Netherlands Country Profile

Market Overview:

 

On March 3, 2020 Focus Economics reported that Dutch economic growth is expected to slow somewhat this year on easing domestic demand due to softer investment outlays, owing to the uncertain global backdrop amid Brexit uncertainty, the U.S.-China trade spat and the coronavirus outbreak.  However, softer inflation and the government’s fiscal expansion, which includes tax breaks, should buttress private consumption.  Euromonitor forecasts 2020 Gross Domestic Product (GDP) growth at 0.2%.

  • The Netherlands’ economy had already cooled in 2019.  GDP grew by 1.7% in 2019 – down from 2.6% in 2018. 
  • The real value of private final consumption rose by 1.3% in 2019 and growth of 1.8% is expected in 2020, as consumption enjoys the support of robust disposable income growth.
  • The labor participation rate is at a post-crisis high in the Netherlands but employment growth, is forecast to slow.  In conjunction with dynamic rates of labor supply growth, this should lead to a modest uptick in the unemployment rate from 3.4% in 2019 to 3.6% in 2020.
  • Growth will moderate further over the next few years, reflecting modest economic growth in Europe and a rapid deterioration in consumer confidence.  Business investment is projected to soften, reflecting the worsening trade environment. Growth of real GDP will dip further to about 1.3% per year by 2027.

The Dutch economy depends crucially on foreign trade.  Rotterdam is Europe’s largest port, handling more than twice as much cargo as its nearest European rival, Antwerp.  The port’s industrial and distribution activities generate annual added value equivalent to around 10% of Dutch GDP.  There are also a large number of coastal and international vessels providing cargo services and an important ship servicing facilities.  

The Dutch economy is closely integrated with the rest of the EU 27 + U.K.  For example, in 2019 other members of the EU 27 + U.K. accounted for 73.9% of all exports. Machinery and electrical equipment made up 23.3% of exports in 2018. Brexit could have a significant impact, given the extensive trade links with the UK. The possibility of rising protectionism is another downside risk.

The Netherlands’ population was 17.2 million in 2020 (CIA World Factbook Est.), up from 15.9 million in 2000.  Total population will be growing very slowly in the future. Median age in 2020 was 42.8 years – 5.5 years greater than the figure for 2000 and above the regional average.  Nearly 20% of the population is 65 or older. 

USDA’s Office of Agricultural Affairs (OAA) in The Hague hereinafter referred to as “Post” reports that although the Netherlands is a small country geographically, it is the perfect gateway for U.S. products into the EU 27 + U.K.  due to the presence of the Port of Rotterdam, Amsterdam Schiphol Airport, the confluence of two European rivers, and an excellent road and railway infrastructure.  It is the largest importing country within the EU 27 + UK.  The Netherlands also continues to be the second largest exporter of agricultural products in the world, after the U.S. and before Germany.  These exports include agricultural products produced in the Netherlands and imported products that are re-exported after further processing. 

The Netherlands is the largest market for U.S. exports of consumer ready food products in all of Europe and the 8th largest U.S. export market in the world.  U.S. exports of consumer ready food products totaled US$1.2 billion in 2019, an increase of 3% from the previous year.  The Netherlands are the 2nd largest U.S. processed food export market in the EU27 + U.K. and the 9th largest overall, totaling US$931.7 million in 2019 and a 1%  decline from the prior year.  Top processed U.S. food products exported to the Netherlands in 2019 included:

  • Food Preparations
  • Processed Fruit
  • Fats and Oils
  • Processed Vegetables And Pulses
  • Distilled Spirits And Other Alcoholic Beverages
  • Prepared/Preserved Seafood
  • Dog and Cat Food
  • Snack Food
  • Chocolate And Confectionery
  • Beer and Wine

Retail Sector:

Euromonitor reports that the packaged food retail sales value reached US$20.7 billion in 2019.  That represented a growth of 6.1% or over US$1.2 billion since 2015.  They also predict growth of 11.7% by 2024, amounting to nearly US$2.5 billion for a total packaged food value of nearly US$23.8 billion. High growth products in the forecast include:

  • Ready Meals
  • Sauces, dressings condiments
  • Savory snacks
  • Processed Meat and Seafood
  • Ice cream and frozen desserts
  • Processed Fruit and Vegetables
  • Breakfast cereals

Post reports that in 2018, the turnover of the Dutch food retail industry grew by 2% and totaled US$45.9 billion.  There are roughly 4,300 food retail outlets in the Netherlands providing almost 300,000 jobs.  Around 80% of all food retail outlets are full service supermarkets, operating on floor space between 500 and 1,500 square meters located downtown and in residential areas.  Retailers with full service supermarkets have responded to the need of the Dutch to have these supermarkets close to their homes.  The remaining 20% includes mainly convenience stores (near office buildings, city center, motorways and train/metro stations), some wholesalers and just a few superstores (conveniently located in shopping malls and industrial parks).  

The top two food retailer formulas in the Netherlands, Albert Heijn and Jumbo, have a market share of almost 54%.  The market share held by German discounters Aldi and Lidl combined has further increased to almost 18% in 2018.  Independent food retail stores are increasingly leaving the scene due to shrinking margins, growing online sales and on-going consolidation.

Euromonitor reports that despite continued growth in 2019, supermarkets are coming under increasing pressure from discounters, hypermarkets and convenience stores. Margins in supermarkets are very small, and consumers are increasingly price-sensitive. Supermarkets remains the largest grocery retail channel, but is at risk of losing this position in the longer-term, due to the generalist nature of these outlets and their lack of clear USP or strategic direction.

However, it is not only other grocery retail channels which pose a threat to the growth of supermarkets, which also face competition from channels such as variety stores and e-commerce.  Variety stores such as Action sell food and drinks at very low prices, often undercutting supermarkets, whilst increasing numbers of consumers value the convenience of e-commerce.  In addition, there is competition from foodservice. People are eating out more frequently, further hampering growth in sales in supermarkets.

According to Euromonitor overall, there has been a degree of polarization in modern grocery retailers.  The middle segment has come under pressure, as smaller discounters and larger hypermarkets continued to gain share within grocery retailing.  Supermarkets are therefore adapting their strategies to increase their relevance in modern grocery retailing.  For instance, some players are making the shopping experience more convenient by offering self-checkout tills, others are lowering their prices by offering deeper discounts, and others are offering more premium products, such as freshly baked bread.

At the premium end of the spectrum, a number of smaller players have successfully carved out niches for themselves, such as Marqt.  Their success has been built on following the evolving consumption habits of affluent urban professionals, who are willing to pay a substantially higher unit price for everyday groceries in exchange for guarantees of ingredient quality, supply chain transparency or organic manufacturing. Considering that this consumer demographic saw their incomes rise particularly rapidly in recent years, such premium supermarket brands are well-positioned to benefit from changing consumer habits.

Albert Heijn remained unchallenged as the leader in supermarkets in value terms in 2019, thanks to also holding the largest number of outlets, which are spread across the country. The company benefits from strong recognition for its Albert Heijn brand and years of leadership in grocery retailing. The company reversed the decline in its share seen in 2018, partly thanks to the opening of a further two outlets. An important reason for this trend reversal was the company’s efforts to counter the damaging perception which was widespread amongst Dutch consumers that Albert Heijn was expensive.  According to research by Consumentenbond, Albert Heijn is only more expensive than the average by 5%-10%.  This has primarily been achieved by expanding its private label range, in particular through its budget private label range.  In 2018, Albert Heijn started to trial self-scanning checkouts in some of its supermarkets, after its successful experience with this payment model in its convenience stores.

Jumbo Supermarkten is Albert Heijn’s main challenger.  The company achieved rapid growth over the last decade, primarily due to the acquisition of former rivals.  Before the beginning of the review period it took over C1000 and Super de Boer and remodeled their outlets, bringing them under the Jumbo brand.  In 2018, Jumbo Supermarkten, jointly with Superunie member Coop, acquired the Emte supermarket chain from Dutch wholesale group Sligro.  In 2019, Jumbo therefore saw strong growth in its outlet numbers, as these outlets also moved under the Jumbo fascia.  This strongly boosted the company’s value sales, and is expected to continue to have an effect in the forecast period (to 2024).  Through its acquisition of popular foodservice chain La Place in the middle of the review period, the company is now particularly strongly positioned at the interface of foodservice and food retailing.

Best Product Prospects:

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

  • Nuts And Dried Fruits
  • Fruit Juices (Orange And Grapefruit)
  • Alcoholic And Non-Alcoholic Beverages
  • (Super) Fruits Containing High Levels Of Antioxidants
  • Beef
  • Food Preparations
  • Grapes
  • Food Preparations
  • Almonds and Pistachios

Food Service Sector:

Post reports that the turnover of the Dutch foodservice market in 2018 was valued at US$23.7 billion, up by almost 6% from 2017.  While sales in all subcategories were up, sales in the delivery subcategory, especially for hot meals, saw a double-digit growth rate of 13%.  In addition, Dutch consumers want food products that are healthy, authentic and tasty.  Foodservice chains from the U.S. are and continue to be successful on the Dutch market because they have been able to respond to changing consumer needs; more U.S. chains are now opening outlets in the Netherlands.

Unlike the retail sector, the Dutch foodservice industry is fragmented and has many independent players.  This is especially the case for cafés/bars, restaurants, cafeterias and street stalls/kiosks.  The majority of fast food and delivery outlets however are consolidated and often part of an (international) chain.  Well-known examples of international foodservice chains active in the Netherlands include McDonalds, Domino’s Pizza, KFC and Burger King.  Chains from the U.S. are popular in the Netherlands because of their efficiency and consistency but also because the meals are affordable.  They continue to be successful because they have been able to respond to changing consumer demands and now for instance offer vegetarian and healthy food products.  More U.S. chains recently opened outlets in the Netherlands, including Dunkin’ Donuts (coffee and donuts), Five Guys (burgers and fries), Taco Bell (tacos, burritos and quesadillas) and TGI Friday’s (casual dining fast food style).

Post reports that Dutch consumers are increasingly stressed and seem to be rushed.  They are struggling to do many things on a regular weekday such as taking care of the children, doing their job, going to the gym, engaging socially and of course eating.  Consumers are faced with a dilemma: less time for buying food and preparing meals versus a growing awareness of health and nutrition.  As a result, the demand for convenient and healthy food products (albeit at an affordable price) is growing more than ever before.  Demand is also growing for packaged food in smaller portions due to the growing number of people that are watching their weight and the shrinking average household size.  People are increasingly eating alone and/or dining out. International cuisines that are gaining in popularity are cuisines from Israel, Lebanon and Syria.

Consumers’ consciousness about food products is growing.  More than ever, they want to know whether the food they bought was produced in a sustainable way.  They are also interested in fair-trade, locally grown and organic food products.  The market of products that are vegan or have a free-from claim is growing.  Retailers are increasingly dedicating shelf space for these products.  Consumers, often Millennials or Generation Z, are also willing to pay for authenticity.  They want to hear or read about who produced this food product and what the story behind the product is.  This desire for authenticity also applies to foodservice outlets. Restaurant owners that have a story to tell about their restaurant appeal to today’s consumers.

Sales in all subcategories were up in 2018 compared to sales in the previous year.  Sales in the delivery subcategory, especially for hot meals, saw a double digits growth rate of 13%.  There are many new-to market restaurants delivering hot meals, supported by on-line platforms, such as Deliveroo, Foodora and UberEats.  Thuisbezorgd.nl continues to be the largest hot meal delivery company in the Netherlands.  Established fast-food chains from the United States are also active in the Dutch market and are having a huge impact on the hot meal delivery market.  Burger King, KFC and McDonald’s are all relative new entrants for home delivery.  Smaller chains, such as Pizza Hut, Subway and Papa John’s are also getting into home delivery.  New fast-food chains, such as Five Guys will become serious players in the delivery market in the near future.

Foodservice establishments can purchase products in three different ways: directly from U.S. suppliers, from Dutch importers or local wholesalers/distributors. Large fast food chains might be importing some unique specialty ingredients directly from the United States but for the most part, they will depend on local partners. Independent players, like restaurant owners and hotels, prefer to purchase from wholesaler and distributors.  The latter prefer to have products delivered since this will save them time and will ensure products are available when needed. High-end hotel and restaurant players prefer to buy fresh products like bakery, produce, seafood, and meat, wine and dairy products from specialized distributors.  The benefit lies in the possibility to have tailor-made orders and the interpersonal relationship.  Beer and non-alcoholic beverages are generally bought directly from breweries.  For shelf stable grocery products, like spices, nuts, sauces, cooking ingredients and also distilled spirits and cider, hotels and restaurants turn to wholesalers.

Best Product Prospects:

Products that in addition to a competitive price are unique and innovative or not sufficiently available have the best prospects on the Dutch market: Unique and innovative products (taste, packaging, size); Products not sufficiently available in the Dutch market; Products present in the market which have good sales potential include nuts, seafood, fresh produce, sauces and condiments, snack foods, wines and craft beer, food products with special certification, pulses and sweet corn.   

Food-Processing Sector:

 

Post reports that the Dutch food processing sector generates a turnover of US$92.4 billion and production growth is supported by growing demand from mainly Germany and Belgium.  Growing exports are also the main driver behind Dutch imports.  Dutch food companies have been working closely together to ensure their products are safe and competitive and more recently that they are also healthy, nutritious and sustainable in order to meet consumer demand. 

Despite fierce competition from suppliers in other EU 27 + U.K. member states and other countries, Dutch food companies are always on the lookout for food ingredients from the U.S. that might give them a competitive advantage.  There are 6,195 food companies in the Netherlands, employing approximately 140,000 people, or 6% of total employment in the Netherlands.

The Netherlands is a small country geographically in Northwest Europe but some of the largest food processing companies have facilities there.  The Netherlands is the perfect gateway for U.S. food ingredients due to the presence of the Port of Rotterdam, Amsterdam Airport Schiphol, the confluence of two European rivers and an excellent road and railway infrastructure.  The Dutch are champions in transportation and logistics making the Netherlands a global trading hub for food processing.  The Netherlands is the second largest exporter of agricultural products in the world after the United States and before Germany.  In large part, these exports come from the Dutch food processing complex.  Agricultural products produced domestically and imported are re-exported after further processing.

The Dutch food processing industry is performing well.  Since 2014, its turnover grew on average by 3.5% per year.  The industry has been a steady supplier of jobs in the Netherlands.  Last year, around 140,000 people worked for a food company; the majority of the jobs are to be found in the middle of the country.  The number of food companies continues to grow since the beginning of this decade.  According to the Central Bureau of Statistics (CBS) there were 6,180 food companies in the Netherlands last year, up by 1,600 compared to 2010.  The increase is the result of the growing number of small food companies (with less than 10 employees).  This segment grew from 3,265 in 2010 to 4,900 in 2018.

Dutch food companies operate internationally. Dutch exports and imports of food products grow every year. Exports (in value) however, have grown faster than imports and, as a result, the Dutch export surplus of food products continues to get larger. In 2018, it totaled US$32.7 billion, up by 1.2% compared to 2017.  By more than 50%, the main export markets are Germany, Belgium, and France. The other European markets also take about a quarter of Dutch exports.

Increased attention to product reformulation and growing food awareness of more sustainable production procedures (in particular energy efficiency and CO2 reduction) will continue to further shape the Dutch food processing industry in the years to come. Food manufacturers are increasingly experiencing pressure from society to invest in facilitating healthier choices for consumers.  The challenge is to combine healthier nutrition with other consumer needs such as affordability, convenience and taste.

Through innovation and product reformulation, food companies are working on the nutritional impact of food products.  They also work on reducing the salt content, saturated fats, and portion sizes to make it easier for consumers to adhere to a responsible diet.  On the product label, consumers can find information on the composition of the product, presence of allergens, quantity of the product, shelf life and storage conditions. Several Dutch retailers have voiced their support for a voluntary nutrition-labeling scheme.  The most popular option seems to be the Nutri-Score scheme, which retailers in France and Belgium are using, sees Belgium Adopts Nutri-Score for Front of Pack Nutritional Labeling.  This scheme includes a color coded designation from “A” (best nutritional quality) to “E” (poorer nutritional quality).

More and more Dutch food companies are looking at what can be done better in their factories like reducing energy and saving water.  Increasingly they are also spending resources on having a more responsible purchasing policy in place for their raw inputs. As a result, many have switched to more sustainable alternatives for palm oil, soya, meat, fish, coffee or cocoa.  Also, food waste, caused by production failures, planning errors or disapproval of finished products due to a too-short shelf life, has gained more attention over the past few years.

Food companies try to minimize food waste not only from a business point of view but increasingly from an ethical and sustainability point of view.  At the moment the Dutch food industry, food distributors and the Ministry of Agriculture are discussing the use of ‘best before’ label on food products in the context of ‘food waste’.  Many products, which have a ‘best before’ date on the label, are edible after that date, but are still thrown away out of safety concerns.  The Dutch government wants to halve food waste by 2030.

Dutch food processing companies prefer to work with U.S. suppliers because they are professional and deliver food ingredients with a consistent high quality. U.S. companies also have a great variety of products to offer.  There is growing demand for ingredients with a special claim and sustainable production methods.  U.S. farmers have a good story to tell about sustainability and their supply chain.  U.S. suppliers should know that the Netherlands is the most important gateway for U.S. products to the EU 27 + U.K., the buyers and food processing companies are here.

Best Product Prospects:

Post reports that food ingredients present in the market which have good sales potential include:

  • Nuts (Almonds, Peanuts, Pistachios, Walnuts, Hazelnuts and Pecans)
  • Highly Processed Ingredients (Dextrins, Peptones, Enzymes, Lecithins and Protein Concentrates)
  • Fish Fillets (Frozen Fillets Of Alaska Pollack, Cod And Hake)
  • (Fresh And Processed) Fruit and Vegetables (Cranberries, Sweet Potatoes, Grapefruit, Asparagus and Mangoes)
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