Denmark Country Profile

Market Overview:

Euromonitor reports that Denmark’s economy will strengthen modestly in 2017. Real Gross Domestic Product (GDP) is expected to grow by 1.5% in 2017 after gains of 1.1% in 2016. Private consumption will provide only limited support but government consumption should increase briskly. Exports will also perform well though investment prospects are dim owing to a decline in business confidence and concerns about Britain’s exit from the European Union, “Brexit”. The economy is also held back by a long-term fall in North Sea oil and gas production. Real GDP should grow by about 1.7% per year in the medium term.

The real value of private final consumption rose by 1.3% in 2016 and growth of 2.1% is expected in 2017. Households are rebuilding balance sheets but still struggle with high levels of debt. Unemployment was 6.2% in 2016 and it will not change in 2017. Productivity growth is sluggish but long-term unemployment is very low. Much of the increase in employment is in trade and transport. Several labor reforms have been introduced with the goal of boosting the labor supply to offset the effects of population ageing.

The key economic challenge for Denmark is to ensure continued growth in living standards while preserving the welfare state and dealing with an ageing population. To succeed, the government must increase the labor supply as well as the pace of productivity growth. Without improvements in these two areas, it is calculated that the growth rate of per capita GDP could fall to just 0.5% per year within a couple of decades.

U.S. exports of agricultural products decreased 32% to US$179.5 million in 2016. Exports of consumer ready products amounted to 50% of the agricultural total, or US$89.5 million, down 9%. Denmark is the 8th largest importer of U.S. processed foods in the EU-28, totaling US$163.3 million in 2016, and an increase of 15% from the prior year. Top processed food exports to Denmark from the U.S. in 2016 included prepared/preserved seafood, beer and wine, fats and oils, snack foods, processed fruit, food preparations and syrups and sweeteners.  

Retail Sector:

Euromonitor reports that packaged food retail sales in Denmark reached nearly US$8.8 billion in 2016. That represents growth of nearly 7% or US$568 million since 2012. They forecast growth of 13.2% by 2021, where packaged food sales increase US$1.1 billion to US$10.2 billion. High growth categories in the forecast which include baked goods, sweet biscuits, snack bars and fruit snacks, soup, breakfast cereals, ice cream and frozen desserts, baby food, ready meals and savory snacks.  

Euromonitor reports that grocery retailers recorded 1% growth in current value sales during 2016, which was comparable to the performance over the review period (2011-2016). The grocery environment did not show strong growth rates as Danish consumers chose not to spend much of their money in such retailers. The current value growth of 1% in 2016 was on a par with average growth of the review period. The positive performance of the economic climate in the country and improvement in the consumer confidence index supported this development. However, Danish consumers remained price sensitive and only opted for quality brands when the price was right.

There were no major changes in consumers’ shopping behavior in Denmark in 2016. Most consumers continued seeking value for money product solutions for their groceries, which explains the better performance of discounters over other channels in grocery retailing. In addition, grocery retailers place greater emphasis on the advertising of products when on discount or promotion. This was evident from strong in-shop marketing activities, in brochures, which are distributed to consumer mailboxes at home, and via flyers which are available in shops and which detail special offers and discounts.

In 2016, supermarkets held a 23% value share of modern grocery retailers, while at the beginning of the review period this stood at over 29%. Gradually, Danish consumers have come to appreciate cheaper shopping outlets, such as discounters and hypermarkets over supermarkets, with the latter known for their higher unit price on similar products.

Traditionally, Danish consumers buy grocery products from supermarkets at a much higher level than they do for non-grocery products. With a reputation for being more expensive compared to other grocery retailers, supermarkets understand that consumers frequent the channel primarily for groceries, while non-grocery products tend to be purchased through cheaper retailers. In 2016, grocery products in supermarkets held an 87% share, which represented a slow increase over the review period. Within hypermarkets, groceries held a 58% share, with non-grocery products not far behind on 42%. Wider product choice, marketing activities and frequent discounts in hypermarkets, encouraged consumers to purchase non-grocery products from this channel compared to supermarkets.

Discounters continued to perform well in 2016 as it did over the review period, with the channel recording 2% growth in value sales to reach DKK47 billion. This translated to a value share of 37% within modern grocery retailers. Danish consumers prefer to buy at discounters as they know that they will get better value for their money in this channel. Furthermore, products in discounters have a reputation for offering a good level of quality and appeal to many Danish consumers who take into consideration a product’s value when doing their shopping, whether to be consumed or used at home. In addition, strong marketing campaigns via all media channels, with an emphasis on economic benefits, encourage consumers to buy their groceries at discounters.

Convenience stores suffered a 1% decline in value sales to reach DKK11 billion in 2016. This is not surprising as throughout the review period convenience stores showed stagnant development. Although Danish consumers appreciate the convenience of shopping at a convenience store, many of which are located near their homes, the high unit price at such outlets forced consumers to do their shopping at other cheaper retailers.

Coop Denmark led grocery retailers in 2016 with a value share of 30%. Nevertheless, the company regularly experienced strong competition from Dansk Supermarked, which also held a value share of 30%. Coop Denmark enjoys a strong brand presence through its chains (Irma, Fakta and others) in modern grocery retailers, which are recognized and appreciated by many consumers throughout the country.

Generally, the competitive environment witnessed little change during 2015 as major players maintained their positions within grocery retailers. Nevertheless, Dagrofa, which ranked third throughout the review period including 2016, lost half a percentage point in share, and saw its actual sales drop by 3%. In May 2015, the company closed its 190 SuperBest and Eurospar supermarkets and opened 120 of its new concept Meny outlets.

Discounters are an important grocery channel in Denmark, which regularly took share from supermarkets during the review period. In discounters, Dansk Supermarked was the leading player in 2016 with a value share of 32%. The company benefits from the strong performance of Netto, which is popular among many consumers seeking to buy groceries at a competitive price.

Best Prospect Products:
Demand is also growing for convenient, high-energy beverages and snacks. As mentioned, the number of single-person households is increasing and more women are entering the labor force. Danish consumers are becoming increasingly busy, there is a lower propensity to prepare meals at home and the frequency of traditional family meals is dwindling. As a result, there is rising demand for convenience foods such as healthy frozen foods and microwaveable meals. There is also growing interest by Danish consumers in a wider variety of imported ethnic foods, and in seafood.

Food Service Sector:

Euromonitor reports that consumer food service in Denmark recorded 5% current value growth in 2015, the highest growth rate in the last five years. The market is notably improving and recovering after the global financial crisis. The encouraging performance of 2015 can be mostly described by the improving living standards and economic recovery in Denmark with positive real growth for two consecutive years. Danes’ incomes also held up better than in many Western European Eurozone members over the review period.

Danes are feeling more confident about the future and they have positive expectations of the economic situation, which also positively effects consumer food service. Consumers are moving to better quality food options and therefore such channels as full-service restaurants and cafés/bars are developing faster compared to fast food, self-service cafeterias and street stalls/kiosks. Customers are willing to pay extra for better experiences and greater content of natural ingredients, as well as valuing locally produced and organic products. There is also increasing demand for takeaway and home delivery. From the companies’ side, competition for consumers’ attention is growing and with positive macro/micro trends there are notably more investments into new concept creation, marketing, product development and innovation.

Health and wellness is one of the most visible trends in consumer food service in Denmark, and it is greatly influencing industry players. In order not to lose customers’ loyalty, many players are being forced to review their menus and strategies. The trend is negatively influencing fast food, which is gradually losing share to other channels such as full-service restaurants and cafés/bars, which are perceived to provide better quality food, even though fast food recorded positive value growth during review period and expected to do so during the forecast as well. This is because the concept of fast food is changing with a wider and healthier range of products.

Pizzerias now offer wholegrain pizzas, burgers available with organic buns, and caffè latte with lactose free milk. There is increasing demand for high protein products that are low in fat and sugar. There is not only an increasing focus on healthy food by consumer food service providers, but also on drinks. For example, many convenience stores such as 7-Eleven are launching fresh pressed juices and smoothies, which are being positively received by consumers. The sales of healthy drinks are increasing in Denmark, which is having a negative effect on soft drinks.

According to the Ministry of Environment and Food of Denmark, there are more than 200 Nøglehulsmærket keyhole label certified eating places in Denmark. Initially, the Keyhole label, which is a Nordic nutrition label that was launched locally in 2009, was for packaged food with low content of sugar, salt and fat, which made it easier for consumers to choose healthier products in the store. In 2001, the label was also introduced to consumer food service outlets such as restaurants, canteens and cafeterias. The aim of the concept is to increase the knowledge of restaurant professionals on how to cook and serve healthier food. In addition, there are an increasing numbers of food service outlets that focus on organic food. According to Statistics Denmark, sales of organic food and beverages to the consumer food service, including institutions increased by 33% in 2014.

With the increasing pace of living, Danish consumers are increasingly valuing convenience. Having less time for food preparation at home, and not being willing to spend time waiting in queues is driving a number of consumers to switch to ordering online. Consumer food service providers are trying to adapt to increasing consumer demand for convenient ways of ordering food by launching different apps and menu items that could be easily consumed on the go.  

Takeaway is ongoing trend and more players want to take share of this, not necessarily through their standard offerings, but also by launching new products. For instance, McDonald’s promote its coffee on the go, or ice cream specialist brand Paradis is increasing its frappés, other coffee drinks and smoothies. Major Danish retailers are also increasing their focus on healthy prepared meal options and are trying to attract more customers willing to save time on homemade food. The increasing demand for convenience is also one of the reasons for increasing mobile orders, although not all players offer that opportunity to consumers.

Food-Processing Sector:

Denmark has one of the most-advanced agriculture and food processing sectors in the world. With an incredibly efficient agricultural sector, Denmark produces enough food to feed three times its population, exporting more than two-thirds of this agricultural production to over 200 countries around the world.

The value of Danish agricultural export, including the agribusiness sector, has risen steadily in recent years. At last report the agriculture and food sector as a whole represents 20% of total Danish commodity exports. The Danish Agri-Food and Fisheries industries were one of the country’s largest export groups. Over 60% of all exports went to countries within the EU, with Germany, United Kingdom (U.K.), Italy and France being the most significant buyers. Outside the EU, the United States (U.S.) and Japan are Denmark's major Agri-food customers.

Despite the sector's strengths, Denmark does import a considerable amount of food products. Like most of its industries, the Danish food processing sector is heavily reliant on imports. Denmark's top five agricultural imports include; soybean oilcake, wine, fresh boneless beef, food preparations and biscuits and crackers. 

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