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Which trends offer opportunities or pose threats on the European spices and herbs market?

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The increasing demand for sustainably produced spices, the growing interest in the health benefits of spices and in international ethnic cuisines are the top trends opening up opportunities for exporters from developing countries. On the other hand, increasing buyer requirements and frequent legislation changes are the main threats for new suppliers from developing countries not yet familiar with these requirements.

1. Sustainable sourcing turning into a leading trend

Strict sustainability requirements by European buyers were not widely present in herbs and spices until recently. However, this seems to be changing as certain spices produced less sustainably pose threats to the global supply chain. This is because many of the herbs and spices imported into Europe are produced by underpaid farmers, who resort to using more chemicals to obtain better yields or simply switch to more profitable crops, which in turn lead to shortages of high-quality and safe herbs and spices on the global market.

The topic of sustainability covers a wide range of social, environmental and economic aspects throughout the supply chain. However, in the herbs and spices sector specifically, the most important focus is on farmers, who are the first and most important link in the supply chain. Farmers in spice producing countries often lack advanced production technology, up-to-date market information, equipment, and storing and drying facilities. In these circumstances, they do not have strong negotiating powers and must sell their herbs and spices quickly to local traders, often for low prices.

The black pepper situation in 2019 and 2020 is illustrative of the sustainability problems in the industry, standing in stark contrast with the fairly positive 2015–2017 period. In 2019 and 2020, black pepper prices dropped to their lowest in 10 years. Many farmers in Vietnam did not even harvest their peppers, as harvest costs were higher than the sales profits. In some provinces, farmers who could not pay loan interests were forced to sell their lands and pepper plantations.

Many international organisations and private companies are currently engaged in drumming up support for sustainable spice production. The most widely known of these is the Sustainable Spice Initiative (SSI) formed by a group of companies and organisations in 2012. Current SSI projects focus mostly on Asian producers, but there are indications of future projects for African countries too. Sustainability is also an important topic on the agenda of the European Spice Association.

Most sustainability support projects target increasing agricultural competence of farmers. Some examples include introducing agricultural techniques, controlled used of pesticides and cross contamination prevention. Focus is gradually moving from farmers to processors, and audits such as SMETA or BSCI are more frequently required. Some individual aspects are also getting attention, such as monitoring CO2 emissions. Certification schemes for CO2 emissions include MyClimate and TÜV SÜD’s carbon footprint certification.

Aside from international organisations, some individual companies have their own sustainability projects. Spice and herbs traders more and more recognise financial benefits such as costs reduction, shorter supply chains and easier compliance with European regulations. For example, Olam launched the AtSource sustainability project, through which some sustainably sourced materials have a premium price. This project provides customers with insights into varying sustainability parameters across the supply chain.

Although European spice import is increasing, there is a global scarcity of sustainably produced spices fully complying with all aspects of European legislation. This means that high-quality and sustainably produced spices and herbs can provide opportunities for suppliers in developing countries. One way to add value to your spices and herbs is to provide evidence to European buyers that they are produced in a sustainable way. This evidence may be a specific certification, laboratory results, premium price paid to farmers, fair wage for workers in processing facilities, or investments in rural communities.

Sustainable sourcing is not only a private initiative. Sustainability has been placed on the global agenda through the Sustainable Development Goals, covering environmental, economic, social and ethical issues.

Tips:

2. Immunity boosting spices show strong demand

The market for most spices is growing on average at an annual growth rate of approximately 4%. However, due to the Covid-19 pandemic, several spices promoted for their immunity support functions had much stronger growth during 2020. Heavily promoted spices such as ginger, curcuma and garlic are increasingly demanded by end consumers, particularly thanks to social media marketing.

European imports of ginger increased in 2019, a trend that strongly continued in 2020. Consumers favour fresh ginger to dried, although dried ginger also continued in strong demand in 2020. Ginger juice is a relatively new product increasingly imported to Europe, used in new drinks called ‘juice shots’. Ginger syrup is another product with growing demand. Although entirely unrelated to the pandemic, and in spite of the absence of scientific evidence that any food supplement may help in treatment against Covid-19, ginger remains popular due its perceived health benefits.

Curcuma is used both as a spice and in the production of curcumin, which is used in food supplements. European imports of curcuma in the first half of 2020 were approximately 20% larger than in the same period in 2019. There is no scientific evidence that curcuma can help in treatment against Covid-19, some research articles suggest that it can have positive effects on immunity.

Garlic, mostly fresh, also had a very strong import growth in 2020. Garlic has already been proven to prevent the common cold and is used in traditional medicine worldwide. A basic staple of recipes in many cuisines, garlic’s popularity and immunity boosting properties helped increase garlic imports by 24 thousand tonnes between January and July 2020, compared to the same period in 2019. Use of garlic oil in food supplements is also growing.

Other spices whose demand also grew in 2019 and 2020 because of their presumed health benefits include green herbs with antioxidant properties (rosemary, basil), cinnamon, cloves, and black cumin seeds. The European Spice Association provides information on the health benefits of spices, including in traditional or alternative medicine, such as Ayurveda.

Many spices and herbs are also promoted as salt replacers, for example, by the British Heart Foundation. Examples include mint, rosemary, nutmeg, basil, cardamom, chilli, cinnamon, chives, coriander, dill, cumin, ginger, oregano, paprika, parsley, sage, thyme and turmeric. Several large food processors such as Unilever already amended their recipes to reduce salt intake by using herbs instead. Many herbs also fit into contemporary eating trends, such as Paleo and Sirtfood diets.

Tips:

  • Be careful when promoting the health benefits of spices and herbs. Some studies did not find enough proof of curing specific illnesses. European food labelling legislation strictly forbids misleading the consumer. Claims that a portion of food prevents, treats or cures a human disease cannot be made.
  • Read more about popular spices in Europe in the CBI studies on the European curcuma market and European ginger market.
  • Explore opportunities for cooperation with the pharmaceutical and food supplement sector. To satisfy the needs of those demanding importers, it is important to have regular laboratory tests. Read more about European Buyers in the health segment in the CBI study on finding buyers in the health products sector.
  • Extracts offer the possibility to generate added value in the country of origin, but need to be developed in close coordination with the market in order to meet clients’ specifications. Read more about specific buyer requirements for the health products sector.

Figure 1: Organic turmeric food supplement

Organic turmeric food supplement

Source: Holland & Barrett
Figure 2: Garlic food supplement

Garlic food supplement

Source: Strongus

3. Popularity of ethnic cuisines continues despite travel restrictions

Europe’s food service sector was hard hit by the Covid-19 pandemic. Many countries implemented restrictions for restaurants, bars, some closing down for months on end. Revenues of restaurants, bars, cafés, hotels and other business in the hospitality industry declined, and many were forced out of business. On the other hand, home delivery and take-away services gained more popularity. Inspired by the online offerings of home delivery food, European consumers continue to show a growing demand for ethnic flavours and spice blends.

New flavours are becoming more popular in Europe. For example, European consumers are now searching for umami alternatives to monosodium glutamate. Umami is one of the five category of basic tastes in food (others are sweet, sour, bitter, and salt). companies producing flavouring agents added umami taste by adding monosodium glutamate to spice mixtures and sauces, but consumers are now turning to natural alternatives, such as Japanese soy-based sauces and pastes, including miso, teriyaki and katsu.

According to industry sources, besides Japanese flavours, African and Middle Eastern cuisines (particularly Lebanese) gained popularity in 2020. Sumac berries, for example, have also grown in popularity, since they are one of the ingredients used in za’atar spice blend. Other popular spice blends inspired by Middle Eastern cuisine include baharat, berbere, zhug, chermoula and ras-el-hanout.

Most of the traditional and previously not mainstream spice blends are blended in Europe, but direct import of blends is also increasing. However, it is not possible to specify the exact quantities imported for specific blends, because of statistical limitations. Harmonised System codes used for blends can be "091091 – Mixtures of different types of spices", but also "09109999 – undefined spices". None of these codes clearly describe which specific spices or blends are measured (the only exception is curry powder).

Some special types of traditional spices, such as special pepper or special chillies, have also grown in demand. One of the problems with new herbs and spices are pesticide residues, which are often above the required minimum limits. One of the stronger trends is the development of vegetarian spice mixes aimed at meat replacement food solutions.

Figure 3: Umami paste

Umami paste


Source: Albert Heijn
Figure 4: Zaatar spice blend

Zaatar spice blend


Source: Waitrose

Tips:

  • Cooperate with European companies when offering new spice blends. Sometimes, original blends need to be adjusted to the local taste to appeal to consumers in the target market. Some of the leading brands may even be ready to support you in developing start-up products.
  • Invest in social networks marketing. Demand for specific spices is also created by bloggers and celebrity chefs (Jamie Oliver, for example). The most commonly used online channels to advertise your spices in Europe are Facebook, LinkedIn, YouTube and Instagram. Focus your efforts on some of the social platforms mentioned to promote your products.

4. Spices for vegetarians and vegans

Veganism and vegetarianism are part of a trend that is strongly growing in the European market. Many spices used in the meat processing industry are now also used in vegan and vegetarian alternatives to meat. This trend helps to maintain a stable demand for spices, as similar mixes are used in both the meat and meatless industries. This does not mean that some new ‘vegetarian’ spices are specifically in higher demand.

The trend for veganism and vegetarianism has no large influence on sourcing, but it influences spice mixing and ingredient companies, which are now making more innovative flavour mixes. The same spices used in meat processing, such as chillies or pepper, are now used to produce meat alternatives that resemble the taste of meat.

Tip:

  • To tap into the meat substitutes trend, connect with the leading food ingredient companies in Europe to explore possibilities for direct supply of spices instead of through intermediaries.

5. Chillies and spicy food in demand

Imports of ground dried chillies to Europe has increased by 7% annually over the last five years. Imports of chillies from developing countries increased from 33 thousand tonnes in 2014 to 44 thousand tonnes in 2019. According to research conducted by ingredient supplier Kalsec, consumers globally are eating spicy foods more often than they were one year ago. This growing interest in spicy food is expected to continue in the next few years.

Although chillies are in demand, it seems that the level of heat is decreasing. According to industry insights, the frequency of consumption of hot and spicy foods is increasing, but heat levels are moderating. While consumers are still incorporating heat into their consumption patterns, heat is taking on more complexity, such as sweet heat combinations or ethnic cuisines that combine a variety of herbs and spices with some type of chilli pepper. Most European imports include products that are moderately pungent.

Tips:

  • Consider offering special types of chillies to the European market. European buyers are actively searching for new chillies and spicy flavours for European consumers in new sourcing destinations, such as countries in Africa.
  • Consider the development of new chilli spices of moderate heat level. More complex flavours can be achieved by searing, roasting, toasting or smoking a pepper rather than using the chilli without further processing.

6. Demand for organic and natural spices continues to increase

European consumers are generally looking for more natural and healthier products, including spices. Organic is just one aspect of it, but new processing technologies enable production of spices and flavourings in more natural ways. For example, oleoresins are now increasingly produced as natural ingredients. Previously, oleoresins were produced as food additives which had to be marked with E numbers. Perception of E numbers in Europe is negative for most consumers, who believe they have negative health effects.

Availability of organic spices is still limited, although spices are used in many finished organic products. Thus, the organic market for spices is expected to grow. At the moment, European legislation allows the use of a small amount of conventional spices in organic products in case there is proof that there is no availability of a specific spice or ingredient. Consumption of organic spices and condiments in Europe is expected to increase by 3%–5% annually over the next several years.

Currently, India, China and Vietnam are the key exporters of organic spices. In some countries, it is not easy to produce spices and herbs free from contaminants. For example, irrigation with contaminated water from the Nile river is a big challenge for growers in its basin. Another problem is that organic spices are often of lower quality than conventional spices. In organic production it is also more difficult to control allergen cross-contamination, since weed seeds cannot be controlled with the use of herbicides.

Tips:

  • Make a business plan before producing organic spices. The industry estimates that productivity during the conversion phase to organic farming tends to decline, sometimes by as much as 30%. The conversion phase usually takes two years, so take this into account when investing in organic production, as a higher price will be generated only after this period.
  • Improve your good agricultural practices and consider the production of spices and herbs without using pesticides. Some countries have already gained a good image as sourcing origins that grow spices without the use of pesticides (such as Peru for the production of ginger, Thailand for the production of turmeric and Cambodia for the production of pepper).

7. Increasing food safety and anti-contamination requirements

Several pieces of European legislation are making food safety stricter and more complicated to comply with. Maximum residue levels (MRL) for pesticides have changed so frequently that it is hard for producers to keep up with and instruct farmers in time. One significant example is related to the lowered level for chlorpyrifos residues. Sometimes the period of implementation is too short and an MRL change is announced when crops are still growing on the land after the application of pesticides, which eliminates the possibility of change at the farmer’s level. It is specifically difficult for small companies to stay up to date with regulation changes.

Among other things, food safety in spices relates also to mycotoxins (such as aflatoxins) and microbiological (e.g. Salmonella) contamination, unauthorised food additives and adulteration, and maximum levels of polycyclic aromatic hydrocarbons being exceeded. Contamination of spices with allergens is also an important issue in the European herbs and spices trade. For example, all imported paprika is now extensively tested for the presence of peanut traces.

Especially important issues are food fraud and adulteration. Adulteration is the deliberate and intentional inclusion in herbs and spices of substances whose presence is not legally declared, is not permitted or is present in a form that might mislead or confuse the customer, leading to an imitated food and/or a product of reduced value.

Examples of adulteration are spices with undeclared additives or colourings, misleading consumers, different parts of the same botanical plant or incorrectly presented shares of different spices in spice mixtures.

In order to protect traders and consumers from adulterated products, European laboratories are working to create more tests to reveal potential food frauds. For example, Eurofins is using molecular biological methods and isotopic methods to test the botanical or geographical origin of spices and herbs.

Tips:

  • Use the European Spice Association Authenticity Sample Submission Form (open in Excel) for laboratory sampling of spices or herbs before exporting.
  • Read more about specific requirements in our study on buyer requirements for spices and herbs, which provides updates on issues such as recent MRL levels changes, allergens, new legislation on measuring the level of chlorates in water, measuring the levels of curcumin, pyrrolizidine alkaloids and tropane alkaloids, and new organics regulation.

8. New origins coming up

The majority of spices imported into Europe are produced in tropical climate zones. The tropical climate allows migration of the spices and herbs production across the globe. Ginger, for example, was originally produced only in Asia and is now widespread in African countries. China and India, which were traditionally European suppliers, are becoming the main spice importers, because their domestic crop cannot meet domestic demand. This leads to the development of new production and sourcing destinations.

Cambodia pepper production illustrates the production switch, where Cambodian production increased to match the needs of neighbouring countries. Cambodia underwent major changes in its position in the world market; its crop reached 20,000 tonnes in 2017, up from 1,450 tonnes in 2011. Most Cambodian pepper is produced without chemical inputs, and is bought by Vietnamese importers to mix it with Vietnamese pepper and reduce pesticide levels in order to meet European requirements.

Another example can be found in the vanilla industry. For decades, Madagascar dominated the vanilla supply. However, new countries are appearing on the supply side, such as Jordan, Thailand, Indonesia and Uganda. Also, Israel has announced that it will start more intensive production of vanilla.

Many European buyers are currently searching for new opportunities to source herbs and spices from countries in Africa. Some potentially attractive origins include Tunisia (culinary herbs), Uganda (vanilla, cinnamon, cloves, special chillies), Kenya (chillies), as well as Ghana, Senegal, Mali, Tanzania, South Africa, and Zimbabwe. In Asia, Myanmar could be an interesting new origin for ginger sourcing.

Tip:

  • Use the opportunity to offer products of a new origin. Many European importers will be interested in exploring new sourcing options in order to reduce supply risks due to the impact of climate change impact on supply.

9. More transparent supply chain

Final buyers are now more conscious and inquisitive about the origins of products, and the entire supply chain is opening up more to transparency. Quality assurance and food safety departments at buyers and retailers demand this information. A decade ago, importers and agents were secretive about their suppliers. Now, presenting suppliers to final buyers in Europe is one way to be more competitive, as customers want to be fully informed. At present, importers make presentations about their suppliers, including videos, to introduce and advertise them to the final buyers.

Storytelling is important when presenting products to European buyers but also to final consumers. Storytelling is used to create a unique selling proposition and includes aspects, such as sustainability, uniqueness and health benefits.

Tip:

  • Create your unique selling proposition based on aspects of sustainability, quality and uniqueness.

10. New packaging innovations coming up

One of the main changes regarding packaging will be the switch to sustainable materials. In November 2018, more than 250 organisations signed the new commitment to eliminate plastic when it is problematic or unnecessary and to shift to reusable packaging. By 2025, they plan to make all plastic packaging either reusable, recyclable or compostable. Every year, they will share public reports on their progress.

Another trend related to spices is smaller portions in consumer packaging. People often only need small portions, because they want to try out a recipe, for example. Very small packaging options for spices and herbs have therefore increasingly appeared in retail chains across Europe.

The small bags included in meal kits are a very specific example of small spices or herbs portions. A meal kit is a package of ingredients to cook a meal, primarily with meat, fish, poultry, vegetables, sauce and spices. Consumers mix the ingredients and cook the meal according to the instructions provided. Sales of meal kits in grocery stores have increased, as they are easier for consumers and prices are acceptable.

Tips:

  • Consider replacing plastic bags with paper bags or carton boxes when packaging spices and herbs, in order to meet the sustainability requirements of European importers.
  • Find out which companies supply spices and herbs to meal kit producers in order to research possibilities for direct export.

The European Union is officially progressing toward fairer sourcing of food products. On 12 April 2019, the European Parliament formally adopted the Unfair Trading Practices Directive (pdf). Farmers in developing countries are especially vulnerable to unfair trading practices, since they are less likely to have links with alternative markets and may have less access to legal support or the information needed to challenge the unfair practices of large European buyers.

Crucially for suppliers from developing countries, the new Directive protects those who are based outside the EU, but sell to an EU-based buyer. The new Directive now needs to be transposed into the law of each EU Member State within the next two years. In practice, each Member State has to investigate suspected unfair trading practices and impose penalties accordingly.

The most common unfair trading practice is the official policy of some retailers to have very delayed payment. According to the European Late Payment Directive, enterprises have to pay their invoices within 60 days, unless they expressly agree otherwise and provided it is not grossly unfair.

Another initiative has been announced by the French government, which plans to ban “buy one, get one free” offers on food products in supermarkets. Those large discounts are seen as an unfair competition where some supermarkets could sell goods at a loss just to defeat competitors. Selling at a loss is forbidden in France. French farmers have long complained about being hit by a price war between retailers that they say benefits consumers, but hurts producers.

  • Carefully calculate your costs if you are planning to supply supermarkets in Europe directly. If you do not have official representation with a warehouse in Europe, it will be very challenging to meet all logistic and other demands of the European retail sector. Instead, consider working with specialised suppliers of private label brands, especially if you have competitive packing facilities.

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

Please review our market information disclaimer.

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