France Country Profile

Market Overview:

Focus Economics reported that the French economy is to poised slump sharply in 2020. A higher unemployment rate and income losses will hammer private consumption, while elevated uncertainty and weak demand are set to weigh on investment and exports.  Risks of a second wave of Covid 19 infection and a significant deterioration of the public accounts darken the outlook.  Analysts see the economy contracting 9.3% in 2020, and in 2021, they see it rebounding and expanding 6.6%.

  • The real value of private final consumption rose by 1.2% in 2019 and a fall of 6.4% is anticipated in 2020, the home confinement measures will have a particularly grave impact on the wholesale and retail trade, as all non-essential businesses are forced to close.  Workers in in transport and leisure-related activities will also face net losses.
  • Unemployment in France is projected to increase to 9.6% in 2020, up from 8.5% in 2019, due to the severity of the economic downturn, but the extended short-term activity scheme set up by the government should help to contain the rise.
  • Tax cuts and the creation of a €50 billion investment fund will provide crucial support in the future

In the longer run, the country’s potential rate of growth could be dragged down by the effects of population ageing.  Nonetheless, France remains the world’s fourteenth most favored destination for foreign direct investment (FDI) and should retain its position in the global rankings in the medium term.

France’s demographics, though favorable compared to several other European countries, are in need of more reforms.  Without action in this field, the potential rate of growth will fall.  Population has been slowly but steadily growing at the same time as French society ages.  Total population was 64.8 million in 2019, about 6 million more than in 2000. Meanwhile, the median age is rising.  It stood at 42.1 years in 2019 and it will rise to 44.2 years by 2030.  The number of those over 65 years represented 20.3% of total population in 2019 and this share will rise to 24.1% by 2030.

USDA’s Office of Agricultural Affairs (OAA) in Paris hereinafter referred to as “Post” reports that socio-economic and demographic changes have significantly changed food trends in France.  French consumers want food products that offer better taste and health benefits.  The younger generation enjoys trying new and innovative products and they value products with an attractive image along with good taste.  In France past food safety scares have increased consumer concerns about sanitation and safety issues.  These concerns have led to greater demand for natural and organic food products, natural fruit juices, and organic produce.  In addition, there is increasing demand for fish and seafood products, vegan food, gluten free products, and food supplements.  There is a strong demand in France for ethic meals, halal manufactured products and to a lesser extent, kosher certified products.

The French market for food products is mature, sophisticated and well served by suppliers from around the world.  France’s transportation infrastructure benefits from advanced technology and high-level government’s investment.  The food industry is a major and stable sector of the economy.  U.S. firms must navigate complicated national and European regulations and standards to sell products in France.

Another challenge for U.S. firms is dealing with highly concentrated retail distribution chains and networks.  Many French global manufacturers and suppliers exercise strong control over these retail networks, with well-organized buying offices that have very stringent selection processes for new suppliers, products and services.  Ability to allow for high retail mark-ups combined with innovative and creative marketing approaches are prerequisites to enter the French market.  Over the past few years, there has been a renewal of interest in American food products.

Advantages and Challenges in the French Market Facing U.S. Exporters

Advantages

  • A significant portion of French households can afford imported food products.
  • The French food retail industry is looking for new imported food products.
  • American food and food products are increasingly popular in France.
  • The French have efficient domestic distribution systems.
  • French consumers demand quality, innovative, healthy products.
  • Changing lifestyles, demographic changes and the economic crisis fuel growth in the retail sector.

Challenges

  • Lack of brand and variety awareness of U.S. food products by consumers
  • Although of interest, introducing new-to market brands and products is not easy.
  • Complying with European and French regulations
  • Domestic and intra-EU imports dominate the supply chain.
  • Adapting products to French consumers’ tastes and expectations
  • Adapting U.S. products to French consumer needs regarding price, practicality, variety, quality and packaging.

In 2019 U.S. exports of consumer ready foods to France totaled US$264.8 million, a decrease of 7% over the same period in 2018.  France the 35th largest market for U.S. consumer food exports following Honduras and Peru and just ahead of Bahamas and Trinidad and Tobago.  France also imported US$267.6 million in U.S. processed foods in 2019. That was down 23% from the previous year.  Because of the high amount of distilled spirits and seafood, France is a rare market in that it imports more processed foods than consumer oriented which is usually not the case. Top processed foods exported to France in 2019 included:

  • Distilled Spirits & Other Alcoholic Beverages
  • Prepared/Preserved Seafood
  • Beer & Wine
  • Food Preparations
  • Condiments & Sauces
  • Snack Foods
  • Spices
  • Processed Vegetables & Pulses
  • Fats & Oils 

Retail Sector:

According to Euromonitor, retail sales in the packaged food market in France had been estimated at US$90 billion in 2019.  That represents growth of 4.4% and US$3.7 billion since 2015.  France is the 6th largest package food market in the world.  By the year 2024, the retail sales in the packaged food market in France is expected to reach US$95.4 billion, growth of 4.5% or US$4 billion.  High growth categories in the forecast include:

  • Baked goods
  • Sauces, dressings, condiments
  • Ice cream and frozen desserts
  • Ready meals
  • Savory snacks
  • Sweet biscuits, snack bars and fruit snacks
  • Baby food
  • Confectionery

Post reports that More than 70% of French household food purchases are made in supermarkets, discount stores, and smaller local stores.  Different types of retailers have experienced growth and success over the last eighteen months, including local neighborhood stores and some larger discount stores offering innovative services such as internet purchases.  The retail sector fared well during the COVID-19 pandemic.  France’s retail sector offers a variety of opportunities for U.S. food and food products, provided they conform to EU regulations.

Retail food was considered an essential industry by the government and most firms continued to operate but with slightly lower capacity because of limitations on labor and new distancing precautions. Trucking increased costs for the industry as there were fewer drivers, with some choosing not to work and other foreign drivers departing the country. Some small neighborhood outlets suffered during the crises but supermarkets enjoyed 7% growth this spring, and retail sales continue to be strong in spite of the re-opening of restaurants.

France’s retail distribution network is diverse and sophisticated. The food retail sector is generally comprised of six types of establishments: 1) hypermarkets, 2) supermarkets, 3) hard discounters, 4) convenience stores, 5) gourmet centers in department stores, and 6) traditional outlets including neighborhood stores - bakeries and butcheries, 7) gas marts, as well as open-air markets and internet sales. In 2019, sales within the first four categories represented 75% of the country’s retail food market.

In 2019, the largest French retailers continued investing in smaller stores in city centers.

In 2019, food expenditures represented about 20% of the overall budget, compared to 35% in 1960.  The household food basket is now primarily composed of processed and ready-to-eat foods, while the demand for meat, fruit and beverages, bread and alcoholic beverages has decreased.  The increase of household purchasing power, fluctuation in food prices and changing lifestyles has contributed to the changes in food habits.  In 2019, the overall retail food sales in France were stabled, estimated to US$366 billion. Hyper and supermarkets and hard discounters sell approximately US$240 billion; neighborhood stores, including traditional grocers, US$98 billion; and specialized food stores such as frozen food stores, organics and open-air markets, US$28 billion.

Generally, hyper and supermarkets remain the most popular stores, but specialized food stores, frozen food stores, and hard discounters have increased their retail sector market share in recent years.  French consumers tend to diversify their purchases through several stores: for example, buying some products locally and others from discount stores that may be farther from their residence.  In addition, consumers are more price sensitive and demand high-quality products to be worth the extra investment.  Since several years, the large retailers ‘drive-thru service is on the rise, representing 7.6% of total food sales.  In addition, large retailers are expanding their private labels offered, plus 1.4% in 2019, as well as investing in smaller stores.

Convenience stores fall under the category of small supermarkets (superettes), are generally located in small cities, and frequently opened every day (including Sunday). Within ten years, proxy/convenience stores increased by 40% and in 2018, there were approximately 8,600 outlets affiliated with large retailers such as Carrefour, Casino and Intermarché.  Their number is expected to continue rising in coming years with more new concept stores.

Most exporters within the EU conduct market promotion activities in France.  Products such as fresh or preserved fruits and vegetables, wine, beer, fish and meat are commonly promoted in trade shows, advertisements and supermarkets.  Third countries promoting food products in France include Norway, Israel, Morocco, South Africa, Argentina, Brazil and Canada.

Best Prospects: Products identified as opportunities for U.S. Suppliers:

  • Fish and seafood: salmon, cod, lobster, scallops
  • Citrus fruits and Nuts: grapefruit, almonds, pistachios, and other nuts
  • Salted and sweet snacks, confectionary products
  • Spices, sauces, seasoning
  • Wine and other alcoholic beverages
  • Carbonated drinks, juices
  • Pulses
  • Canned fruit/vegetables, marmalade

Products not present in significant quantities but that have good sales potential

  • Energy drinks, 7% growth and market valued at US$1.6 billion
  • Organic foods, 15% growth and market valued at US$11.4 billion
  • Kosher foods, 14% growth and market estimated at US$ 0.6 billion
  • Halal foods, 6% growth and market estimated at US$ 8.5 million

Food Service Sector:

Euromonitor reports that overall, consumer foodservice in France experienced a healthy performance in current value sales terms in 2019 following a testing couple of years for the country linked to the economy, unemployment levels and disruptive elements including the Yellow Vests movement towards the end of 2018.  However, 2019 witnessed a marginal improvement in the local economy with an upturn in consumers’ purchasing power, which was a consequence of certain tax reduction measures related to income tax in addition to the slowdown of inflation.  This led to a tentative return of confidence for the French, a trend that is likely to further develop over the forecast period with an upturn in non-essential spending, including consumer foodservice.

One notable trend within consumer foodservice amongst local consumers has been the increasing demand for snacking and quick service, leading to solid growth for limited-service restaurants, and fast casual concepts within full-service restaurants such as North American (burgers) and pizza full-service formats.  Local consumers also increased their demand for greater diversification as they gradually moved away from European formats and became more adventurous, supporting demand for Asian, Middle Eastern and Latin American cuisine.  Chained specialist coffee shops such as Starbucks on the other hand, benefitted from greater appreciation of premium quality coffee and snacks in a contemporary setting, lending itself to a more relaxed atmosphere where customers want to spend longer to socialize with friends or work due to the offer of free Wi-Fi in many chained outlets.

Digitalization in general is being increasingly adopted by major players such as McDonald’s both through online ordering and terminals in stores which enable customers to place their own orders and customize to their specific preferences, removing the need to queue and therefore offering greater convenience and time-saving.  However, online ordering through third party delivery platforms also allows independent players to gain greater visibility, and therefore partnerships between restaurants and delivery companies are set to continue to strengthen over the forecast period.

Despite being dominated by independent operators, making consumer foodservice an extremely fragmented competitive landscape in France, chained players continued to gain share in 2019 across value sales, transactions and outlets.  This was linked to the expansion by many of the major chains, including limited-service names such as McDonald’s and Burger King, full-service brands Buffalo Grill and Memphis Coffee, and chained street stalls/kiosks including Le Kiosque à Pizzas and Waffle Factory.  The ongoing growth and decision to continue to expand addressed the trends for snacking (street stalls/kiosks), and fast service as offered by burger limited-service restaurants and casual dining as offered by a number of full-service formats.  

Players that have emerged over the review period have also been successful in identifying local consumers’ increasing appetite for greater diversification, as they became increasingly adventurous in their choice of cuisine, benefitting a number of limited-service brands including O'Tacos and Fresh Burritos (Latin American), Nabab Kebab (Middle Eastern) and Côté Sushi and eat'SUSHI (Asian), which all recorded impressive growth towards the end of the review period. Sushi in particular, has become an extremely popular choice for home delivery as a healthy snack or for sharing amongst friends.

As of April 2020 Euromonitor reports that consumer foodservice in France is predicted to record an improved performance over the forecast period (2024), with all areas of the market, value sales, transactions and outlet numbers, set to record stronger growth compared to the review period.  Higher current value sales will be driven by the larger categories of full-service and limited-service restaurants, as they continue to address consumers’ changing habits and lifestyles, through greater diversification, faster service and the increasing demand for healthier, premium quality food including vegan options to expand their reach as local consumers are concerned with local, organic and environmentally-friendly production.

Post reports that geographically large and regionally diverse, France has distinct local and regional food and flavor preferences.  While restaurants serving local cuisines continue to dominate the market, ethnic cuisines are increasingly popular, especially in large cities. An increasing number specialize in cuisine from Asia or Africa, and the United States.  In general, non-chained establishments source ingredients from local retailers and markets.

Best Product Prospects:

Post reports that the products with the best opportunities in this sector include:

  • Fish and seafood
  • Beef and bison meat
  • Fruits and vegetables
  • Frozen desserts (such as cakes and ice creams)
  • Ready-to-eat meals and ethnic/regional sides or meals
  • Fruit juices and soft drinks (including flavored spring waters)
  • Dried fruits and nuts
  • Fresh fruits including grapefruits and exotic fruits, and vegetables

Food-Processing Sector:

Post reports that The French food processing sector is valued at US$212 billion with over 17,650 food processors from small family owned businesses to some of the largest food companies in the world.  Progress in food technology, marketing innovations, and exports of finished food products contribute to France's increasing demand for food ingredients. Exports of processed foods are higher than other large industrial sectors in France and its food industry is the third largest in the world behind Germany and the United States.

Primary imports from outside the European Union (EU) were oilseeds, fruits, and distilled alcohols from the United States and China. Imports from the EU were primarily dairy, meat, and vegetables.  In 2018, the trade balance for France’s agricultural and food products reached US$18.9 billion. Not including transshipments, France's exports to the U.S. in 2019 were valued at US$6.6 billion, led by wine and spirits.

The information in this report was compiled before the Covid-19 health crisis and does not reflect all details of the current economic situation that is still being impacted by the on-going pandemic.  The strict national confinement plunged the country into recession. Gross Domestic Product (GDP) is estimated to fall by 6% for 2020, the worst recession since World War II.  According to the French Ministry of the Economy, the public deficit will reach 7.6% of GDP and the public debt will grow to 112% of GDP in 2020.  The World Trade Organization predicts a drop in world trade between 13% and 32% in 2020.

That said, food processing was considered an essential industry by the government, and most firms continued to operate but with slightly lower capacity because of limitations on labor and new distancing precautions in factories.  Trucking also increased costs for the industry as there were fewer drivers, with some choosing not to work and other foreign drivers departing the country.  The biggest impact was the shutdown of potatoes processing factories for labor and safety issues.  The meat sector is continuing to produce for the consistent retail demand.  Many importers have noted that they have slowed or stopped their purchases form the United States as well as other countries while they assess future demands.  Economic recovery is not expected until late in the year or in 2021.

Food nationalism is growing with messages of “Buy French” popular among government officials and the media.  French President Macron’s recent speeches have highlighted the need for food sovereignty at the French and EU level.  However, France relies on exports of agricultural products and enjoys a large surplus in their trade balance with exports such as wine and wheat where it is the leading EU exporter.  Therefore, it is unlikely France will be able to pragmatically close the borders while continuing to promote their exports.

France's demand for food ingredients has increased due to progress in food technology as well as finished food product exports.  Products in high demand are new products designed to be convenient and healthy for consumers, low fat, and organic.  The food processing industry is focused on improving nutrition in its final products.  Since December 2016, EU Regulation requires that the nutritional information is detailed on product labels.  

French consumers are also very sensitive to food safety and quality.  In response, the food processing industry is proactive in removing ingredients from products that have been associated with safety concerns even if they are permitted by law and regulations and the concerns are not backed by scientific studies.  Food ingredients are usually imported without problems but they do face phytosanitary and other food safety regulations.  Additives are subject to special authorization if they are not on the EU's list of approved additives.  Tariffs and other labeling requirements may cause problems for some U.S. exporters.

In order to sustain its processing sector, France became a net importer of agricultural products; The EU remains France's most important trading partner with top five suppliers: Spain, Belgium, Germany, The Netherlands, and Italy.  Outside of the EU, the United States is France's third largest supplier after Switzerland, and Brazil.  U.S. exports to France represented 2% of the value of imports in 2019.  Major products imported from the United States are fish and seafood, dried fruits and nuts, pulses, canned and prepared meat, beverages, wine, spirits and grains.

Growth in tourism to France has helped boost French food manufacturers' sales to HRI. U.S.-style food has become more popular among young-urban consumers, a growing sector, and a benefit for potential U.S. inputs into food processing.  Additionally, more products from the United States are recognized by French industry for quality and healthy aspects.

Most French processors buy their food ingredients through brokers and local wholesalers. Some of the larger companies have direct relationships with larger foreign suppliers. Food processors supply France’s retail and food service (HRI) industries, which account for roughly 70% and 30% respectively, of the sector’s overall sales. The common entry strategy for small and medium sized U.S. companies is dealing either directly with a local wholesaler or broker or indirectly through an export agent or consolidator.

 

Best Product Prospects:

 

Post reports that U.S. products present in the market that have good sales potential include:

 

·      Fish and Seafood

·      Citrus fruits and nuts

·      Coffee, tea and spices

·      Sauces, condiments and seasonings

·      Salted and sweet snacks

·      Sugar, chocolate, and confectionery

·      Pulses

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