Voluntary Report - public distribution

**Date:** 10/8/2003

**GAIN Report Number:** E23189

E23189

**European Union**

**Market Development Reports**

**The EU Food and Drink Industry in Figures**

**2003**

**Approved by:**

![](media/image1.wmf)Christine Strossman

#### U.S. Mission to the European Union, Brussels

**Prepared by:**

Hilde Brans

**Report Highlights:**

In 2001, the food and drink industry reaffirmed its position as the
leading European industrial sector, accounting for 13 percent of the
total production value in the manufacturing sector. With a production
value of 628 billion euros and an added value of 145 billion euros, it
still ranks ahead of the car, chemical, machinery and equipment
industries. The food and drink sector is the third largest employer in
the EU.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E2\]

# THE EU FOOD AND DRINK INDUSTRY IN FIGURES

# INTRO

The structural data for 2001 show that the EU food & drink industry has
been less affected by the economic downturn, worsened by the September
11 events, than other industries. Despite the sector's own structural
problems -- a saturated market in terms of volume and food safety scares
-- the turnover of EU companies has slightly increased to 628 billion
Euros. Total exports of EU food products amounted to 45 billion Euros.

# STRUCTURE AND EMPLOYMENT

In 2001, the food and drink industry reaffirmed its position as the
leading European industrial sector, accounting for 13% of the total
production value in the manufacturing sector. With a production value of
628 billion Euros and an added value of 145 billion Euros, it still
ranks ahead of the automobile, chemical, machinery and equipment
industries. The food and drink industry is very diversified with sectors
covering both first-stage as well as second-stage processing. It
transforms more than 70% of the agricultural raw materials produced in
the EU.

With nearly 2.8 million employees and 29,000 companies, the food and
drink sector is the third largest employer in the EU. It is extremely
diversified, both from the point of view of the final products and the
types of activities and structures. The figures in the table below only
give a partial view of the sector. Exact figures are difficult to obtain
due to differences in the member states' data collection systems. The
latest EU data relate to structures of over 20 employees. However, the
food and drink industry is characterized by a high proportion of small
and medium-sized enterprises (SMEs) with less than 250 employees. In
1999, 99.3% of the total companies were SMEs. Eight out of ten companies
have less than 10 employees. SMEs generate almost half of the production
and added value of the sector. About two thirds of employees in the food
and drink sector, work for an SME.

+-------------------+-------------+-----------+-----------+-----------+
| **EU-15 FOOD AND  |             |           |           |           |
| DRINK SECTOR:     |             |           |           |           |
| STRUCTURE /       |             |           |           |           |
| PRODUCTION BY     |             |           |           |           |
| COUNTRY - 2001    |             |           |           |           |
| Estimates**       |             |           |           |           |
+-------------------+-------------+-----------+-----------+-----------+
|                   | *           | **Added   | **Em      | **No. of  |
|                   | *Production | Value**   | ployees** | Co        |
|                   | (Current    |           |           | mpanies** |
|                   | Prices -    | *         | **(x      |           |
|                   | Billion     | *(Billion | 1000)**   |           |
|                   | Euros)**    | Euros)**  |           |           |
+-------------------+-------------+-----------+-----------+-----------+
| Belgium           | 24          | 5         | 62        | 723       |
+-------------------+-------------+-----------+-----------+-----------+
| Denmark           | 17          | 4         | 87        | 450       |
+-------------------+-------------+-----------+-----------+-----------+
| Germany           | 110         | 27        | 597       | 6,035     |
+-------------------+-------------+-----------+-----------+-----------+
| Greece            | 5           | 1         | 43        | 1,036     |
+-------------------+-------------+-----------+-----------+-----------+
| Spain             | 67          | 14        | 371       | 3,040     |
+-------------------+-------------+-----------+-----------+-----------+
| France            | 115         | 21        | 392       | 3,604     |
+-------------------+-------------+-----------+-----------+-----------+
| Ireland           | 15          | 4         | 47        | 687       |
+-------------------+-------------+-----------+-----------+-----------+
| Italy             | 93          | 24        | 268       | 6,800     |
+-------------------+-------------+-----------+-----------+-----------+
| Luxembourg        | 1           | 0         | 4         | 226       |
+-------------------+-------------+-----------+-----------+-----------+
| Netherlands       | 39          | 6         | 147       | 855       |
+-------------------+-------------+-----------+-----------+-----------+
| Austria           | 11          | 2         | 79        | 1,264     |
+-------------------+-------------+-----------+-----------+-----------+
| Portugal          | 10          | 2         | 104       | 1,916     |
+-------------------+-------------+-----------+-----------+-----------+
| Sweden            | 13          | 3         | 53        | 344       |
+-------------------+-------------+-----------+-----------+-----------+
| Finland           | 8           | 2         | 34        | 336       |
+-------------------+-------------+-----------+-----------+-----------+
| U.K.              | 98          | 30        | 506       | 2,319     |
+-------------------+-------------+-----------+-----------+-----------+
| **EU-15**         | **628**     | **145**   | **2,796** | *         |
|                   |             |           |           | *29,635** |
+-------------------+-------------+-----------+-----------+-----------+

Source: Eurostat

+---------------------------+-----------+----------+--------+--------+
| ###### EU FOOD            |           |          |        |        |
|  & DRINK COMPANIES - 1999 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
|                           | **P       | **Value  | **No.  | **No.  |
|                           | roduction | added at | of     | of     |
|                           | (%)**     | factor   | compa  | emplo  |
|                           |           | cost     | nies** | yees** |
|                           |           | (%)**    |        |        |
+---------------------------+-----------+----------+--------+--------+
| Micro companies 1-9       | 7.7       | 9.9      | 80.5   | 19.2   |
| employees                 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Small companies 10-19     | 6.1       | 6.4      | 10.9   | 10.6   |
| employees                 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Small companies 20-49     | 10.5      | 9.5      | 5.0    | 11.0   |
| employees                 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Middle-sized companies    | 9.6       | 8.2      | 1.7    | 8.5    |
| 50-99 employees           |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Middle-sized companies    | 17.2      | 14.4     | 1.2    | 13.1   |
| 100-200 employees         |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Large companies 250-499   | 14.7      | 14.0     | 0.4    | 10.6   |
| employees                 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Large companies 500-999   | 11.2      | 11.1     | 0.2    | 10.1   |
| employees                 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+
| Large companies \> 1000   | 23        | 26.6     | 0.1    | 16.9   |
| employees                 |           |          |        |        |
+---------------------------+-----------+----------+--------+--------+

Source: Eurostat

Among the different sectors in the food and drink industry, the meat
processing, dairy and beverage sectors account for half of the total
food production value. The category "other products" dominated by the
bakery, pastry and confectionary industries also make up a significant
part of the EU's food production.

  ------------- ---------------- --------- ----------- --------- --------------- ---------
  **EU 15 -                                                                      
  STRUCTURE /                                                                    
  PRODUCTION BY                                                                  
  SECTOR --                                                                      
  2001                                                                           
  Estimates**                                                                    

                **Production**             **Added               **Employees**   
                                           Value**                               

  **Sector**    **Billion        **%**     **Billion   **%**     **x 1000**      **%**
                Euros**                    Euros**                               

  Meat products 126              20.1      23          15.9      624             22.3

  Fish products 15               2.4       2           1.4       93              3.3

  Processed     36               5.8       9           6.2       168             6.0
  fruit &                                                                        
  vegetables                                                                     

  Oils & fats   25               4.0       3           2.1       48              1.7

  Dairy         96               15.3      16          11.0      274             9.8
  products                                                                       

  Flour &       27               4.3       6           4.1       78              2.8
  starch                                                                         
  products                                                                       

  Animal feed   40               6.4       6           4.1       98              3.5

  Other food    163              26.0      48          33.1      1,078           38.6
  products                                                                       

  Beverages     98               15.7      32          22.1      335             12.0

  **Total**     **626**          **100**   **145**     **100**   **2,796**       **100**
  ------------- ---------------- --------- ----------- --------- --------------- ---------

#  Source: Eurostat

# ACCESSION COUNTRIES

On May 1, 2004, eight countries from Central and Eastern Europe (CEECs)
as well as Malta and Cyprus, will join the European Union. Around 10,000
companies are active in the CEECs, employing almost one million people.
Products with higher added value are expected to develop more rapidly
than more traditional sectors. In each of the CEECs, the food and drink
industry, representing 15% of industrial jobs (12% in the EU), plays a
key role in the national economy. The share of household consumption
devoted to food (an average of 22%) is largely above the one registered
in the EU-15 (13%).

+----------------+-----------------+-----------------+-----------------+
| **ACCESSION    |                 |                 |                 |
| COUNTRIES --   |                 |                 |                 |
| PRODUCTION /   |                 |                 |                 |
| STRUCTURE**    |                 |                 |                 |
|                |                 |                 |                 |
| **2001         |                 |                 |                 |
| Estimates**    |                 |                 |                 |
+----------------+-----------------+-----------------+-----------------+
| ## Countr      | **Production**  | **Employees**   | **No. of        |
| y {#country-1} |                 |                 | companies**     |
|                | **(Billion      | **(x 1000)**    |                 |
|                | Euros)**        |                 |                 |
+----------------+-----------------+-----------------+-----------------+
| Estonia        | 0.62            | 21              | 120             |
+----------------+-----------------+-----------------+-----------------+
| Hungary        | 7.20            | 119             | 3,195           |
+----------------+-----------------+-----------------+-----------------+
| Latvia         | 0.75            | 27              | 225             |
+----------------+-----------------+-----------------+-----------------+
| Poland         | 21.10           | 346             | 2,939           |
+----------------+-----------------+-----------------+-----------------+
| Czech Republic | 7.30            | 117             | 1,023           |
+----------------+-----------------+-----------------+-----------------+
| Slovakia       | 2.44            | 46              | 346             |
+----------------+-----------------+-----------------+-----------------+
| Slovenia       | 1.84            | 18              | 97              |
+----------------+-----------------+-----------------+-----------------+
| Lithuania      | 1.34            | 44              | 467             |
+----------------+-----------------+-----------------+-----------------+

Source: CEEC Federations

+------------+----------+-------+----------+------+---------+--------+
| *          |          |       |          |      |         |        |
| *ACCESSION |          |       |          |      |         |        |
| C          |          |       |          |      |         |        |
| OUNTRIES - |          |       |          |      |         |        |
| STRUCTURE  |          |       |          |      |         |        |
| /          |          |       |          |      |         |        |
| PRODUCTION |          |       |          |      |         |        |
| BY         |          |       |          |      |         |        |
| SECTOR**   |          |       |          |      |         |        |
|            |          |       |          |      |         |        |
| **2001     |          |       |          |      |         |        |
| E          |          |       |          |      |         |        |
| stimates** |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
|            | **Prod   |       | **Added  |      | **Empl  |        |
|            | uction** |       | Value**  |      | oyees** |        |
+------------+----------+-------+----------+------+---------+--------+
| **Sector** | *        | **%** | *        | *    | **x     | **%**  |
|            | *Billion |       | *Billion | *%** | 1000**  |        |
|            | Euros**  |       | Euros**  |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Meat       | 126      | 20.1  | 23       | 15.9 | 624     | 22.3   |
| products   |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Fish       | 15       | 2.4   | 2        | 1.4  | 93      | 3.3    |
| products   |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Processed  | 36       | 5.8   | 9        | 6.2  | 168     | 6.0    |
| fruit &    |          |       |          |      |         |        |
| vegetables |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Oils &     | 25       | 4     | 3        | 2.1  | 48      | 1.7    |
| fats       |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Dairy      | 96       | 15.3  | 16       | 11   | 274     | 9.8    |
| products   |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Flour &    | 27       | 4.3   | 6        | 4.1  | 78      | 2.8    |
| starch     |          |       |          |      |         |        |
| products   |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Animal     | 40       | 6.4   | 6        | 4.1  | 98      | 3.5    |
| feed       |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Other food | 163      | 26    | 48       | 33.1 | 1,078   | 38.6   |
| products   |          |       |          |      |         |        |
+------------+----------+-------+----------+------+---------+--------+
| Beverages  | 98       | 15.7  | 32       | 22.1 | 335     | 12     |
+------------+----------+-------+----------+------+---------+--------+
| **Total**  | **626**  | **    | **145**  | **1  | **      | *      |
|            |          | 100** |          | 00** | 2,796** | *100** |
+------------+----------+-------+----------+------+---------+--------+

Source: Eurostat

#  

# TOP EU FOOD MANUFACTURERS 

Top EU food manufacturers, ranked by turnover in 2001

+-------------+-----------+---------+-----------------------+---------+
| # M         | # Co      | #       | # Sector              | # T     |
| anufacturer | untry {#c | Sales ( |                       | otal em |
|             | ountry-2} | billion |                       | ployees |
|             |           |  Euros) |                       |         |
|             |           |         |                       | **(X    |
|             |           |         |                       | 1000)** |
+-------------+-----------+---------+-----------------------+---------+
| # Unilever  | # Netherl | # 32.1  | # Dairy, beverages,   | # 279   |
|             | ands / UK |         |  dressings, frozen fo |         |
|             |           |         | ods, cooking products |         |
+-------------+-----------+---------+-----------------------+---------+
| # Diageo    | # UK      | # 19.0  | # Alcoholic beve      | # 72    |
|             |           |         | rages, dough products |         |
+-------------+-----------+---------+-----------------------+---------+
| # Danone    | # France  | # 14.5  | # Dairy, beverages,   | # 101   |
|             |           |         |  biscuits and cereals |         |
+-------------+-----------+---------+-----------------------+---------+
| # Cadbur    | # UK      | # 8.9   | # Bev                 | # 38    |
| y Schweppes |           |         | erages, confectionery |         |
+-------------+-----------+---------+-----------------------+---------+
| # Heineken  | # Ne      | # 8.1   | # Alcoholic beverages | # 38    |
|             | therlands |         |                       |         |
+-------------+-----------+---------+-----------------------+---------+
| # Parmalat  | # Italy   | # 7.8   | # Dairy, gourmet      | # NA    |
|             |           |         | , biscuits, beverages |         |
+-------------+-----------+---------+-----------------------+---------+
| # Interbrew | # Belgium | # 7.3   | # Alcoholic beverages | # 38    |
+-------------+-----------+---------+-----------------------+---------+
| # As        | # UK      | # 7.1   | # Sug                 | # 34    |
| sociated Br |           |         | ar, starches, baking  |         |
| itish Foods |           |         | products, meat, dairy |         |
+-------------+-----------+---------+-----------------------+---------+
| #           | # UK      | # 6.4   | #                     | # 9     |
| Tate & Lyle |           |         |  Sweeteners, starches |         |
+-------------+-----------+---------+-----------------------+---------+
| # Lactalis  | # France  | # 5.5   | # Dairy               | # 16    |
+-------------+-----------+---------+-----------------------+---------+
| #           | # Denmark | # 5.0   | # Dairy               | # 18    |
|  Arla Foods |           |         |                       |         |
+-------------+-----------+---------+-----------------------+---------+
| # Sudzucker | # Germany | # 4.8   | # Sugar               | # 24    |
+-------------+-----------+---------+-----------------------+---------+
| # A         | # UK      | # 4.6   | # Alcoholic beverages | # 24    |
| llied Domeq |           |         |                       |         |
+-------------+-----------+---------+-----------------------+---------+
| # Carlsberg | # Denmark | # 4.6   | # Alcoholic beverages | # 27    |
+-------------+-----------+---------+-----------------------+---------+
| # Scottish  | # UK      | # 4.4   | # Alcoholic beverages | # 63    |
| & Newcastle |           |         |                       |         |
+-------------+-----------+---------+-----------------------+---------+

#  Source: CIAA -- the sales figures of the companies listed refer to their world sales

# 

# CONSUMPTION

The evolution in consumer demands is linked to the change in social
values, lifestyles, demographic trends and new consumption patterns.
Demand for finished products such as snacks and health foods, is
increasing to the detriment of unprocessed products. Food and drink
products may be split into two groups: necessity purchases (high price
competition) and luxury purchases (premium prices for branded labels).
The increasing number of working mothers resulted in the growth of
easy-to-prepare foods, convenience foods, microwave and frozen foods.
The most significant trend in consumer demand is to combine pleasure,
well-being and health. The need for freedom and mobility encourages
industrialists to develop "nomadic" products, which can be used at any
time in any place. Increased travel, exotic holiday destinations and
popular TV cookery programs have led to the marketing of new ethnic
foods. Increased consumption of fortified, health and dietary foods
reflect the consumers' believe that these foods can prevent disease and
help them stay healthy.

Food and drink items used to account for the biggest share of household
expenditure but have gradually been overtaken by "housing" and
"transport and communication" in most member states. There are still
significant differences in the regional trends of consumption of certain
food and drink items. These differences are usually linked to the
availability of certain products on the local market. For example, the
highest volumes of fish and seafood are consumed in Portugal and Greece
while the highest per capita consumption of meat is in Austria, a
land-locked country. However, the increased consumer awareness of
foreign foods and drinks coupled with improved distribution, have led to
a convergence in consumption patterns. The strategy of food and drink
companies has focused on the consolidation of market share and wider
geographic implantation.

Food and non-alcoholic beverages, at current prices, percentage of total
household consumption expenditure:

  -------------- -------------- -------------- -------------- --------------
  **Country**    **1998**       **1999**       **2000**       **2001**

  Belgium        13.8           13.1           13.0           not available

  Denmark        13.1           12.8           12.8           12.9

  Germany        12.1           11.9           11.9           12.3

  Greece         17.0           16.8           16.9           not available

  Spain          15.8           15.2           15.2           not available

  France         14.7           14.3           14.2           14.4

  Ireland        12.7           11.5           10.9           10.7

  Italy          15.3           14.7           14.4           14.4

  Netherlands    12.1           11.6           not available  not available

  Austria        13.1           12.9           12.7           12.6

  Portugal       19.0           18.7           18.5           not available

  Finland        13.3           13.0           12.7           12.8

  Sweden         12.9           12.6           12.5           12.8

  U.K.           10.3           10.0           9.7            9.7
  -------------- -------------- -------------- -------------- --------------

Source: Eurostat

Structure of expenditure, percentage of total household expenditure:

  --------------- ------- -------- -------- -------- ------- -------- -------- --------- -------- ------- ------- --------- --------
                  **B**   **DK**   **GR**   **SP**   **F**   **IR**   **IT**   **LUX**   **NL**   **A**   **P**   **FIN**   **UK**

  Bread & Cereals 2.4     2.2      2.0      2.8      2.8     2.4      3.3      1.6       1.8      2.2     3.2     2.4       2.0

  Meat            3.6     2.8      4.0      5.1      4.5     3.8      4.7      2.7       2.2      2.9     6.2     2.7       2.4

  Fish & Seafood  0.8     0.6      1.3      2.4      1.0     0.4      1.6      0.5       0.3      0.3     3.2     0.5       0.4

  Dairy           1.6     1.9      2.5      2.5      2.2     2.0      2.8      1.3       1.6      1.8     2.5     2.5       1.3

  Oils & Fats     0.3     0.4      1.5      0.7      0.4     0.4      0.9      0.3       0.3      0.5     1.2     0.4       0.2

  Fruit           0.8     0.7      1.4      1.4      1.1     0.7      1.8      0.8       0.8      1.0     1.6     1.0       0.7

  Vegetables      1.2     1.3      1.9      1.4      1.8     1.7      1.7      0.9       1.3      1.0     2.0     1.3       1.5

  Sugar, jam,     0.9     1.5      1.0      0.6      0.8     1.3      0.7      0.6       0.7      1.0     0.5     1.1       0.7
  chocolate,                                                                                                                
  confectionery                                                                                                             

  Non-alcoholic   1.3     1.5      0.9      1.0      1.0     1.6      1.6      1.0       1.0      1.3     0.7     1.3       0.9
  beverages                                                                                                                 
  --------------- ------- -------- -------- -------- ------- -------- -------- --------- -------- ------- ------- --------- --------

Source: Eurostat

B=Belgium; DK=Denmark; GR=Greece; SP=Spain; F=France; IR=Ireland;
IT=Italy; LUX=Luxembourg; NL=Netherlands; A=Austria; P=Portugal;
FIN=Finland; UK=United Kingdom (no figures available for Germany and
Sweden).

In a 1996 EU survey on consumer attitudes, European consumers were asked
to list their first, second and third most important factors from a list
of 15 options that influence their choice of food. The 15 options were:
quality and freshness, habit or routine, price, family preferences,
healthy diet, taste, convenience, presentation, slimming, vegetarian or
other special eating habits, prescribed diet, content of additives,
cultural / religious / ethnic background, availability, someone else
decides. The three main perceived influences on food choice in all the
member states are "quality", "price" and "taste". "Healthy eating" is
also among the top 5 of perceived influences in all of the member
states.

Main factors influencing food choice, 1996 (%)

  ------------- ------------- ----------- ----------- ----------- --------------
  **Country**   **Quality /   **Price**   **Taste**   **Healthy   **Family
                Freshness**                           diet**      preference**

  Austria       90            54          25          50          32

  Belgium       76            34          46          37          29

  Denmark       64            39          29          48          22

  Finland       67            62          41          40          17

  France        77            57          42          25          21

  Germany       76            40          31          31          29

  Greece        75            18          47          32          38

  Ireland       49            30          45          35          36

  Italy         84            29          40          25          36

  Luxembourg    68            18          49          24          18

  Netherlands   73            36          41          28          36

  Portugal      66            38          40          34          24

  Spain         80            52          22          32          25

  Sweden        73            59          37          30          31

  UK            59            43          49          40          30

  **EU          **75**        **43**      **38**      **32**      **29**
  average**                                                       
  ------------- ------------- ----------- ----------- ----------- --------------

Source: Institute of European Food Studies survey

# FOOD TRADE

In 2001, the value of EU exports of processed agricultural products to
third countries amounted to 45 billion Euros. Around 35% of processed
products are exported in the form of high added value products, called
"non-Annex I" products. In 2000, a revised EU export refund regime for
non-Annex I products entered into force (Commission Regulation
1520/2000). EU Producers are being compensated for the competitive
disadvantage on world markets due to the high raw material prices
(regulated by the Common Agricultural Policy) they are forced to pay on
the domestic market. Export subsidies are calculated based on the raw
materials used in the manufacture of processed products. In addition, an
inward processing regime has been implemented. This regime allows raw
materials to be imported at world prices without paying tariffs with the
objective of exporting the processed goods.

The U.S. remains the first export destination of European food and drink
products and represents a quarter of the export market. The trade with
CEECs increased significantly (+ 14%) in the context of the
pre-accession stage while exports to Latin America, in particular to
Argentina, decreased at 21%. With EU imports amounting to 38.4 billion
Euros in 2001, the trade balance remains positive at 6.6 billion Euros.
Brazil, the U.S. and Argentina are the main suppliers of food and drink
products to the EU.

Beverages remain the major processed agricultural export product,
representing around one third of total EU exports. The export of spirits
represents 40% of sales in this sector. Exports of soft drinks and
mineral waters are in full expansion. Three sectors show a negative
balance: processed fruit and vegetables, oils & fats as well as fish
products.

  --------------------------------------------- ------------- ------------
  **EU TRADE IN 2001 BY SECTOR (Million                       
  Euros)**                                                    

  **Sector**                                    **Export**    **Import**

  Meat sector                                   4,522         4,766

  Processed and preserved fish and fish         1,874         11,077
  products                                                    

  Processed and preserved fruit and vegetables  2,554         4,926

  Animal and vegetable oils and fats            2,683         6,534

  Dairy products and ice cream                  5,163         1,314

  Grain mill products, starches and starch      1,822         789
  products                                                    

  Prepared animal feed \*                       1,188         965

  Chocolate, biscuits, confectionery and food   11,494        4,131
  preparations                                                

  Beverages                                     13,256        3,679

  Other                                         458           188

  **Total**                                     **45,015**    **38,369**
  --------------------------------------------- ------------- ------------

\* This category includes prepared feed for farm animals and prepared
petfood and excludes bulk commodities such as oilseed cakes and fish
meal

Source: Eurostat

  ----------------- ----------------- ----------------- -----------------
  **TOP EXPORT                        **TOP IMPORT      
  DESTINATIONS -                      ORIGINS - 2001**  
  2001**                                                

  **Country**       **Million Euros** **Country**       **Million Euros**

  U.S.              9,085             Brazil            4,038

  Japan             3,716             U.S.              3,438

  Switzerland       2,617             Argentina         2,936

  Russia            2,569             China             1,501

  Canada            1,361             New Zealand       1,481

  Poland            1,157             Norway            1,345

  Norway            1,030             Thailand          1,284

  Australia         776               Poland            1,255

  Czech Republic    767               Switzerland       1,214

  South Korea       741               Australia         1,095

  Algeria           721               Turkey            1,010

  Israel            528               Chile             847
  ----------------- ----------------- ----------------- -----------------

Source: Eurostat

  ------------------ ---------- ---------- ---------- ---------- ---------- ------------
  **Annual increase                                                         
  (%) of EU exports                                                         
  of food and drink                                                         
  products**                                                                

                     **1997**   **1998**   **1999**   **2000**   **2001**   **2002\***

  Food and drink     11.4%      -3.1%      -3.9%      12.5%      5.0%       4.7%
  products                                                                  
  ------------------ ---------- ---------- ---------- ---------- ---------- ------------

Source: Eurostat \* 1^st^ half of 2002

# EU/US TRADE IN PROCESSED AGRICULTURAL PRODUCTS

The U.S. is the EU's main export destination for processed agricultural
products, followed by Japan, Switzerland, Russia and Canada. With
exports of processed agricultural products to the U.S. amounting to 9.7
billion Euros in 2002 and imports from the U.S. amounting to 2.7 billion
Euros, the EU trade balance for processed products remains positive.

Beverages represent almost half of the EU's processed agricultural
exports to the U.S. Other main exports to the U.S. are: preparations of
cereals, flour, starch and milk (555 million Euros), dairy (545 million
Euros), oils and fats (515 million Euros), preparations of vegetables
(462 million Euros) and cocoa preparations (415 million Euros).

Main EU imports of processed agricultural products from the U.S. are:
animal feed (842 million Euros), beverages (669 million Euros), other
food products (316 million Euros), preparations of fruit and vegetables
-- incl. nuts - (262 million Euros), fruit juices (114 million Euros)
and fish products (114 million Euros). Beverages cover both alcoholic
and non-alcoholic beverages: mineral waters, soft drinks, beer, wine and
spirits. Fruit juices are listed as a separate category.

Both beverages and fruit juices are fast growing categories which owe
their popularity to perceived health benefits and the marketing of new
products such as functional drinks, mineral waters with juice, milk with
juice and juice with alcohol (alcopops). According to a representative
of the drink industry in the EU, the color of drinks is also an
important factor. European consumers tend to prefer yellow drinks while
U.S. consumers are more inclined towards red drinks. It is the beverage
industry's opinion that the European market will become "redder" over
the coming years.

The EU also offers excellent prospects for fish products. Declining EU
fish stocks and smaller catch quotas have reduced the supply of fishery
products while demand has been stable or even growing in certain member
states. EU fish processors have to rely more and more on extra-EU
imports.

+----------------------------------+---------+--------+-------+------+
| **EU/US TRADE, BY SECTOR - 2001  |         |        |       |      |
| and 2002 (million Euros)**       |         |        |       |      |
+----------------------------------+---------+--------+-------+------+
|                                  | *       |        | **2   |      |
|                                  | *2001** |        | 002** |      |
+----------------------------------+---------+--------+-------+------+
| ## Product                       | **I     | **Ex   | **Imp | **   |
|                                  | mport** | port** | ort** | Expo |
|                                  |         |        |       | rt** |
+----------------------------------+---------+--------+-------+------+
| Processed meat                   | 53      | 275    | 36    | 263  |
+----------------------------------+---------+--------+-------+------+
| **Fish products**                | **113** | **34** | **    | **   |
|                                  |         |        | 114** | 38** |
+----------------------------------+---------+--------+-------+------+
| Processed vegetables             | 168     | 427    | 151   | 462  |
+----------------------------------+---------+--------+-------+------+
| **Processed fruit**              | **123** | **94** | **    | **   |
|                                  |         |        | 111** | 94** |
+----------------------------------+---------+--------+-------+------+
| **Juices**                       | **120** | **79** | **    | **   |
|                                  |         |        | 114** | 78** |
+----------------------------------+---------+--------+-------+------+
| Products of the milling industry | 23      | 61     | 20    | 79   |
+----------------------------------+---------+--------+-------+------+
| Dairy                            | 27      | 529    | 21    | 545  |
+----------------------------------+---------+--------+-------+------+
| Beverages                        | 806     | 5,344  | 669   | 5    |
|                                  |         |        |       | ,903 |
+----------------------------------+---------+--------+-------+------+
| Preparations of cereals, flour,  | 71      | 529    | 55    | 555  |
| starch & milk                    |         |        |       |      |
+----------------------------------+---------+--------+-------+------+
| Cocoa preparations               | 17      | 381    | 16    | 415  |
+----------------------------------+---------+--------+-------+------+
| Oils & Fats                      | 183     | 429    | 150   | 515  |
+----------------------------------+---------+--------+-------+------+
| Sugar & confectionery            | 48      | 217    | 65    | 208  |
+----------------------------------+---------+--------+-------+------+
| # Animal feed ~1~                | **969** | *      | **    | **   |
|                                  |         | *111** | 842** | 98** |
+----------------------------------+---------+--------+-------+------+
| Coffee, tea & spices             | 24      | 239    | 27    | 246  |
+----------------------------------+---------+--------+-------+------+
| **Other food products ~2~**      | **344** | *      | **    | **2  |
|                                  |         | *117** | 316** | 43** |
+----------------------------------+---------+--------+-------+------+

Source: Global Trade Atlas

~1~ HS code 23 (includes oilcakes and fish meal)

~2~ includes yeasts, sauces, soups, ice cream and protein concentrates

The top-3 importing member states in 2002 are: United Kingdom (829
million Euros), Netherlands (605 million Euros) and Germany (282 million
Euros). Main U.S. exports to the U.K. include: beverages (287 million
Euros), animal feed (149 million Euros), other foods products (125
million Euros) and fish products (83 million Euros). Main U.S. exports
to the Netherlands include: animal feed (204 million Euros), beverages
(125 million Euros) and other food products (92 million Euros). Main
U.S. exports to Germany include: beverages (103 million Euros), animal
feed (63 million Euros) and other food products (23 million Euros).

The top-3 exporting member states in 2002 are: France (2,155 million
Euros), Italy (1,846 million Euros) and Netherlands (1,478 million
Euros).

  -------------- -------------- -------------- -------------- --------------
  **PROCESSED                                                 
  AGRICULTURAL                                                
  PRODUCTS:                                                   
  EU/US TRADE,                                                
  BY MEMBER                                                   
  STATE -- 2001                                               
  & 2002                                                      
  (million                                                    
  Euros)**                                                    

                 **2001**                      **2002**       

  **MEMBER       **IMPORT**     **EXPORT**     **IMPORT**     **EXPORT**
  STATE**                                                     

  AUSTRIA        15             131            15             136

  BELGIUM        140            210            126            198

  DENMARK        86             371            70             361

  FINLAND        17             56             14             51

  FRANCE         150            1,949          143            2,155

  GERMANY        318            696            282            751

  GREECE         33             98             33             110

  IRELAND        159            271            151            213

  ITALY          165            1,680          125            1,846

  NETHERLANDS    710            1,199          605            1,478

  PORTUGAL       85             65             77             80

  SPAIN          205            610            179            677

  SWEDEN         70             376            60             454

  U.K.           937            1,212          829            1,233
  -------------- -------------- -------------- -------------- --------------

Source: Global Trade Atlas

Global branding and further integration of European markets is producing
a more homogeneous food and drink market in Europe but there are still
significant differences in national consumption trends. A thorough
analysis of the best prospects for U.S. products on the EU market is
provided in the "Exporter Guides", prepared by the Offices of
Agricultural Affairs in the individual member states. An overview of EU
food import regulations and standards can be found in the "Food and
Agricultural Import Regulations and Standards" (FAIRS) report. These
reports can be downloaded from our website at
[www.useu.be/agri/fairs.html](http://www.useu.be/agri/fairs.html).

**Visit our website:** our website
**[www.useu.be/agri/usda.html]{.underline}** provides a broad range of
useful information on EU import rules and food laws and allows easy
access to USEU reports, trade information and other practical
information. E-mail: AgUSEUBrussels@usda.gov.

**Related reports from USEU Brussels:**

  --------------- ------------------------------------ ------------------
  **Report        **Title**                            **Date Released**
  Number**                                             

  E22093          EU Food & Drink Industry in Figures  9/24/2002
                  2002                                 

  E23186          New Allergen Labeling Rules          9/30/2003

  E23182          EU Directives affecting food         9/29/2003
                  supplements, herbal medicines and    
                  certain dietetic foods               

  E23136          New rules on nutrition and health    7/18/2003
                  claims proposed                      

  E22084          EU FAIRS report                      8/21/2002
  --------------- ------------------------------------ ------------------

Sources:

-   Annual Report of the Confederation of the Food & Drink Industries
    (CIAA)

-   Eurostat: Yearbook 2003, Consumers in Europe 1996-2000

-   Institute of European Food Studies

-   Foodnews

-   Global Trade Atlas