Country Profile

Germany Country Profile

Discover more about the German market including overviews about the retail, food service, and food processing sectors. Events, resources, and more are linked throughout the profile.

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Market Overview

$1 Billion
total of 2020 U.S. exports of consumer ready foods to Germany
12th
largest U.S. export market for consumer products
3rd
largest U.S. export market for consumer products in Europe

Euromonitor reports that the German economy experienced a recession in 2020.  Due to the Coronavirus (COVID-19) pandemic and the containment measures it has necessitated, the German economy experienced the sharpest contraction on record in the first half of the year.  The hospitality, leisure and manufacturing sectors have each been affected.  Assuming the pandemic is contained, growth of real Gross Domestic Product (GDP) will be 3.2% in 2021, and will gradually fall to around 1% per year in 2025-2027.

 

  • Real GDP declined by 4.9% in 2020 – down from modest growth of 0.6% in 2019.
  • The real value of private final consumption has seen only modest growth for several years.  Gains of 1.6% were recorded in 2019 and a fall of 5.5% was expected in 2020. Spending has been limited by COVID-19 related temporary business closures, curfews and social distancing measures.
  • Unemployment was 3.1% in 2019 and it rose to 4.3% in 2020.  Thanks to the expansion of subsidized short-time work schemes unemployment has stayed relatively low.  Employment began increasing again in August and the number of workers tapping the short-time work scheme has started to come down from its peak of six million in April-May.

Germany still faces a number of persistent constraints.  The country’s huge service sector is highly protected and relatively inefficient.  Investment as a share of GDP continues to be lower than in most other large economies.  Finally, the country’s ageing population will eventually pose greater fiscal problems.  Another long-term problem is that Germany faces a broad-based decline in population.  Its birth rate is the lowest of all advanced countries while approximately 500,000 people are retiring each year.

 

Germany’s population has been falling gently over time.  In 2020, total population stood at 80.1 million (CIA World Factbook Est.), only slightly above the figure for 2000.  The number will grow to 83.5 million in 2030.  Germany also has one of the world’s oldest populations.  The median age was 47.8 years in 2020.  This was 7.7 years greater than the figure for 2000 and well above the regional average.  The growing number of older consumers is altering the pattern of consumption and pushing up healthcare costs.

 

USDA’s Office of Agricultural Affairs (OAA) in Berlin hereinafter referred to as “Post” reports that that Germany is by far the biggest market for food and beverages in the European Union.  The food retail sector is saturated, highly consolidated, and competitive.  There is good sales potential on the German market for U.S. exporters of nuts, fish and seafood products, dried fruits, bakery products, organic products, and sweet potatoes.  The Covid-19 related lockdown measures have impacted German consumers’ shopping and consumption patterns.  It remains to be seen if and to what extent consumers continue to stick to these patterns once the pandemic is over.

 

Germany is the second largest importer and third largest exporter of consumer oriented agricultural products worldwide, and by far the most important European market for foreign producers.  Overall, Germany is a net importer of all major categories of food products.  Grocery retailing reached an estimated US$273.9 billion, and imports of agricultural products decreased by 4.3% to US$107.4 billion.  Imports of consumer-oriented agricultural products totaled US$62.9 billion in 2019.

 

In 2020 U.S. exports of consumer ready foods to Germany totaled just over US$1 billion, an increase of 4% over the same period in 2019.  Germany is the 12th largest U.S. export market for consumer products and the 3rd largest in Europe.  Germany also is a major importer of U.S. processed foods as well.  U.S. exports of processed food products to Germany dropped 13% in 2020 to US$335.9 million.  Top processed foods exported to Germany in 2020 included:

 

  • Alcoholic Beverages
  • Food Preparations And Ingredients
  • Canned, Dried And Frozen Fruit
  • Condiments, Sauces, Jams & Jellies
  • Fats & Oils
  • Prepared/Preserved Seafood  
  • Non-Alcoholic Beverages
  • Snack Foods  

Advantages and Challenges for U.S. Food Exporters in Germany

The German market offers a number of benefits to U.S. exporters, but it is not without difficulties.

Advantages

  • Germany is the biggest market in Europe with one of the highest income levels in the world.
  • Large non-German population and Germans’ inclination to travel abroad help fuel demand for foreign products.
  • Germany is among the largest food importing nations in the world.
  • Many German consumers are uninformed about the details of sustainability, and there is still room to define a U.S. sustainability message.
  • U.S. style is popular, especially among the younger generation; good reputation for U.S. foods like dried fruits, seafood, and wine.
  • Germany is the largest EU market for U.S. beef under the EU import quota for high quality beef, which was expanded in January 2020.

Challenges

  • German consumers demand quality and low prices.
  • Private sector sustainability standards can act as a barrier to trade.
  • EU import regulations and tariffs. EU gives preferential access to products from EU countries.
  • No unified U.S. sustainability message in the German market, looming misconceptions about U.S. agriculture.
  • Non-tariff barriers, such as phytosanitary restrictions and traceability requirements, can make exporting to Germany complicated.
  • The quota only applies to beef from animals not treated with growth-promoting hormones.

“All of Food Export’s programs were a tremendous help getting us export ready, understanding the challenges that come with international business, and learning how to navigate them.”

Katz Gluten Free

Food Export-Northeast Participant since 2018

Interested in importing from U.S. suppliers?
Contact us to learn more.

Retail Sector

$99.6 Billion
estimated total of retail sales in the packaged food market in Germany in 2020
4th
largest packaged food market in the world
$107.3 Billion
estimated retail sales in the packaged food market in Germany by 2025

According to Euromonitor, retail sales in the packaged food market in Germany had been estimated at US$99.6 billion in 2020.  That represents growth of 9.2% and US$8.4 billion since 2016.  Germany is the 4th largest packaged food market in the world.  By the year 2025, the retail sales in the packaged food market in Germany is expected to reach US$107.3 billion, growth of 8.5% or US$8.3 billion.  High growth categories in the forecast include:

 

  • Savory Snacks
  • Sweet Biscuits, Snack Bars & Fruit Snacks
  • Sauces, Dressings & Condiments
  • Ice Cream & Frozen Desserts
  • Pet Food
  • Rice, Pasta And Noodles
  • Cheese

Post reports that the German retail market’s key characteristics are consolidation, market saturation, strong competition, and low prices.  Germany is an attractive and cost-efficient location in the center of the EU.  While many consumers are very price sensitive, the market also provides for many wealthy consumers who follow value-for-money concepts.  These consumers are looking for premium quality products and are willing to pay a higher price.  Germany has some of the lowest food prices in Europe.  German citizens spend only 14% of their income on food and beverages.  Low food prices result from high competition between discounters and the grocery retail sale segment.

 

The top four grocers account for around 70.2% of the total market.  The German market is largely dominated by domestic players.  This is particularly true for hypermarkets, supermarkets, and discounters.  German consumers are very particular about what they like and what they do not like in their grocery retailers, and grocery retailers can count on a strong base of loyal customers.  The failure of Walmart to establish itself in Germany over a decade ago is the example for how hard it is for international players to successfully enter the German market.

 

Euromonitor reports that with the long-term effects of the COVID-19 pandemic still uncertain, especially in the short-term, what is certain is that supermarkets is primed to fare better over the long-term than perhaps any other store-based retail channel in the coming years.  The longer restaurant operations and other away-from-home food options remain restricted, the more entrenched consumer behaviour will be for at-home dining. Supermarkets will continue to gain expertise in online delivery options as well as in omnichannel engagement, reaching consumers in their homes like never before.  For Germany in particular, where store-based sales are traditionally so important to retailers, this represents a strong shift in behavior.  Moreover, the variety and better store experiences that supermarkets already offer will help the channel stand out in the years ahead.

 

Euromonitor reports that the outlook for convenience or “c-stores” in Germany is highly dependent on COVID-19.  C-stores is an underdeveloped retail channel in Germany, given the market’s high density of small-format grocery stores which often serve a similar purpose.  Existing c-stores typically cater to commuters and tourists, and new outlet development targets dense urban areas that traditionally enjoy high footfall.  As the effects of the pandemic push into 2021, and the longer consumers stay at home and become used to working remotely, the more demand for c-stores will suffer.  Instead, forecourt retailers will continue to attract consumers who commute or travel by car, especially given the expectation of more domestic holidays in 2021.  For fast-growing brands like REWE to go, this means a continued pivot to forecourt retail and petrol shop conversions, and a likely pause on stand-alone new outlet development in c-stores.

 

COVID-19 related lock-down and physical distancing measures heavily impacted the German food sector as well as consumers’ shopping and consumption patterns.  With closure of schools and the majority of shops and services, and many people working in a home-office setting, much of the demand for food and agricultural products shifted from restaurant and food service sector to food retail and/or was significantly reduced. Consumers not only spent more money on food to build an emergency stockpile, they also shopped more consciously and focus on locally grown food, for instance.

 

Best Product Prospects:

 

Post reports that U.S. products in the market that have good sales potential include: nuts: almonds, walnuts, pistachios, hazelnuts, pecans; fish and seafood: salmon, surimi, roe and urchin, misc. fish products; dried and processed fruits: raisins, prunes, cranberries; fruit juices: cranberry, grapefruit, prune; beef and game: hormone-free beef, bison meat, exotic meat and processed meat products; organic products

Food Service Sector

$110.8 Billion
total value of German food service sales in 2019
11.9%
increase in food service sales from 2018 to 2019
$60 Billion
in sales in the HRI sector in 2019 came directly from restaurants

Post reports that in 2019, German food service sales increased by 11.9% to US$110.8 billion. That was triple the growth from previous year, with all three major market segments—hotel, restaurant, and catering/institutional (HRI) - enjoying increased sales. Restaurants led the food service market in 2019, with US$60 billion in sales.  Key trends include sustainability, regional produce, convenience, health and wellness, and retail catering.  COVID-19 related lock-down and physical distancing measures heavily impacted the German food sector and consumers’ shopping patterns.

 

After the sudden mid-March shutdown of public life due to COVID19, some restaurants closed down entirely while others found new business strategies. FAS Berlin noticed three main changes in strategy, as well as government measures and stimuli.  Instead of fully closing down their cornerstone restaurants, many business owners opened for a limited time a day with a lower-price and higher-volume simple menu, selling out of their shops’ windows for instance.  Also, many opened up online shops to sell readymade products, e.g. pesto, bread, wine etc., as well as cooking boxes for consumers to recook a full set dinner at home.  Hereby, the social media channel Instagram functions as their communicator to circulate the menu of the day and opening hours.

 

The German food service sector is large and highly fragmented but can be divided into the commercial and institutional food service markets.  The German commercial food service market includes hotels, restaurants, fast food and take-away outlets, bars, cafeterias, coffee shops, and similar channels.  The institutional food service market consists of hospitals, universities, nursing homes, and cafeterias.

 

The primary reasons for growth in the sector are Germans’ desire to consume more outside of their homes and Germany’s status as a popular tourist destination. In general, people are willing to pay more, but the price-performance ratio is one of the most important factors, as Germans are very price-sensitive. Some key trends include sustainability, regional produce, convenience, health and wellness, Asian and ethnic cuisines, and retail catering.

 

Post discovered that some mid-range to high-end restaurants in bigger cities in Germany is currently making more revenue under their new business operations, than before the COVID19 pandemic.  Restaurants as for example Lode&Stijn, Mrs. Robinson, and Prism, will integrate a part of their new profitable concepts after they are allowed to fully reopen.  In Germany, each Federal State has the authority to decide when to open up again.  In Berlin, restaurants reopened on May 15, under strict health and hygiene protection measures.

 

There is also relief expected for restaurants from the legislative side as the German Ministry of Finance announced tax cuts for restaurants, in place until June 2021.  In detail, VAT on food items will decrease from 19% to 7%; beverages and alcohol (due to EU law) are excluded from this relief.  As prices in Germany are always shown including tax, it will be easier for restaurants to charge the same price as before but keep the difference of the 12% as revenue.  Overall and in total, the German government is guarding and stimulating the economy with US$382 billion in monetary and fiscal measures and US$887 billion in guarantees and buying shares.

 

Full-service restaurants continue to lead in consumer food service sales, but all sectors grew in the last year.  This is driven by the trends towards young single households, a further decline in the unemployment rate, and an aging population.  All of these factors fuel the demand for healthy and sustainable food.  However, as there is also an increasing risk of poverty with old age as well as the price-sensitivity of that generation, low-cost food service models are likely to prevail.

 

Best Product Prospects:

 

Post reports that U.S. food products with good potential for increased sales in this sector include tree nuts, hops, sweet potatoes, pulses, fish and seafood and whisky.

Food-Processing Sector

$221.7 Billion
value of processed food and drink produced in Germany in 2019
6,123
food processing companies in Germany
81,537
the number of organic-certified products produced in 2019

Post reports that Germany is by far the biggest market for food and beverages in the European Union.  The food processing industry represents the third-largest industry in Germany.  In 2019, Germany produced an estimated US$221.7 billion of processed food and drinks.  When meeting EU standards, the following products have good sales potential on the German market: nuts, fish and seafood products, highly processed ingredients, dried fruits, sweet potatoes, bakery products, organic products, and pulses. COVID-19 related lock-down and physical distancing measures heavily impacted the German food sector, as well as shopping and consumption patterns of German consumers. Effects should be visible in next year’s reports when the data from 2020 is evaluated.

 

Germany’s food processing industry is well developed and has access to all food ingredients.  Generally, German food processors source their ingredients from local producers or local importers.  Only large processors import ingredients directly from foreign suppliers.  

 

The 6,123 food processing companies employ well over 618,721 people.  The sector is dominated by small- and medium-sized companies; 95% of which have less than 250 employees.  In 2019, the sector generated a turnover of roughly US$221billion; accounting for 5.8% of the German GDP.   The largest subsectors by value were meat, dairy, bakery, confectionary and ice cream, and alcoholic beverages; accounting for 25%, 15.3%, 9.8%, and 6.2% respectively.

 

Sector trends include that food product portfolio is becoming more specialized and complex.  The share of convenience and ready-to-eat products as well as smaller packaging sizes is increasing while the share of milk and dairy products, alcoholic beverages, and sugar is declining.  The food industry is adjusting to the increasing demand for organic products; the total number of organic-certified products rose from 24,000 in 2004 to 81,537 in 2019.  Food labeling with special seals is very common in Germany and has a large impact on the industry.  Various regional, organic, sustainability, and animal welfare labels are introduced or being discussed in Germany. Most companies have a sustainability strategy that demonstrates sustainability in the entire chain from cultivation all the way through to food processing.

 

Best Prospects:

 

Post reports that U.S. products in the market that have good sales potential include: nuts: almonds, walnuts, pistachios, hazelnuts, pecans; fish and seafood: salmon, surimi, roe and urchin, misc. fish products; dried and processed fruits: raisins, prunes, cranberries; fruit juices: cranberry, grapefruit, prune; beef and game: hormone-free beef, bison meat, exotic meat and processed meat products; organic products.

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