Netherlands Country Profile

Market Overview:

According to Euromonitor the Netherlands’ economy will slow in 2017. Netherlands’ real Gross Domestic Product (GDP) will grow by 1.4% in 2017 – down from 2% in 2016. Tax cuts and an increase in fixed investment provide moderate support. The economy also benefits from an improvement in the labor market. Sluggish growth in private final consumption and exports are drags. Deleveraging prevents a stronger recovery in consumption. The consequences of Britain’s exit from the European Union (EU) or “Brexit” are a source of uncertainty. Growth of real GDP will average 1.5% per year in 2018-2020.

The real value of private final consumption rose by 1.4% in 2016 and growth of 1.1% is expected in 2017. Consumption is supported by modest gains in real wages and a cut in income taxes. The Dutch are still consuming about 5% less, on average, than they were almost a decade ago. According to the central bank, house prices remain below their peak in 2008. However, this gap has been reduced over time. House prices will rise by about 3% in 2016. Pent-up demand should drive sales. The economic recovery will be gradual with growth below trend rates. A prolonged dip in natural gas production will be a drag on the economy.

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 Netherlands is the top U.S. market for exports of food and agricultural products among the EU-28 and the 10th largest overall. U.S. exports to the Netherlands increased 11% and were nearly US$2.7 billion in 2016. Of that amount US$1.2 billion were of the consumer oriented variety, 46% of the agricultural total. The Netherlands is the largest market for U.S. exports of consumer ready food products in all of Europe and the 8th largest export market in the world. Netherlands are the 2nd largest U.S. processed food export market in the EU-28 after the U.K. and the 8th largest overall, totaling US$981.2 million in 2016, about the same as 2015 and 37% of the agricultural total. Top processed U.S. food products exported to the Netherlands in 2015 food preparations, fats and oils, non-alcoholic beverages, processed fruit, processed vegetables and pulses, prepared/preserved seafood and distilled spirits and other alcoholic beverages, beer and wine and snack foods. 

Retail Sector:

Euromonitor reports that the packaged food retail sales value reached US$18.9 billion in 2016. That represented a growth of 3.1% or over US$566.5 million since 2012. They also predict growth of 8.9% by 2021, amounting to US$1.7 billion for a total packaged food value of nearly US$20.9 billion. High growth categories in the forecast include baked goods, processed fruit and vegetables, ice cream and frozen desserts, breakfast cereals, rice pasta and noodles, sauces dressings and condiments and savory snacks.

According to Euromonitor the most significant development in grocery retailing in the Netherlands in 2016 was the growing strength of the two leading players, Albert Heijn and Jumbo Supermarkten. Both companies have managed to stave off the challenge posed by competitors through strong outlet expansion. Albert Heijn has added 80 outlets to its already dense network of supermarkets since 2011, while also growing the presence of its popular AH-to-Go convenience store banner in city centers and train stations. Jumbo Supermarkten, meanwhile, completed in 2016 the refurbishment of the last C1000 stores following its acquisition of the chain in 2012. As a result, it nearly doubled its number of outlets over the last five years. Such aggressive outlet expansion started to bear fruit in 2016, enabling both Albert Heijn and Jumbo Supermarkten to gain further share as recently opened stores picked up sales.

Another strategy used by these two players to strengthen their positions involved the progressive blurring of traditional boundaries between grocery retailing and consumer food service, as well as retailing and institutional sales. Besides increasing the range of ready-to-eat meals on offer in its supermarkets, Albert Heijn continued to pursue this strategy primarily through its AH-to-Go convenience stores, which are frequently equipped with self-service checkouts and allow customers to quickly pick up food for on-the-go consumption. In addition, Albert Heijn increased the number of its AH-to-Go stores located in Dutch universities by opening a third outlet at Wageningen University in the second half of 2016. Furthermore, there is an emerging trend of AH-to-Go stores also being used as company restaurants. Examples include stores at the headquarters of Royal Ahold’s subsidiary bol.com and at Amsterdam’s Academisch Medisch Centrum hospital.

Jumbo Supermarkten added a new dimension to its foray into consumer food service through the acquisition of the popular self-service cafeteria chain La Place in early 2016. Traditionally located in V&D department stores, La Place was part of the V&D chain. Following the latter’s bankruptcy at the end of 2015; the independently located outlets of the profitable cafeteria chain were put up for sale and acquired by Jumbo Supermarkten. Thus far, Jumbo Supermarkten has adopted food service elements primarily through its hypermarket format Jumbo Foodmarkten, which besides offering a broad range of food and non-food items features Foodmarkt Cafés, where consumers can enjoy pizza, pasta, sushi, baked fish and pastries. It is too early to tell how exactly Jumbo Supermarkten’s acquisition of La Place will influence its core grocery retailing business (e.g. whether La Place cafeterias will be opened in new Jumbo stores).

Discounters continued to outperform modern grocery retailers in 2016 and supermarkets in particular. Nevertheless, the rate at which discounters are gaining value share from other grocery channels slowed in 2016 in comparison with previous years. Lidl managed to grow its value share slightly to 8% in 2016, and Aldi to 6%. While Aldi was traditionally the stronger chain, in recent years it has been overtaken by its rival. One reason for the better performance of Lidl is that the chain has continued to expand its number of stores, which rose from 356 in 2011 to 407 in 2016. In contrast, the number of Aldi stores in the Netherlands has remained at around 500 over the last five years. Furthermore, Lidl has built a stronger presence than Aldi in larger cities. For instance, in Amsterdam, Lidl currently has around one-and-a-half times as many stores as Aldi.

Hypermarkets was the best performing channel in grocery retailing in 2016, posting current value growth of 4%. This can be attributed to two factors. Firstly, the number of hypermarkets in the Netherlands continued to increase in 2016 thanks to the opening of a second Dekamarkt World of Food store. Furthermore, the two most important chains in the channel, AH XL and Jumbo Foodmarkten, saw strong sales growth in their existing outlets. Overall, however, hypermarkets remained a small channel in modern grocery retailing in the Netherlands, with the country having only 41 hypermarkets compared to nearly 4,500 supermarkets in 2016.

Groceries remained by far the most important product type for both hypermarkets and supermarkets, accounting for around 81% and 95% of their total value sales, respectively. The share of non-grocery sales is slowly increasing as several chains are expanding their non-grocery assortments. For instance, Albert Heijn has been broadening its range of cat and dog food products in an effort to attract customers of pet care specialists. However, the shift from grocery to non-grocery products is being hampered by the fact that various chains have tried to capitalize on current health trends by significantly improving and expanding their fresh food assortments.

Convenience stores continued to produce mixed results, with the channel as a whole registering a 2% current value decline. On the one hand, more traditional convenience store formats like Spar and Troefmarkt have been struggling for years, with outlet numbers dwindling. On the other hand, however, more modern convenience store formats such as AH-to-Go have witnessed healthy sales growth. Located in high-traffic city center locations and public transportation hubs such as major railway stations and airports, AH-to-Go is benefiting from the trend towards greater mobility, with many increasingly consuming while on the go. In addition, AH-to-Go has also been able to benefit from the blurring of traditional boundaries between retailing and consumer food service, with several recent AH-to-Go stores having been opened in locations such as universities and hospitals, where one would have in the past expected a food service establishment.

Best Product Prospects:
Post reports U.S. products with some competitive advantage in this sector include sauces condiments and seasonings, pulses, tree nuts, seafood, snack foods and fresh fruit.

Food Service Sector:

Post reports that the Dutch food service industry is expected to grow annually by over 2% due to a recovering economy and changing consumer eating culture. The growing segments within the food service industry are especially the specialist coffee shops, juice/smoothie bars and food trucks. Young consumers are increasingly looking for new and convenient food solutions. U.S. food product with clean ingredients and healthy food products have the best sales potential on the Dutch market.

Euromonitor reports that the Dutch food service industry is composed of the following six sub-sectors: full-service restaurants, fast food outlets, cafés/bars, self-service cafeterias, 100% home delivery/takeaway and street stalls/kiosks. In 2015, total sales of food product and beverages in the Netherlands were valued at almost US$50 billion. Food retailers were responsible for roughly three quarter of those sales while the food service industry accounted for the remaining quarter, or US$11.9 billion. Restaurants, fast food outlets and cafés/bars were the three largest subsectors. In 2015 their combined sales totaled US$10.5 billion, or almost 90% of total food service sales.

Annual growth rates for full-service restaurants have been stable for the past few years at almost 2%. The same applies to fast food outlets. They demonstrated an annual growth rates between 2%-3%. The growth rate for cafés/bars picked up in 2015, driven by growing sales at specialist coffee shops and juice/smoothie bars. The opposite development happened for self-service cafeterias. After several years of positive growth rates, the turnover in this segment dropped by almost 2%. Chained self-service cafeterias like La Place and HEMA struggled to maintain transaction levels while independent self-service cafeterias saw their number of outlets decline. Although the annual growth rate dropped, last year was another good year for the 100% home delivery/takeaways sub-segment. The growth rate of almost 7% was driven by strong consumer demand for convenience consumption. Young urban consumers who live in single households are an important group. This group finds it convenient to not prepare food themselves while being able to stay at home.  

The future for the Dutch Food service industry looks bright. Annual growth rates are expected to increase from 2% to almost 3% in 2020. There are two main developments that drive this positive outlook. The first one is the positive performance of the Dutch economy. The Dutch eating culture is changing; this trend is driven by the millennials1. The traditional 3 meals-a-day (breakfast, lunch and dinner) is slowly being replaced by five snacking moments. At the same time, eating at home is slowly transitioning to eating while traveling, working or meeting friends. Food choices and eating moments are becoming more tailor-made. These developments will all have a positive effect on consumer spending in food service outlets.

The vast majority of fresh and processed food products destined for the Food service industry fall in the Consumer-Oriented and Fish and Seafood Products category. The Netherlands is the largest market within the EU for these products from the United States. The United States is the 6th largest supplier of Consumer-Oriented Products to the Netherlands and trade continues to grow. The U.S. market share also grew from almost 3% in 2011 to over 4% in 2015. In 2015, the highest export levels since at least 1970 were posted for beef & beef products, processed vegetables, tree nuts and condiments & sauces.

Best Product Prospects:
Post advises products that meet one or more of the following criteria have the best prospect to be sold on the Dutch market: Products (innovative, price, packaging, taste, size) those that are unique to the U.S.; Products those are not sufficiently available in the Benelux market and products that are available during the off season in the Benelux (often fresh products). They add that there are products present in the market which have good sales potential including nuts such as almonds, peanuts, pistachios, walnuts, hazelnuts, pecans; seafood: Alaska pollack, salmon cod, halibut, scallops, lobster, etc.; fresh fruit and vegetables: sweet potatoes, grapefruit, minneola, cranberries, etc.; fruit juice concentrates: orange juice, cranberry, grapefruit; sauces, snacks and condiments; Bourbons and orange bitter and California wines.

Food-Processing Sector:

Post reports the Dutch food processing industry depends on a steady supply from primary producers on the one hand and on food distributors such as food retail and wholesalers on the other. Products used in the food processing industry range from low-value bulk commodities to high-value, highly specialized food ingredients. There are over 5,695 food processing companies ranging from large multinationals to a few small & medium sized companies. Approximately 135,000 people are employed in the food processing industry. Last year, the industry generated a turnover of over US$69.8 billion. Meat, dairy and fresh produce each comprise 25% of the market. The other subsectors contribute the remaining quarter of the turnover. The majority of the food processing companies are located close to the main port cities of Rotterdam and Amsterdam or in places close to the German consumer market of North Rhine-Westphalia (with almost 20 million consumers).

EU-28 imports of U.S. agricultural and fish products totaled $14.5 billion in 2016. One fifth (almost $2.9 billion) was imported by Dutch traders. It shows the importance of the Netherlands within the EU – U.S. trade in agricultural products. The Netherlands is a small country geographically but the EU traders and food processors are here. Due to its large and sophisticated processing industries, the Netherlands increasingly depends on stable supplies of food ingredients from other EU member states and third countries, like the U.S. Expertise, infrastructure, commerce and logistics are all advanced in the Netherlands.

Food processors are increasingly focused on sourcing ingredients and developing products that are sustainable and contribute to a healthier diet as these are major concerns for consumers. Food processors are working in various fields together with the government, food distributors, Non-Government Organizations (NGOs) and farmers to make supply chains more sustainable. The supply chain starts with sourcing raw materials and that is why increasingly companies switch to sustainably produced palm oil, soy products, fish, fresh produce, coffee and cocoa. Sustainable food has become the most important growth markets. The turnover of sustainable food in 2015 totaled €3.0 billion (US$3.2 billion), up by 12% while the market share grew last year from 7% to 8%. Food processing companies are producing products that contain less salt, sugar and fat and smaller portion sizes. In addition to healthy and sustainable food products, consumers continue to buy products that are convenient, tasty and above all affordable.

The Dutch food processing industry is well developed and has access to any food ingredient imaginable. In order to be successful in the market, the U.S. food ingredient must have a competitive advantage on for instance price, quality, quantity, variety, size, (seasonal) availability, packaging, special certification (organic, sustainable), etc. Such products have good potential to fare well in the Netherlands although still facing competition from other (third country) suppliers.

Best Product Prospects:
When meeting EU and Dutch standards, the following products have good sales potential: 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). Food ingredients not present in significant quantities, but which have good sales potential Ingredients for the natural and healthy foods industry bakery products, dairy products (whey, milk powder), millet, spelt and meslin and pulses. 

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