Skip to Content Skip to Navigation

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

Takes 11 minutes to read

European demand for spices and herbs is growing. This is mainly due to trends such as healthy living, interest in new tastes and convenience. Due to high prices and a sense of scarcity, European buyers are increasingly willing to buy from smaller suppliers. You can find opportunities especially in smaller or niche markets focusing on special varieties, improved quality and sustainability. However, you should comply with strict requirements regarding quality, food safety and traceability to enter the European market.


Growing demand for spices

The global spices market is growing at an annual growth rate of about 5% (by value) and is projected to exceed $10 billion by 2020. European imports of spices and herbs from developing countries have grown significantly in recent years (see Figure 1).

The European market for spices will continue to grow, but due to the maturity of the industrial sector, European growth is slower than in other regions according to Market Watch.

Most direct European imports come from developing countries (97% of total imported volume). The positive market conditions therefore make it possible for you to directly benefit. Volume-driven uniform product markets could provide opportunities, but competition is higher and margins are lower in such markets.

As a small to medium-sized company, you will find good opportunities in supplying so-called speciality spices and herbs that are traded in smaller volumes. Examples that could be interesting are:

  • special varieties (e.g. Mexican chillies, Tellicherry peppercorns;
  • a focus on product characteristics (e.g. better colour and taste);
  • customisation according to buyer’s preferences (e.g. very coarse grinding);
  • sustainability

Tips:

  • Directly target countries that now rely mostly on other European countries for their supply (countries other than the Netherlands, Germany, the United Kingdom, France and Belgium). These countries might however require further processing, packaging, smaller volumes and other services.

  • Focus on local or regional markets as well, such as the Asia-Pacific region, which is projected to grow at an annual growth rate of 7% from 2015 to 2020. This is the fastest-growing market for spices in the world.

Directly target countries that now rely mostly on other European countries for their supply (countries other than the Netherlands, Germany, the United Kingdom, France and Belgium). These countries might however require further processing, packaging, smaller volumes and other services.

Focus on local or regional markets as well, such as the Asia-Pacific region, which is projected to grow at an annual growth rate of 7% from 2015 to 2020. This is the fastest-growing market for spices in the world.

Growing popularity of ethnic food

Demand for ethnic food is rising in Europe. Reasons for this include the growing multicultural population in Europe and the fact that Europeans are travelling more and more to exotic destinations. The demand for spices and herbs used in exotic cuisine is therefore also rising.

At this moment the following tastes are especially popular:

  • Chinese (pepper, ginger, anise);
  • Indian food (curry, chillies, cardamom);
  • flavours of Thai food (cassia cinnamon, cloves, nutmeg); and
  • Vietnamese cuisine (ginger, chillies, fennel, pepper, chillies).

The ongoing search for new tastes by cooks, food manufacturers and consumers will ensure the market for spices and herbs continues to grow. This is the case in Western European markets as well as in regions such as Southern and Eastern Europe where the demand for ethnic food is still small.

Smaller food processors, retailers and brands specialised in ethic food are strong forces in the growing market for ethnic food. However, large retailers and multinationals are also increasingly active in this market.

It is easiest for you to supply smaller processors, retailers and specialised brands, as these are less demanding in terms of food safety, service and volume. They often import directly from developing countries and have close relations with their home country, making it easier for you to connect with them.

The size and composition of ethnic communities differ strongly by country, so opportunities will also be different. For instance, within Western Europe there are large differences:

  • United Kingdom (Indian, Pakistani and Bangladeshi);
  • the Netherlands (Indonesian, Turkish, and Moroccan);
  • Germany (Turkish);
  • France (Moroccan, Algerian, other communities from North Africa and French-speaking countries in West Africa).

It is also important to realise that ethnic food tastes vary by region, country and even buyer. Indian food in the United Kingdom tastes different than in Germany, and uses different ingredients and mixes.

Tips:

  • Be aware that demand for specific spices and herbs differs by country. When selling composite products like spice mixes, you might have to adjust your product to the region or even the buyer you are selling to. See our factsheet on spice and herb mixes and other factsheets such as pepper, ginger, cloves and nutmeg for more information.
  • If you want to learn more about the European market for ethnic food, please see the following (paid) studies by Market Research and Mintel.
  • See the McCormick Flavour Forecast 2016 for more information about the latest global trends in taste.
  • There are specific trade fairs for ethnic food in the EU. Ethnic Food Europe is a good example. The exhibitor’s list provides interesting trade leads.

Tight supply leads to high prices

Global demand for spices and herbs has increased strongly in recent years, while growth in production is limited. As a result, prices of many spices and herbs have increased strongly (see Figure 2).

Looking ahead, it is questionable whether supply will be able to keep up with demand. New plantings of spices and herbs might not be able to satisfy global demand and replenish low stock levels.

A structural challenge is to find new farmers. Despite high prices, many young people are not interested in cultivating spices and herbs.

Industry experts expect prices to remain high, or in some cases to continue to grow. The large price drops we have seen in the past are not expected to occur again in the future.

It is interesting to see that European demand has continued to grow despite high prices. Spices and herbs are minor but important ingredients that contribute little to the total cost of the food in which they are used. The demand is relatively inelastic to price changes.

With a stable economic outlook, the European market will provide excellent opportunities for you to increase profitability and invest in your own company.

Tips:

  • Keep yourself updated on the global supply situation and prices. In this way you can determine your competitive position and find the right moment to sell.
  • Make sure you have a good overview of short- and long-term price developments as well.
  • See ITC’s Market Insider, McCormick, Nedspice, Zoblean and Public Ledger (paid service) for crop and price reports.
  • See our factsheets for more product-specific prices and sources, as well as information about price developments. For example, you can consult our factsheets about cinnamon, cardamom, pepper, vanilla , ginger, chillies or cloves.
  • Use sector experts in your network to complement price information.

1 . European buyers look for compliant suppliers

The requirements of European buyers regarding quality, food safety and sustainability are amongst the strictest in the world. Only a small share of the total global spice and herb crops are compliant with European Union requirements.

Due to high prices, there is also increased fraud with spices and herbs (e.g. cumin with peanut shells, oregano with olive leaves), causing major concerns for European buyers. European buyers have serious problems with finding sources for the products they need.

Moreover, requirements are continuously becoming more strict. In 2015, for example, new legal requirements were introduced for polycyclic aromatic hydrocarbons (PAHs) for smoked spices and herbs and stricter requirements for ochratoxin A (OTA) for pepper, capsicums, nutmeg, mace, turmeric, ginger and mixtures.

European buyers are continuously looking for suppliers that can meet the strictest requirements. This can provide opportunities for you as an exporter. European buyers are looking to establish long-term relationships with reliable suppliers. They are also looking to source from other suppliers to complement and secure their supplies, including smaller suppliers.

European buyers are also moving closer to the source of supplies to control their supply chain. They want to know more and more about the origin of their products, and are working towards a more traceable supply chain. In some cases they will even want to know which field their products come from. In other cases, having the right papers (e.g. test reports, steam sterilisation certificate) is sufficient for buyers.

Some buyers are looking to work directly with farmers, avoiding middle men that add no value. This development could offer opportunities for you, but it may also threaten your own position in the supply chain.

Because of increasing supply scarcity, exporters can easily sell their products on the world market. Exporters are therefore not always interested in supplying to strict European buyers. With the growing global demand, the influence of European buyers will decrease further.

At the same time, countries outside of Europe are adopting stricter requirements for food products as well. The Codex Alimentarius Commission is holding talks to further harmonise spices standards around the world. Various producer countries have submitted proposals for standards, including:

  • India (standards for dried chilli, ginger and garlic);
  • Egypt (standards for basil and coriander);
  • Indonesia (standards for nutmeg); and
  • Nigeria (standards for cloves and ginger).

It will still take years for such harmonisation to take effect. It is clear, however, that it is increasingly important to focus on quality and food safety, whether you want to supply the European market or not.

Compliance with quality and food safety standards is also a strategy for adding value. Due to supply insecurity, products that comply with European Union requirements often fetch a higher price.

Tips:

  • Invest in quality and food safety. As requirements in the European market and your local market are becoming stricter, strive to make continuous improvements.
  • Ensure that you continue to add value in your supply chain by working together with other exporters and farmers in your region. It is very interesting for buyers if you are able to organise farmers and ensure their compliance with buyers’ requirements. It might also be hard for you to supply a full container (minimum order size), but this could be possible by working together. Further areas of collaboration include collection, quality testing, storage and transport.
  • See our study about buyer requirements in Europe for spices and herbs for more information.

Quote: “CSR is now addressed in 65-70% of the audits that suppliers are subjected to.”(John Hill, British Pepper and Spice)

2 . Growing awareness of sustainability

European buyers pay more and more attention to their responsibility for the social and environmental impact of their activities. The most important issues European buyers are concerned with include:

  • child labour
  • healthy and safe working conditions
  • respecting labour laws
  • paying minimum wage
  • correct use of pesticides (if only for meeting the legal limits for residues, the so-called maximum residue levels)

While sustainability used to be an issue in niche markets only, it is now high on the agenda of the entire sector.

The most important European players are collectively working on making the spices and herbs supply chain more sustainable. One example is the Sustainable Spice Initiative, with members such as Unilever, Olam and Verstegen. Sales of certified sustainable products are also growing in the European Union market.

In the coming years, sustainability will become an even more important topic in front-running regions like Western and Northern Europe. At the same time, sustainability will also receive increased attention in Southern and Eastern Europe, as well as in developing countries.

The sustainable segment provides excellent opportunities for small and medium-sized exporters to set themselves apart. Whether you are successful depends on your approach, ambition and level of professionalism. It takes significant effort over a long period of time to be successful in this market. Nevertheless, small steps can already be taken towards a more sustainable approach.

It is important to realise that sustainability is still developing within the spices and herbs sector. Issues that would have given you a competitive advantage a few years ago are now considered common. Opportunities shift, and it is important to move along with developments.

Tips:

  • If you want to become more sustainable, start by addressing the most important issues mentioned above. From there onwards, look at more strategic choices. Determine which core values you want to work with (e.g. social, environmental or both).
  • Monitoring your performance on sustainability through audits or (self-)verification is a way to be rewarded for your efforts, either by opening up new markets and/or receiving a price premium.
  • Work together and build strong relationships with your buyers and suppliers. Look for European companies that can help to invest in training and certifying farmers. Work with NGOs and (international) governmental organisations to attract capital.
  • Sustainability can provide opportunities for you locally as well as regionally, as sustainability is becoming more important all around the world. The faster you move into the market for sustainable products, the larger your competitive advantage will be.
  • For more information, read our study on the sustainable spices and herbs market in Europe.
  • See our study about buyer requirements in Europe for spices and herbs for more information about certification and other related topics.

European consumers looking for convenience

Demand for easy-to-prepare and ready-cooked meals is increasing in Europe. European consumers are spending less and less time on preparing meals due to their busy schedules, and the number of single households is increasing.

Easy-to-prepare and ready-cooked meals rely on spices and herbs to retain and enhance food flavour (e.g. ready-to-use spices and herbs, seasonings and condiments).

In addition, these products increase the demand for crushed and ground spices and herbs, and spice and herb mixtures. Branch association Food and Drink Europe identified convenience as a key innovation trend in the European food sector. The demand for (processed) spices and herbs will therefore continue to grow.

For you as an exporter from a developing country, the growing market for processed spices and herbs provides some opportunities. Grinding and crushing is already taking place on a large scale in developing countries, thanks to low wages and improved processing facilities and detection techniques. Imports of crushed and ground spices now account for 20% of all imports from developing countries (see Figure 3 below).

The market for mixed spices and herbs is still hard to enter. Only 1.8% of imports of mixed spices and herbs come from developing countries, and imports from these countries have not grown in recent years. If you want to enter this market, you will have to overcome barriers such as reluctance of buyers, high investment costs and strong competition from European suppliers.

Tips:

  • Only consider crushing, grinding, blending and packing after you have taken value-adding steps such as cleaning and quality improvement. These last types of added value are easier to achieve, require less financial investment and earn you an interesting premium (usually around 5%).
  • For more information, see our studies on crushed and ground spices and herbs and consumer packed spices and herbs.

Healthy living

Healthy living is one of the most important trends in Europe. Unhealthy food ingredients like salt, sugar and synthetic additives are increasingly replaced by spices and herbs. An example is what Unilever and Schwartz are doing in this context.

Another important trend is that the per capita consumption of meat in Europe has stabilised, and is even decreasing in some European countries (see this article about meat consumption in Europe for more information).

A decreasing meat consumption means demand for other food products will grow, including products that imitate the taste of meat or have a similar nutritional value. This so-called meat substitute market is expected to grow globally by 6.4% per year between 2014 and 2019.

Consumers often choose meat substitutes for sustainable motives. A large number of sustainable issues such as climate change, animal welfare and health are related to meat consumption. There are opportunities for sustainable spices and herbs (especially organic) in the meat substitute segment.

Tips:

  • Target buyers in the growing healthy living, vegetarian and meat substitute segments, or develop products or ingredients to be sold in these markets. This requires substantial product and market development, so work closely with buyers and sellers. Determine whether you can also service your local market with these products.
  • Ask buyers for their recipes or look at recipes that are already on the market. Be aware that the price of salt is significantly lower than most ingredients. Therefore, the cost price of your product might increase when substituting salt for spices and herbs.
  • Talk to buyers and visit trade fairs to obtain more information about the vegetarian food market. Veggie Expo is a European trade fair specifically aimed at this market.
  • Refer to the database of the Dutch blender Verstegen for ideas about vegetarian and vegetable spice mixes.
  • Allergen-free spices and herbs can be an interesting niche market. Several companies are already active in this market segment, like Dutch Spices and EHL Ingredients.

Fluctuating exchange rates

Exchange rate fluctuations are an important factor in international trade. International spice and herb prices are often quoted in US dollars. The value of the Euro has fallen significantly in relation to the US dollar and other currencies during recent years. This makes it more expensive for European buyers to buy.

Fluctuating exchange rates especially affect buyers that have long-term contracts with their suppliers in which price agreements have been made. Given the scarcity on the world market, buyers will still want to work with long-term relationships, but might postpone purchases in hopes of a better exchange rate.

Some sources predict that further devaluation of the Euro is very likely. Whether fluctuating exchange rates are detrimental or beneficial for you depends on the exchange rate of your own currency with respect to the US dollar.

Tip:

  • Use the Oanda website for information about currency developments.

Steam sterilisation more important

European buyers are increasingly asking for steam-sterilised spices and herbs, as these do not contain microbiological contamination.

If you can steam sterilise your spices and herbs at the source, you can earn a significant premium. Investment in sterilisation facilities can be very costly, however (up to € 1 million). Be aware that some European importers will only perform the sterilisation themselves, and therefore will not rely on you for this service.

A downside of steam sterilisation is that it has a negative effect on the volatile oil content of spices and herbs, which is what produces the flavour. European buyers would switch to other methods if they were equally safe, accepted by consumers and not too expensive.

At the moment there are no alternatives to steam sterilisation that meet the requirements of buyers, but research is being done on a sector level by GreenFooDec.

Tips:

  • If you do not have the means to invest in sterilisation facilities, look for local companies that can provide this service for you.
  • Steam sterilisation is only useful if you also take food safety into account with drying, storage, processing, packaging and transporting.
  • Keep in mind that mycotoxins and other contaminants are insensitive to sterilisation. Make sure you check for these contaminants in all steps of the chain.
  • Stay updated about the developments regarding steam sterilisation. Any investment should be carefully considered. If better technologies are developed, steam sterilisation will become a less interesting option for buyers.

Please review our market information disclaimer.

Follow us for the latest updates