FOOD & DRINK → Finished Goods
KEY MARKET FIGURES
The French market represents 13.2% of the European food market, a potential 164 billion euros, which is broken down as follows :
- Food: €136 bn
- Alcoholic Drinks: €18 bn
- Non-Alcoholic Drinks: €10 bn
Although the French food industry is ranked third in the European Union, and fourth worldwide after the Netherlands, Germany and the United States, in 2009 France imported nearly 30 billion euros of food products, the equivalent of 18% of annual consumption.
The average food expenditure in the European Union is 12.5% of the total household budget, whereas France stands out with an expenditure of 13.6% on food.
MARKET DISTRIBUTION BY PROCESS
- Dehydrated 1%
- Canned 4%
- Frozen 5%
- Ambient Food 14%
- Drinks 19%
- Refrigerated 24%
- Fresh 33%
MARKET DISTRIBUTION BY PRODUCT (in Billions of Euros)
- Sugar 1
- Eggs 2
- Fats 4
- Non-Alcoholic Drinks 6
- Other Products 9
- Fish Products 12
- Starches 13
- Alcoholic Drinks 15
- Confectionery 17
- Dairy Products 21
- Fruit and Vegetables 25
- Meat 38
CONSUMER CONCERNS
Today, French people are embracing new dietary habits. They place increasing importance on the nutritional quality of their food, the impact of the industry on the environment, animal well-being and convenience of use, to make their daily lives easier.
The market must therefore respond to these concerns, by offering innovative products focusing on the following trends :
- HEALTH & BALANCE
- SPEED & EASE OF USE
- TRACEABILITY & ETHICS
- QUALITY & VALUE FOR MONEY
HEALTH & BALANCE
The importance of a balanced diet has become a significant factor in the food choices, especially since the 1980s.
French consumers are eating more and more healthily, i.e. less meat (12kg less than in 1995) and less alcohol (24 litres less since 1998), in favour of fruit and vegetables (an increase of 60kg between 1995 and 2008) and mineral water (average consumption in 2008: 151 litres per year / person). They are increasingly interested in health products such as cheese, yogurts and other dairy products enriched in Omega-3 ect.
Sugar consumption per person has fallen by 3.1% per year since 1971.
French people are the largest consumers of fish and shellfish in Europe. In 2009, this market represented a value of 12 billion euros, i.e. 7.4% of home consumption.
SPEED & EASE OF USE
Our modern diet is influenced by new trends. Increased work pressure leaves little time for meal preparation, which explains the popularity of fast food, ready meals and takeaways.
French consumers are increasingly eating outside the home and “on the go”. In 1958, 5% of meals were taken outside the home, compared to 17% fifty years later. On average, one meal in seven is eaten outside the home (compared to 1/6 in Spain, 1/4 in Italy and 1/3 in the UK), on average 150 meals / year / French person.
The French also want to eat faster. They devote less and less time to eating (1.5 hours in 1975 compared to 30 minutes in 2008) and are careful about their budgets.
French consumers have a more urban, busy lifestyle, and so are increasingly abandoning traditional cooking methods in favour of frozen or ready to use products, which are quick and easy for anyone to prepare.
Several factors have contributed to the reduction in meal preparation time and the use of ready-made products: more women are in employment, journeys to work have got longer, people spend more time on leisure activities, and purchasing power has increased.
Consumption per inhabitant of convenience foods increased on average by 5.5% per year from 1960 to 1980, then from 5% per year between 1980 and 2001.
Fifteen years ago, in Western Europe, it took an average of one hour to prepare a meal, whereas nowadays it takes 30 minutes.
TRACEABILITY AND ETHICS
Consumers are better informed and more demanding.
Concerned by past food safety scares, French consumers are more and more interested in the origin of the products they buy, generating an increasing demand for certification and labelling. They want to know the origin of the ingredients and the product composition, and this information must be simple and easy to access.
Since 2009, French consumers have also begun to pay more attention to animal well-being and environmental concerns.
At the same time, as a reaction to general consumerism, a new, more committed and more responsible type of behaviour has emerged, turning some ordinary consumers into consumer activists. These are new-generation consumers, more considered and more engaged, who use their purchasing power to support their beliefs and to generate a positive impact on the world they live in.
At present, this is still a niche area, reserved for the better-off, better educated and “greener” socio-economic groups, doubtless because they have the financial and/or intellectual means to be able to choose this type of behaviour. However, this attitude will not necessarily be restricted to these groups in the long term. Ethical, eco-friendly production methods add significant value to a product, as do promises of health and nutritional quality, which are incentives for choosing a food product that is more expensive than competitor brands.
QUALITY & VALUE FOR MONEY
In the current economic crisis, price is the factor to which consumers pay most attention when making a purchase, ahead of health and nutritional information (78% of mentions according to consumer statistics).
In fact, consumers are much more attentive to prices in the food sector (57% of mentions) than they are to other main household expenses, such as fuel and energy. Food is an ordinary expense and a basic necessity, and also, after energy, petrol and leisure, the last area in which consumers plan to reduce their budgets.
The relative importance of price is inversely proportional to the level of household income. However, although there are significant differences between the best-off households (67% of mentions) and households on modest incomes (94% of mentions, +27 points), it is still the first criteria chosen.
More than two in three consumers say they would choose to pay more for a regional product (71% of mentions), an eco-friendly product (66% of mentions), a 100% French product (64% of mentions) or a product made by a company that treats its employees well (63% of mentions). A little over one in two consumers state that they would choose a more expensive product, if it was fair trade (61% of mentions) or if the manufacturer supported a humanitarian cause (54%, 8% overall).
More than two in three consumers say they would choose to pay more for a product with a quality label (68% of mentions), a product with a premium food safety guarantee (68% of mentions) and a product containing very high quality ingredients (68% of mentions).
KEY MARKETS IN FRANCE
OUT OF HOME CATERING AND SNACKING
The French Out of Home Catering market (OOH: 82.7 billion euros in 2010) has increased by 2.62% per year. Breakdown of the OOH catering market :
- Mass catering (40% of meals)
- Commercial catering (43% of meals)
Led by profound changes in society and dietary behaviour, the reduction in the amount of time spent on lunch by French people (from 1 hour 22 minutes to less than 30 minutes in 20 years) has led to new demands in this market, with fast food, food on the go, takeaways and snacks being the key drivers.
The snacks segment, which has increased by 13% every year, is THE most dynamic emerging market. It represents 23.5 billion euros, divided between 240,000 establishments (40% savoury snacks, 23% sandwiches, 16% sweet snacks).
One meal in two taken outside the home costs less than 10 euros, and 45% of volume in the “super-cheap” segment (less than €10) comes from takeaways.
The automatic vending machine market is in full growth, which is proof of this change in habits. Quick to buy and quick to eat. This is a typical equation in modern society, which explains the 10% or so of growth per year in this market. In the beginning, these machines only dispensed coffee, but they now sell drinks, sweets, ice creams, savoury snacks, dairy products and even reheatable ready meals.
However, although French consumers want to eat more quickly, they also want to eat healthily and enjoy their food!
There are three key success factors in this market: Health, Taste/Quality and Innovation (lunch box, soups, smoothies etc.).
CONVENIENCE FOODS MARKET (FROZEN, FRESH AND CANNED)
The supply and demand for "ready-to-eat" products has grown significantly, boosted by the popularity of microwave ovens in homes and at work, and by an improvement in conservation techniques.
French people do not only eat outside the home more frequently, but they also prefer to buy increasingly ready-made, ready to be eaten products. For 50 years, the consumption of processed food products has in part been replaced by fresh products, which require more preparation. Consumers are under increasing pressures to balance their work and family life, and so turn to convenience foods (frozen, fresh or canned) to replace the traditional daily hot meal. Nearly one hot meal per week has been replaced by a convenience food. In general, in France, there is a marked preference for processed products containing meat.
The share of expenditure in the household budget on food consumed at home has fallen by half, from 25% in the 1960s to 12% in the early years of the 21st century.
- 50% is spent on food that can be eaten between meals such as cheese, dessert, fruit, bread etc.
- 50% represents food used to form part of a meal, such as a starter or main dish.
Development of convenient deli meat products
According to a survey carried out in 1998, 97% of consumers like the convenience and ease of use of deli meat products.
Food manufacturers have ridden this trend by developing easy-to-use packaging (resealable packaging for ham, patés, terrines and rillettes, self-service deli counters with meat on trays at controlled temperatures, easy opening). The new deli meat products on offer therefore place more emphasis on convenience and ease of use with, for example, ready-sliced products or meat on trays that can be put in the microwave.
Popularity of frozen foods
The frozen products market has increased by 17% in 10 years. This increase is almost universal ? in 1998, 95% of French people had eaten frozen foods, each person consuming on average 30kg per year. Frozen foods are mostly used by families. Frozen foods keep their taste and their nutritional qualities, and are practical, easy to prepare and varied, both in their recipes and their packaging, so they fit in well with new dietary behaviours.
Innovation is one of the key drivers in this sector, given that two years ago, nearly one product in five did not exist. Compared to other countries, the French market is far from being saturated and the potential for development is significant, particularly in the ready meal segment, which increased substantially in 1998.
The most popular frozen products are: fillets of fish (easy to cook and can be used in a wide variety of meals), pizzas (together with ice cream, the pizza segment is the other major player in the frozen sector), then quiches, tarts and desserts. The ice cream penetration level is impressive: 90% of French households eat ice cream, sorbets and frozen desserts. In summary, frozen foods in general and ice cream in particular have acquired the status of everyday foods.
- 22 kilos per second: the quantity of ready meals purchased in France. Over one year, this is equivalent to 700 million kilos, with a turnover of 3.3 billion euros, an increase of 24% between 2004 and 2007.
- According to a survey by INPES (the French institute for health education and prevention) published in April 2010, the proportion of people who said they ate a ready meal at least once a week had increased significantly, from 32.2% in 2002 to 47.3% in 2008.
- Senior citizens are the largest consumers of convenience foods in Europe, with the French in the lead. This information comes from a report carried out in 2005 by the Anglo-American market research company Datamonitor. The over-55s represent over a quarter of turnover in the convenience foods market in Europe, rising to 40% when the 45-54 age group is included. The 25-34 and 35-44 age groups represent 19% and 22% respectively.
- 70% of sales in the convenience foods market comes from mass retail. In 2005, the canned or tinned foods sector made an estimated turnover of 880 million euros for 405,600 tonnes. The fresh deli products market represents 632,500 tonnes, including 108, 000 tonnes for out of home catering, with a turnover of 2.9 billion euros. Frozen convenience foods represents a market, all distribution channels combined, and for at home consumption only, of 223,000 tonnes in volume.
FOOD INTOLERANCE AND FOOD ALLERGIES PRODUCTS MARKET
This market includes diabetic foods, gluten-free foods and lactose-free foods. Diabetic foods have the most impressive sales, with growth of 12.3% between 2008 and 2009.
Although they only represent a small part of the health and well-being foods market, gluten-free foods, such as gluten-free bread and pasta products, plus jams and spreads for diabetics, should continue to show a compound annual growth rate (CAGR) of over 10% from 2009 to 2014. In addition, sales of foods for people suffering from dietary intolerances exceeded sports nutrition products by over 11 million euros in 2009.
In total, the market for food intolerance and allergies products is currently worth between 15 and 20 million euros (2010) and has experienced two-figure annual growth, a sign of great potential.
After all, in Italy and the UK this market has a turnover of over 100 million euros.
The “gluten-free” products segment acts as a driver in this market, with an exponential growth in the number of products available in France since 2008-2009.
Sales from supermarket retail, currently one of the main distribution networks, should be around 50 million euros in 2012, according to the indicators, an increase of 50% on 2009, led by dairy-free milk and gluten-free products in particular, sales of which should more than triple between 2009 and 2012.
N.B.: The product ranges must be able to adapt to the everyday need for a balanced, easy, quick and convenient, yet tasty diet, regardless of age, tastes and lifestyle.
HORIZONTAL SUCCESS DRIVERS
ORGANIC PRODUCTS MARKET
Consumers of organic products want to eat healthily, protect the environment, and enjoy products with an authentic taste, which has significantly boosted growth in this sector.
Sales of organically labelled food and drink increased at a relatively high rate of 38% between 2005 and 2009, and should continue to grow by 55.2% from 2009 to 2014. The total market value of organic foods exploded by around 61% from 2005 to 2009, and according to forecasts will increase by 62% from 2009 to 2014.
- 40% of consumers buy organic products at least once a month
- 23% of consumers buy organic products at least once a week
- 7% of consumers buy organic products every day
Although it only represents 17% of the total French foods market, the organic foods market has shown itself to be more robust in the face of the recession. Unlike the UK and Spain, where household expenses have been curtailed, sales of expensive organic products have increased in France.
The organic products segment is increasing in importance, with growth of 8% in 2009, in particular for categories such as dairy products, soups, sauces and condiments.
The official statistics show that sales of organic products nearly doubled in France between 2005 and 2009, to reach nearly 3 billion euros in the same year, 27% of the European market.
The growth forecast for the organic segment of 8% by 2012, and the still inadequate level of domestic supply, has led French retailers to import more and more organic fruit and vegetables, making it one of the key sectors in the French market.
HALAL PRODUCTS MARKET
Led by the new popularity of “traditional" products, the HALAL market was worth nearly 432 billion euros worldwide, and 5.5 billion euros in France in 2010, of which 1 billion euros came from catering (survey published by SOLIS).
With nearly 5 million practising Muslims, France has seen an astounding increase in this market since 2009, with annual growth of 10%, particularly for meat products, but also in new categories such as confectionery and baby foods.
There are a potential 17 million Muslim consumers in Europe. The only international Halal trade fair in Europe has been held in Paris for the last nine years, which due to its geographical location makes it an ideal springboard for entering this high-growth market.
Sources:
ANIA, INSEE, CREDOC, Greater Lyon Prospective Mission and Urban Development Strategy, "Mescoursespourmaplanète.com" site created by Graines de Changement.
