100%

Source: Autentika Global, based on industry sources.

This study has been carried out on behalf of CBI by Autentika Global.

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