May 2024

Global Food
Industry Outlook
2024/2025
CONTENTS

Production is growing and consumer prices
are decreasing, but challenges remain

Our Trade Sector Experts
The Americas: Selma Rossato
Team Leader of Atradius Risk Services
Selma is Team Leader of Risk Services in Brazil, where her expertise extends across mostindustries. Based in São Paulo, she began her career with Atradius as a credit manager andhas been working in Risk Services for Atradius since 2008. Selma has more than 20 years’
experience in the Brazilian credit insurance market.
Asia-Pacific: Shane Tan
Associate Senior Underwriter at Atradius Asia
Shane is Associate Senior Underwriter at Atradius Asia, a position he has held since 2021.
Based in Singapore, he is currently responsible for the Food, ICT, Rubber and Scientific
Instrument sectors in Singapore, Malaysia and Philippines. Prior to Atradius, Shane worked
as Credit Manager in the Credit Operations department of Daimler Financial Services. This
position included underwriting construction buyers, project management andmanagement reporting.
Europe: Yoann Gublin
Deputy Industry Leader of Agriculture, Retail and Services
Yoann is Deputy Industry Leader of Agriculture, Retail and Services, based in Paris.
His expertise includes a particular focus on the agriculture and agrifood sectors in France.

Our basic need to eat underpins the food and beverageindustry, insulating it against some of difficulties faced
by sectors trading in non-essential goods. This is not to
say that the industry is totally protected against economic
downturns. Demand for luxuries and non-essential foodand drink items decreased last year as consumers tried
to balance household budgets against the costs of highinflation and increases in their interest rate payments.
Most indicators suggest the worst is now behind us,
with disinflation in the coming months likely to resultin a decrease in input costs for producers and foodprices for consumers. However, the industry’s growthjourney is unlikely to be smooth. Geopolitical and climate
risks threaten to slow industry growth, especially inthe segments and geographies that are most exposed.

Yoann joined Atradius in 2014, working initially as a Senior Underwriter specialising inAgriculture, Food, Chemicals and Textiles, before he was appointed Deputy Industry Leader

What is the global outlook for the food and beverages industry?
Growth predictions for the food and drink industry are notoriously tricky, with
unpredictable weather conditions disrupting even the most cautiously crafted
outlook. With that disclaimer in mind, we anticipate global food and beverages
production to increase 3.2% this year, followed by 3.3% in 2025. Food prices for
consumers are expected to ease, although this is likely to be gentle.

of Agriculture, Retail and Services in 2020.

Global food and beverages key figures
2022

2023

2024*

Contents

6.3

Production is growing and consumer prices are decreasing,but challenges remain

3What is the regional outlook for food and beverages performance?

5

What risks does this year’s El Niño pose to the industry?

8

How are changing consumer habits impacting the industry?

9

How have increased input costs impacted the industry?

10

Financial resilience and credit risk

13

Are labour shortages affecting the industry?

14

Food and beverages | Top three opportunities and challenges
over the next five years

17

2
ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

2025*

5.8

PRODUCTION
INDEX

3.3

5.1

2.1
1.8 1.8

5.5

1.6

3.2

3.3 3.5

2.8 2.8

4.2

1.0

GROSS OUTPUT (SALES),(REAL, USD)INVESTMENT(REAL, USD)GROSS OPERATING SURPLUS(PROFITS), NOMINAL USD

Year-on-year, % change. (*forecast) Source: Oxford Economics.

3
ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

What is the regional outlook for food and beverages
performance?
Clouding the outlook are El Niño, the war in Ukraine, theIsrael-Hamas conflict and the Houthi attacks on container
ships in the Red Sea corridor.

global food prices will stay above 2019 levels. Cost drivers
include the high levels of energy prices, transport and labourcosts, and elevated loan costs.

El Niño usually lasts around a year and typically causes hot,
dry weather across Asia and Australia while bringing heavierthan-normal rainfall to the southern U.S. and southern
South America. Poor harvests or interrupted supplies
could put pressure on prices. Despite the recent decrease,

In addition, the geopolitical conflicts could cause market
instability especially if they lead to energy and foodprice shocks. This could raise input costs for producers
and result in food price inflation for consumers.

The Americas

That said, until recently US inflation has remained stubbornly
high, despite the interventions of the Federal Reserve. The
resulting effect is higher food prices for longer, with tightmargins for retailers as they increasingly rely on promotions
as they compete for customers.

North America
Selma Rossato is a Team Leader of Atradius Risk Servicesin São Paulo, Brazil. Looking at the the North American
food market she says: “Following nearly four years ofsignificant economic disruption led by the COVID-19
pandemic and followed by supply chain challenges,
labour shortages and a period of severe inflation, there
are signs the North American food and beverage market
may be returning to a more stable environment.”

What’s more the disruptive effects of El Niño are likely toimpact 2024 food production in the US, while labour, logistics
and financing costs have also increased. All this weighson the margins and profitability of businesses all along thefood supply chain in North America. The outlook for Mexico
is fairly positive, with easing price pressures encouraging
greater consumer spending on food and non-alcoholic drinks.
South America
South America is a leading global supplier of fruits andvegetables, supplying about a quarter of global exports inagricultural and fisheries products. Selma notes that theSouth American food and beverages industry is forecast
to grow 1.7% in 2024 after a 0.7% contraction in 2023. She
expresses caution over inflation forecasts and warns that
despite levels mostly returning to the target ranges set bycentral banks, there could still be some surprises in 2024.

There aresigns theNorth American
market may
be returning toa more stableenvironment.

Some exporters in Brazil have benefitted from the war
in Ukraine as global markets pivot towards alternative
sources. However, overall agri-food businesses will also
remain affected by higher prices for fuel and fertilisers.

Selma Rossato

Food and beverages output per region
2022

3.0

Food and beverages output Americas

2023

2.1

0.7

2.7

2.4

2024*

2025*

5.0

5.2

0.3

1.3
-1.5

1.1

1.7

2022

1.5

1.0

2.2

2023

2.6

2.1

3.7

3.4

4

EUROZONE AND UK-0.7

NORTH AMERICA-0.8 -1.1

SOUTH AMERICA

ARGENTINA

Year-on-year, % change. (*forecast) Source: Oxford Economics.

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

1.4

0

-5.2

ASIA-PACIFIC

2024*

-1.7

2025*

0.5

1.9

1.0

4.1
1.6

2.0

1.5

1.8

-0.5

-6.7

BRAZILCANADAMEXICOUNITED STATES

Year-on-year, % change. (*forecast) Source: Oxford Economics.

CONTENTS

5ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

Asia-PacificShane Tan, Associate Senior Underwriter at Atradius Singapore,shares his understanding of the industry in the Asia-Pacificregion. He explains: “Food makes up a large proportion of
spending for general households. Some areas have introduced
initiatives to support families via financial aid such as cash
vouchers and concessions in order to keep food affordable.”
In many Asian economies, food items make up a big
proportion of the overall consumption basket and hence havea large impact on headline inflation. Among the highest are
India (46%) and the Philippines (38%). There is not a great dealof margin to enable reductions in costs to consumers, nor inhigher profits for producers. As Shane notes: “Food is a very
competitive sector with extremely low margins. They do nothave the leverage to price higher for profits.”
China
The growth of China’s middle class means more people
are spending more on food and drinks. Input costs remain
elevated however, especially for energy, transport and labour,and this is causing a squeeze on profits for many producers.
Ongoing labour shortages and trade tensions with the US
present downside risks.

India
Food price increases over the past few months have hit
household incomes, and ongoing high costs for energy andfertilisers could lead to further food price increases. An El Niño
heatwave could negatively affect harvests and put furtherpressure on prices.
Japan
With a shrinking population, the food industry is increasingly
looking to expand its exports into Asia. Labour shortages andhigh costs for energy and transport are also putting pressure
on food producers.

EuropeFranceConsumer spending on food will decrease during 2024,
particularly meat, fruits and vegetables, with the organic
sector suffering the most. Last year the beverages sector saw
a sluggish performance, in particular in export sales of alcohol.

Food price disinflation will lessen the squeeze on householdincomes in Europe, although adverse weather conditions
including possible El Niño impacts, remain a downside riskfor 2024. Fierce competition is putting pressure on margins
that are already thin. Smaller producers, especially, may
struggle against the bargaining power of major retailers.
Our industry specialist in Europe, Yoann Gublin, says: “TheEU should witness a slight economic rebound in 2024 thanks
to a general slowdown in price increases, increasing wages,
the solidity of the employment market and lower interest
rates.” However, he warns of the downside risks presented
by geopolitical issues.

There is nota great dealof margin
to enable
reductions
in costs to
consumers.

Yoann Gublin

Food and beverages output Asia-PacificFood and beverages output Europe

2023

2024*

2025*

8.7

3.3

2.5
-0.5

CHINA

6

7.1

5.0

3.7

4.6

INDIA

INDONESIA

5.2

5.1
2.6

-2.8

-1.0

0

6.5

2022

2024*

3.7

0.9

0.7

3.8

1.2

-0.9

THAILAND

2025*

6.5

5.2

-0.2

JAPAN

2023

7.5

FRANCE

Year-on-year, % change. (*forecast) Source: Oxford Economics.

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

UK
The industry is facing another difficult year in the UK,
as consumer demand struggles against persistently highinterest rates. A deceleration in food prices will help to
support sector growth, although this is likely to be modest.

Smaller producers may struggle
against the bargaining power ofmajor retailers.

Shane Tan

2022

Germany
In a rollback of measures to mitigate the effects of Covid 19
in the hospitality sector, VAT on food in the restaurant andcatering sector rose from 7% to 19% in January 2024. Thisis expected to lead to a reduction in the numbers of people
dining out in Germany and a possible uptick in bankruptcies
in the sector.

-0.1

5.2

2.4

2.3
-1.9 -1.4

GERMANY

-1.0

ITALY

2.0
-0.1

1.0

2.2

1.5

1.1 2.6
2.3

1.4 0.4-1.0 -2.6

NETHERLANDSSPAINUNITED KINGDOM

Year-on-year, % change. (*forecast) Source: Oxford Economics.

CONTENTS

7ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

What risks does this year’s
El Niño pose to the industry?

How are changing consumer
habits impacting the industry?

We are currently in the grip of the El Niño weather
phenomenon, which along with global warming, has been
partly responsible for 2023 being the hottest year on record.

Consumers look for cheaper and healthier food optionsin the Americas
The recent surge in food price inflation has led many
consumers to change their food-buying habits. In the Americas,
Selma Rossato says: “Where food prices are remaining
elevated, many consumers are turning to private label
products (store own brands) and cheaper retail options likedollar stores, to manage costs. Although nominal spending
on food has increased, real spending has been declining.”

El Niño is expected to last at least through the first half of2024, according to the latest United Nations forecasts, withabnormally high rainfall due across Latin America raisingfears for the agricultural sector. Selma Rossato notes:“In Brazil, El Niño could reduce 10% of corn production and
5% of soy production in 2024 compared to the previous year,
according to CONAB (National Supply Company).”

She adds: “Beyond the price-conscious consumer, plantbased food continues to be one of the most important foodtrends in 2024. This trend is driven by growing climate
and environmental consciousness and more awarenessabout healthy eating, especially in the younger generation.
Consequently, cakes and biscuits, fast food, snacks, sugary
drinks and processed meat are expected to lose ground.”The effects of this year’s El Niño in Asia Pacific have beenless intense. Shane Tan says: “Although El Niño does induce
crop failures, the impact of El Niño on the food sector in
Asia-Pacific is expected to be manageable, although it’spotential impact on India’s monsoon remains a downsiderisk.” He adds: “Even if El Niño conditions persist, pricevolatility is likely to be short-lived.”

Shoppers in Asia-Pacific focus on healthy nutrition
Looking at South-East Asia Shane Tan says: “We’ve observed
lower to middle income consumers switching to cheaperfood alternatives and a general fall in luxury spend.”
Reflecting the experience of the Americas he adds: “InSingapore, we’ve seen an increase in value dollar shops
and more house brand offerings from major supermarkets.”

El Niño doesn’t tend to affect Europe with quite the sameforce as Asia and the Americas. However, Europe is facing
the effects of climate change, including variable drought
conditions. Yoann says: “Southern Europe has been themost affected by drought especially the Iberian Peninsula,which has also been impacted by heat waves, which in turncan cause problems for farmers and food producers.”

Price-sensitive consumers in China are also changing theirbuying habits – where they shop, what they buy, how often,

and how much they spend. As Shane explains: “I don’t expect
food and beverage spending to decrease, but rather we areseeing consumers reprioritise their shopping baskets, focusing
on at-home solutions that meet their needs in terms of nutrition,
health, and sustainability, without compromising on taste.”
Lifestyle changes are also affecting consumer shopping habitsin Asia-Pacific. With a growing middle class, more people inIndia have disposable incomes and are increasing expenditureon health and nutrition.
In Japan, increasingly health-conscious consumers are buying
more energy and live yoghurt drinks and spending less onprocessed meats and fast food. Consumers have cut backon coffee, juice and confectionary, as well as cutting downon alcohol (which some attribute to generational change).
Plant-based diets are growing in popularity in Europe
Consumer habits in Europe are also changing. This includes
eating out less often and being more price sensitive, choosing
supermarket own labels and discounters in place of premium
brands. Yoann also points to changes in the types of foods
consumers are opting for. He says: “Consumers are making
fewer unplanned purchases and are going for cheaper foodalternatives, such as substituting red meat for eggs. Many
Europeans are also switching to a plant-based diet, althoughorganic food products on the other hand are being neglectedconsidering their high price range.”

Agriculture output
2022

2023

4.0

2.0 1.7-0.6

3.1 1.22024*

4.2 3.9
3.4

2.0

1.1
1.3

2025*

1.7 2.1 1.3

1.0

1.7

0.9 1.0

Many Europeans arealso switching toa plantbased diet.
Yoann Gublin
1.9 1.9 0.8

-2.3

-3.9

WORLD

8

AFRICANORTH AMERICA SOUTH AMERICA

ASIA-PACIFICEUROPE

Year-on-year, % change. (*forecast) Source: Oxford Economics.

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

9
CONTENTS

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

How have increased
input costs impacted
the industry?
High costs are resulting in thin margins acrossthe Americas
In many American markets the profit margins of foodproducing and processing businesses are structurally thin
and under pressure. All segments in the Americas have been
affected by increased costs of energy, logistics and labour.
Selma Rossato notes: “Labour and logistics costs have risen.
Retailers are resorting to increased promotions to attract
frugal consumers, though this strains profit margins.”

Ongoing inflation and high wages squeeze European
profits
Yoann Gublin explains: “Persistent inflation is squeezing
margins for food manufacturers. While some companies
have invested in automation, labour costs remain high.”
Conventional food retailers face strong competition fromdiscounters in all European markets. Many food manufacturers
are being impacted by cost inflation: higher prices of energy,
increasing labour costs, higher costs of raw materials (wheat
and other agricultural commodities), increasing logistic costs(fuel) with difficulties increasing prices with food retailers.

What’s more, many food producers are facing a fiercelycompetitive environment, in which the bargaining powerof major retailers and discounters is very strong. Selma
explains: “Big-box retailers are increasingly exploring pricereductions, impacting suppliers’ profitability.”

While margins in the food industry are structurally low,commodity and energy costs are now reducing. There could
be a long lag before seeing immediate effects on their
margins since many food manufacturers are committed toenergy contracts signed during the highest period of inflation.

Food manufacturers struggle to pass on costs to
consumers in the Asia-Pacific
The prices for energy, transport, and labour are all high in
China and this is likely to narrow the profit margins of foodproducers. Many food manufacturers find it hard to passon those higher prices.
In Japan, price increases were particularly large for processed
wheat products, soybeans, and oils and fats. In addition,
the logistics industry is facing the impending “2024 problem”
of overtime restrictions for truck drivers. A significant increasein logistics costs is expected locally.
In India, the sharp increase in costs of energy, and soaring
prices for fertiliser, packaging, and logistics has led to
an increase in the overall cost of food production. Businesses
in South East Asia are also sourcing food products fromlower cost countries. For example, many food products in
Singapore are imported from countries like India, Vietnam and
the Philippines. Increasing numbers of food discounters arealso appearing across South East Asia, including a rise in thenumber of own brands from major grocery stores. There isa huge market for these products as the cost of living rises.
Materials costs can be impacted by extreme weather events.
As Shane Tan explains: “Torrential rainfall across India caused
crop damage and led to green fodder yields to decline.
This, coupled with a steep rise in the cost of cattle feed,
has led to a nine-year high for fodder prices in the country.”

10

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ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

CONTENTS

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

Financial resilienceand credit risk
The Americas: smaller or younger businesses facehigher credit risk
Financing for the sector is available in most markets, buthigh interest rates mean it is expensive and, as a result,inaccessible for smaller companies and those operating onreally thin margins. Selma Rossato says: “Most food producers
and processors in the Americas do not have a problem inaccessing bank loans, apart from small and young businesses
that would normally have limited access to external financing.
Access to bank loans depend on individual credit analysis of
the producers as well as guarantees offered.”
In Brazil, there are specific credit loans (rural credit)
supported by the government for agribusiness companies
and farmers with lower interest rates.
However, many farming and food producing businesses
across the region are operating with higher credit risks.
Many of these are smaller or younger companies that haveseen interest rates on loans surge, leaving them with tighter
cashflows each month as they work to service the debt. In
addition, as Selma notes: “Venture capitalists have become
more selective over which companies they invest in, shifting
their attention to profitable, established businesses.”Asia-Pacific: A mixed picture
External financing is also currently available for most foodproducers and processors across Asia, with some regionalvariation. In India, an exclusive food processing fund,amounting to USD 263 million has been established under
the National Bank for Agriculture and Rural Development(NABARD). This is dedicated to offering affordable credit to
Mega Food Parks across India, with a focus on modernisingand expanding food processing units. In addition, loans
provided to food processing units and cold chain
manufacturers have been categorised under agriculture
activities for priority sector lending (PSL).

Many food and agriculturalbusinesses feel pressured tooffer extremely competitive
terms to buyers.

However, despite such support, many food and agriculturalbusinesses feel pressured to offer extremely competitive
terms to buyers, exposing them to excess risk. Shane Tansays: “Food processors of seasonal foods are more likely
to be hit by liquidity pressures due to the high inventory theyneed to hold for a few months. Processors of rice, wheat andpulses remain somewhat vulnerable, given the estimated fallin annual kharif production, as well as the lag in the ongoingrabi sowing season amid El Niño conditions.”

Focusing on China, Shane says: “Although it is hard to point
to any specific segments facing potential liquidity risks in
China, credit risks are present, especially for businesses withlonger DSO (days sales outstanding). Credit risk is also higher
in general as the economy is experiencing a downturn.”
In the food manufacturing industries of Japan, Hong Kong/
Macau, South Korea and Taiwan, liquidity safety indicatorssuch as current ratio are generally at favourable levels.
That said, this sector is more vulnerable than others
to factors such as high inventory, short expiry dates andheavy dependence on a small roster of customers.
Europe: More defaults on the horizon?
In Europe, Yoann Gublin says: “Many European companies
benefited between 2020-2021 from cheap lending conditions
from the Bond market. Since then, the monetary tightening
which was triggered during the Summer 2022 has resulted
in the tightening of corporate lending (bank loans and credit
lines) conditions in Europe.”
He adds: “While interest expenses have significantly
increased, this situation led to further pressure on margin
generation both for large companies and SMEs. This could
lead to corporate defaults. Credit access has also beentightened towards riskier companies, although many food
manufacturers seem to have better access to credit thanother sectors.”
Smaller farming operations and downstream SMEs experience
the greatest liquidity pressures. Access to credit can be criticalfor farmers to strengthen their working capital requirements(especially for fertilisers and animal feed).
Downstream food producers often have to balance higher
costs with smaller margins, limiting their capacity to generateliquidity. This includes higher raw material prices, higher
energy and packaging prices, higher labour costs, and higher
logistic costs. As Yoann acknowledges: “This situation drives
many food producers and processors to ask for credit lines
to finance their working capital requirements. While large
companies may have an easier access to credit, it is not thecase for SMEs who often present fragile financial standings
and have a higher risk of default.”

12

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ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

CONTENTS

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

Are labour shortages affecting the industry?
Labour shortages are an issue for the industry. In manymarkets, including the USA, China, Japan and Europe, thisis part of a wider trend of migration into urban areas anda decline in the numbers of young people seeking agriculturalwork. In some countries, such as Japan, this is further
exacerbated by a declining birth rate and a decrease in theworking population.
In the USA, labour shortages cut across food supply chains.
There is also a shrinking agricultural labour force as a resultof a general decline in agricultural interest of younger adults
due to several factors including the barrier to entry causedby high real estate and land prices, as well as set-up expenses
and cost of machinery.
The up and down nature of commodity crop pricing,unequal work-life balance and unpredictability of extreme
weather events can lead to instability in the industry that is
unattractive to many workers. In addition, increased accessto education and better job opportunities reduces the numberof unskilled laborers available for work in the industry.

Selma Rossato comments: “The most obvious effect ofan agricultural worker shortage is of course, less and more
expensive food. The second major effect, though, is mostvisible to farmers, who now have to offer better pay to attract
and keep talent.”
Shane Tan reports: “Most factories in China have labour
shortages of between 10% and 15%, an issue that could cause
food prices to remain high.” He adds: “Lack of labour has
always been an issue for food producers and processors in
Singapore. The literacy rate in Singapore is extremely highand most Singaporeans have no desire to work in this sector
due to poor working conditions and low salary. These jobs
are usually taken by foreign workers.”
The role of immigration and new technologies
In Western Europe labour shortages are exacerbated bya negative perception of the sector, fuelled in large part by
the low wages, a lack of benefits, limited career prospects
and hard-working conditions.
In order to fill shortages, governments such as Italy areturning to immigration by issuing nearly half a million
resident permits until 2025. Permits will be delivered to fillshortages in the agriculture and domestic help sectors.
French immigration policies have also provided solutions
to fill shortages in the agriculture and food sector.
Due to labour shortages many European food producers
invest in automation as much as possible. The same goesfor other regions. According to Selma: “Smart technology
advancements and digital solutions have been in development
to address the current labour shortage. Many of these offer
clever solutions from drones and self-driving tractors torobotics to help pick, sort, pack and ship. These can increasea farm´s or food processor´s efficiency and improve
the working conditions of the workers simultaneously.”

Smart technology advancements anddigital solutions can increase a farm’s
or food processor’s efficiency andimprove the working conditions of
the workers simultaneously.
Selma Rossato

14

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ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

CONTENTS

ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

Food and beverages | Top three opportunities
and challenges over the next five years

16
ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

CONTENTS

Top three opportunities for the Americas

Top three challenges for the Americas

1.	Plant-based foods: The plant-based revolution is sweeping
the globe, reshaping our diets and the food industry.
With increasing concerns about health, animal welfare,and environmental sustainability, plant-based foods will
become the new norm and present a growth opportunity
for food producers.
2. 	Aquaculture: Fish farming has been the world’s fastestgrowing food production system for decades and is now
providing more fish than wild capture fisheries for humanconsumption. While critical to meet future demand forprotein, such growth comes with environmental challenges.
3. 	Increasing demand: The world’s population will reachmore than 9 billion people by 2050. To meet demand,
it will be necessary to increase food production by
70% by 2050, according to estimates by the Food andAgriculture Organization of the United Nations (FAO).

1. 	Changing customer preferences: New trends in diets andeating habits are popping up daily (zero-sugar, gluten-free,paleo diet etc), with an increasing rejection of processed
food. Food companies will need to adapt in order to avoid
losing customers/sales, or damage their brand image.
2. 	Young companies in new segments: Recent foodbankruptcies in USA involved companies that werefocused on new segments including plant-based,sustainable and alternative agriculture. So although
it is important to stay vigilant to changing consumer
preferences, these can be risky segments to explore.
3. 	Tough competition: Growing interest in fresh and frozen
foods, grab-and-go items and sustainable products
will create tough competition for food producers in all
segments in the coming years.

Top three opportunities for Asia-Pacific

Top three challenges for Asia-Pacific1. 	Food technology innovation: By introducing technology,
farmers could expect improved yields, increased savingsand greater climate protection.
2. 	Population growth: The forecast Asian population growth
is approximately 250 million over the next decade and thiswill mean the region more than doubling its total spending
on food, from USD 4 trillion in 2019 to over USD 8 trillion
by 2030.
3. 	Untapped territory: Large global players are stepping up
investments and setting up innovation centres in the APAC
region to boost production.

1. 	Climate change: Unpredictable weather conditions,rising sea levels and temperature swings erode landand severely affect crops and commodities.
2. 	Lack of investment: Asian farmers are typically muchsmaller than their American or European counterparts withlower capacity or capability for investment in technology.
With the expected rise in demand but declining outputs,
food prices are likely to rise because of increasing imports
from the other regions.
3. 	Low margin sector: This is a highly competitive industry
and margins are likely to remain subpar.

Top three opportunities for Europe

Top three challenges for Europe

1. 	Economic growth: European food production is expected
to rise starting 2024 and over the coming years as
the European economy should witness modest growth.
As inflation is reducing, customer spending power will
improve.
2. 	EU legislation: With the European Green Deal, there could
be a development in the “Farm to Fork” strategy aiming
to make food systems fair, environmentally friendly andhealthy.
3. 	Ecommerce: Online distribution is a trend that willkeep gaining momentum over the next years throughapplications and websites. Young consumers tend to buy
their groceries online rather than in supermarkets andhypermarkets.

1. 	Uneven playing field: The yet to be ratified EU-MERCOSUR
trade deal has been protested by farmers all over Europe.
Designed to generate exporting opportunities to SouthAmerica with most EU export tariffs erased, the agreement
could unbalance the EU food market with imports of beef
and poultry that don’t meet strict EU standard and compete
directly with European farmers.
2. 	Food security: Given geopolitical tensions, challenge for
the EU will be safeguarding food security for EU members
over the next years.
3. 	Extreme weather and disease: Climate change will remain
a structural issue for European countries but also disease
outbreaks that can impact animal breeding (Avian Flu,
African Swine Fever) and crop harvests (Fusariosis, Septoria).
ATRADIUS GLOBAL FOOD INDUSTRY OUTLOOK 2024/2025

17

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