INDUSTRY OVERVIEWThe Food & Beverage
Industry in Germany

ISSUE 2022/2023

THE FOOD & BEVERAGE INDUSTRY IN GERMANY

Germany: Europe’s Food & Beverage
Market Leader“We located our production plant for dairy alternatives in Germany as the national market
is growing year by year and foods ‘made in Germany’ unlock export opportunities.”
Harry Rønneberg
Rønneberg Group AS founder and PlantA shareholder

83 m

EUR 227 bn

EUR 185 bn

EUR 53.6 bn

1/3

EUR 1.89 bn

Like most if not all business sectors worldwide, the Covid19 pandemic affected the food and beverages industry inGermany and its global supply chains. Nevertheless, growing
national retail sales fully compensated falling food service
sales and a small decline in exports.

Germany’s food industry is not only driven by a commitment
to delivering the very best, but is also highly receptive to
new cultural influences and culinary trends: Increasing healthawareness, an aging population and the resulting demand for
health and wellness products have helped a number of previously niche market actors to become significant industry
players. Locally produced foodstuffs and sustainable production methods are now considered as growth drivers. Meat
and milk alternatives, for example, play an ever-growing roleand offer numerous business opportunities.

consumers help make Germany the largest
retail market for food and beverages in Europe

production value demonstrate the sector's
significance for the German economyof all processed foods manufactured inGermany are exported

National and international companies, operating in almost
every subsegment of the German food and beverage market,
make more than 170 thousand different food products available to German customers. The industry enlarged production
capacities and adjusted supply chains at very short notice tomeet changing production and demand patterns.

Sources: BVE, 2021

2

in retail sales due to increasing demand
triggered by Covid-19 pandemic

in food service sales despite strong Covid-19
lockdown measuresinnovation spending by German food andbeverage companies in 2019

Germany’s Food & Beverage Industry
in Numbers
Germany’s industry numbers speak for themselves and for a secure and successful investment in the country.
Europe’s Largest Market
Total food retailing revenue grew significantly by
8.2 percent, reaching EUR 227 billion in 2020. Other
important distribution channels include exports ofprocessed foods (EUR 61.6 billion) and food service
sales (EUR 53.6 billion).
Major Industry Sectors
Germany’s food and beverage industry is the
fourth-largest industry sector in Germany –generating production value of EUR 185.3 billion in
2020. The industry is best characterized by its
small and medium-sized enterprise sector of
more than 6,100 companies employing a workforce of around 614,000 people. The largest industry segments by production value are meat andsausage products (24.3 percent), dairy products(15.5 percent), baked goods (9.4 percent), and confectionery (7.8 percent).
Food Service
The German food service market came under pressure in 2020 and in the first half of 2021 due tostrict lockdowns implemented to fight the spreadof the Covid-19 virus. Industry sales slumped byover 35 percent in 2020, levelling off at around
EUR 53.6 billion. In 2020, all major market segments in which the top 100 companies are active
were negatively affected by the Covid-19 situation and related restrictions. Despite the difficult
market environment, Germany experienced thelowest drop in food services among the biggest
five European markets. Trends in the food service
market include casual food service concepts suchas “Mediterranean” and “Asian” style as well as“better burgers.” Vegetarian and vegan nutrition
concepts are also becoming increasingly popular.
International Trade
Today, Germany is both the third-largest exporterand importer of agricultural and food products
worldwide. In 2020, imports of agricultural andfood products grew by 1.4 percent to EUR 88.3
billion. In the same period, exports reached EUR
72.6 billion, making Germany a net importer ofagricultural and food and beverage products.
Exports of processed foods and agricultural com-

614,000<6,100

workforce size

companies

EUR 88.3 bn

EUR 72.6 bn

in imported goods

in exported goods

Source: BVE, BMEL 2021

modities declined slightly due to export restrictions and/or border closings to reach EUR 61.6
billion in sales in 2020. One third of all processed
foods manufactured in Germany are exported(70.5 percent to other EU member states), underpinning Germany’s strong location factors in terms
of price and quality.
Recent Investment Successes
Significant investments in the industry include, forexample, the EUR 30 million-plus investment ofJapanese based Fuji Oil in 2019 in Brandenburg. The
manufacturer of vegetable oils and fats co-locatedits German site next to a German starch producer
and will directly process pea fibers produced there.
Other recent projects include US-based Active
Nutrition International’s investment in North
Rhine-Westphalia and Swiss SoulSpice’s (Meris)
cooperation with a regional company in Bavaria.

Germany is an
attractive market
location for international investors

Market Outlook
The sector has demonstrated its strength andflexibility in a crisis and will benefit from Covid-19
implications in the long term. Food producers are
considering alternatives to shorten and diversify
their food chains in preparation for any future
global supply chain disruptions. This trend is mirrored by growing demand for regional and organically produced foodstuffs. Sustainability and foodsafety issues will continue to influence global raw
material procurement and supply chains. Lastly, thefood and beverage sector will profit from a fast
economic recovery and low unemployment rates.

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MARKET OPPORTUNITIESMarket Segmentation
Germany's food and beverage market is highly
diversified, providing significant opportunies
in tradtional and emerging market segments
alike – be it baked goods and dairy produce orhealth and wellness products.

Baked Goods
Germany's baked
goods and dairy
produce markets
remain the biggest
in EuropeMarket: With by annual per household bread andbakery product consumption of 56.9 kg in 2020,
Germany is the European leader in the productionof bread and rolls. Industrial bakery production
generated sales of EUR 17.1 billion 2020. Artisanalbakeries created value of a further EUR 14.5 billion. Food retail sales in the bread and baked
goods area exceeded EUR 2.8 billion, with major
segments including sliced bread and toast. The
German biscuit market had a market value of EUR
2 billion, with chocolate cookies the largest subsegment, followed by cream-filled cookies.
Competitive Landscape: Although the overall
number of companies operating in the German
baked goods industry has been decreasing foryears due to an ongoing consolidation trend, theindustry remains home to a wealth of market
actors – including SMEs and multinational players alike. Industrial bakery production has, in themeantime, exceeded artisanal production as aresult of the nationwide introduction of bake-off
stations and in-store baking to cite two examples.
Discounters are continuously expanding theirmarket share and account for more than half ofthe bakery sales in food retailing today.

Food and Beverage Industry by Segment 2020
in percent

Meat & meat products

24.3

Dairy products

15.5

Baked goods

9.4

Confectionery

7.8

Processed fruits & vegetables

6.3

Convenience foods & others

6.3

Alcoholic beverages

5.8

Non-alcoholic beverages

4.6

Mill & starch products

3.6

Edible oils & fats

3.2

All others

13.2

Source: BVE Annual Report 2020/21

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Opportunities: In-store bakeries and discountbakery chains are expected to continue to growand offer manufacturers of premixes and doughsales opportunities. Further trends include wholegrain products, premium pastries, internationaldelicacies, and healthy snacks. Growth potential
also rests on products such as Mediterranean andgluten-free products as well as the expansionof convenience and ready-to-eat baked goods
including sandwiches, wraps and bagels.

Dairy Products
Market: Germany is Europe’s largest dairy
producer. With a milk production volume of 31.8
million tons in 2020 , the country ranks fourth
globally. A total production value of around EUR
27.2 billion make the German dairy industry thecountry’s second-largest food and beverage
sector. Germany is one of the largest markets in
Europe. However, per capita dairy consumption
is declining slowly but steadily, with consumers
expressing growing demand for dairy alternatives.
One in ten liters of milk in produced in the country
comes from dairy alternatives.
Competitive Landscape: The German dairy
industry has witnessed a steady consolidation
trend towards larger and more efficient producers
for over a decade. The top five players accounted
for around 45 percent of the market's revenue in
2019. In value terms, 53 percent of all sales in theGerman dairy industry are generated by private
label products (59 percent in terms of volume).
Opportunities: The health & wellness trend provides excellent growth opportunities for producers
with a focus on natural ingredients such as calcium
and reduced-fat yogurt and dessert formulas. The
market share of organically produced fresh milk
exceeded 20 percent in 2020. Plant-based milkalternatives are experiencing dynamic growthin Germany, with sales value of EUR 396 million
in 2020. Germany is Europe’s biggest market,
followed by Spain and Italy respectively. The biggest subsegment is oat milk, with almond andsoy-based milk also very popular. Germany is also
home to a strong community of around 3.3. million
consumers that buy lactose-free dairy products ona regular basis.

Confectionery and Snacks
Market: High innovation levels and low barriers
to new product market entry have helped createa EUR 12.7 billion confectionery and snack production market in 2020. The leading segments in termsof market value are cocoa and chocolate products(EUR 5.5 billion), fine pastries (EUR 2.3 billion) andsnacks (EUR 1.7 billion). Average annual confectionery per capita consumption is around 28 kg.
Competitive Landscape: Although 16 companies in the industry might be regarded as large
enterprises, around 250 small and medium-sizedplayers are well established with their products,
making the industry fairly fragmented. The broad
palette of brands available is such that consumer
power is not the determining factor in this market. Germany’s attractive and competitive location factors are underpinned by an above averageexport rate of over 50 percent (equivalent to EUR
8.7 billion). Germany has been the world’s confectionery export champion for 43 years.
Opportunities: International confectionery producers marketed products worth EUR 5.6 billion in2020 in Germany. Growth segments include finepastries and savory snacks. Business opportunities
are powered by an ongoing health and wellness
trend which has led to increased demand for fatfree, low-sugar and sugar-free confectionery.

Beverages
Market: Germany is Europe’s largest market
for soft drinks and alcoholic beverages. Withan annual per capita consumption level of 168
liters, coffee remains the country’s most populardrink. In 2020, average per capita consumption ofmineral water and soft drinks reached 134.5 litersand 114.4 liters respectively. In the same year, theindustry produced non-alcoholic beverages worth
EUR 8.4 billion. Segments with dynamic growth
were fruit juice lemonade light (+48.6 percent)and vitamin, mineral & energy drinks (+20.7 percent). Following a global trend, beer consumptionin Germany has been declining for years, withper capita consumption amounting to 94.6 liters
in 2020. Market volume of alcoholic and nonalcoholic beer was EUR 17.3 billion during the same
period. In contrast, the consumption of wine (20.1
liters) sparkling wine (3.4 liters), and spirits (5.3
liters) has remained stable in recent years. Privatehousehold spending on alcoholic beverages hasgrown constantly in recent years, reaching EUR
25.3 billion in 2020.

Confectionery and Snack Production by Value 2020
in EUR billion

Chocolate products

5.5
2.3

Fine baked goods
Snack products

1.7

Sugar products

1.5
0.9

Ice cream
Cocoa & chocolatesemi-finished products
Raw mixtures

Confectionery and snacks

EUR 12.8 billion

0.7
0.1

Source: BDSI 2021

Competitive Landscape: Although a numberof major international players are present in
the German soft drinks market, the industry ishighly differentiated. Like the German soft drinks
industry, the alcoholic drinks market is diversified.
There are, for example, more than 1,500 breweries active in the market. This makes the German
alcoholic beverage market an attractive businessproposition – particularly for niche and valueadded products.

The highly differentiated beverages
market is an attractive market proposition for niche
products

Opportunities: Following the health and convenience megatrend, the industry offers opportunities in segments and niche segments such asfunctional drinks, smoothies, enhanced waters,organic beverages, and sugar-free soft drinks inparticular. Companies new to the market also
have the chance to record smaller scale successes
by stressing health benefits or unique production
methods.
Current growth categories in the alcoholic beverages sector include craft beer variations such as
pale ale, wheat or lager beer and alcohol-freebeers. Asian beer brands also enjoy growing popularity in Germany. Demand for non-alcoholic beeris also increasing, with market volume expected
to double to EUR 1.8 billion by 2025. Changes in
consumer preferences have also led to a higher
consumption of organic wines, beers and spirits.

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MARKET OPPORTUNITIESMeat and Sausage Products
Market: Despite a slight decrease in production anddemand, the meat and sausage products industry
remains the largest segment in Germany’s foodindustry. In 2020, it reached a production value ofmore than EUR 45 billion. The major segments interms of volume include pork (60.4 percent), chicken(18.6 percent) and beef (13.1 percent) in 2019.

Organic meat consumption was up
50 percent in 2020

Per capita consumption of meat has been shrinking constantly for years and reached 57.3 kg in2020. Nevertheless, the demand for organic meatand meat alternatives is growing. The purchasevolume of organic meat increased by over 50 percent in 2020 compared to the previous year. Animal welfare continues to be the most frequently
cited reason for purchasing organic food. Although
overall exports decreased in 2020 due to Covid-19
and import bans to combat the spread of Africanswine fever, products worth some EUR 7.3 billion
were exported in 2020, making Germany a net
exporter of meat and meat products.
Competitive Landscape: The German meat
processing industry is characterized by an ongoing consolidation trend. The top three industry
players account for around 60 percent of all pig
slaughtering. The overall competition in Germany
can be regarded as strong. Changes in national
labor law regulations and hygienic standards haveput some additional pressure on the industry.
Some retailers follow a backward-integration
strategy and operate their own slaughterhouses,
putting additional pressure on processors.
Opportunities: The sector remains attractive
thanks to traditional nutrition habits and theintroduction of product variations including
convenience foods and snacks. Organic meat is
becoming increasingly popular. The volume oforganic poultry sales rose by about 70 percent in
2020, with red meat (beef, pork, goat, lamb) sharerising by 51 percent.
The manufacture of meat products in accordancewith halal requirements is also becoming more
important. A number of major national retailers
have announced self-commitments to market
only meat from more animal-friendly stock
keeping. This requires massive investment inproduction and will transform the industry in theforthcoming years.
The ongoing trend towards vegetarian and veganfoods has prompted some meat processors to

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introduce meat-free product variations including vegetarian/vegan sausages and cold cuts.
Overall sales of plant-based meat alternatives
have been increasing continuously for a periodof some years.

Fruit and Vegetables
Market: The consumption of fresh fruit and vegetable products in Germany transferred from awayfrom-catering to home consumption due to Covid19 restrictions in 2020.
Retail sales of fresh fruit and vegetable products
profited by this development and grew by almost
16 percent to reach EUR 17.6 billion in 2020. The
sales volume of fresh fruit grew by two percent
and share of fresh vegetables grew by 12 percent.
Prices increased because of a harvest-handshortage at the beginning of the year as well as
spacing and quarantine regulations. Production
value of processed fruits, vegetables and potatoes
in Germany reached EUR 8.4 billion in 2020. The
export quota has stayed stable at 17 percent overthe past years, with exports amounting to EUR 1.4
billion in 2020.
Competitive Landscape: The German fruit andvegetable processing industry can still be regarded
as fragmented and is dominated by medium-sizedcompanies. Nevertheless, some companies are
slowly entering a consolidation phase in orderto release synergy effects. The overall industry
and employment situation is slightly positive,
although companies are effected by shortages in
raw material supply and rising logistics costs.
Opportunities: With fresh fruit imports of EUR
4.3 billion, Germany is a significant net importer.
Current consumer trends include convenience
products including pre-packed fruit and vegetablesalads as well as trade-up developments within
the segment (e.g. growing sales of seedlessgrapes, organic and fair trade products). Furthermore, German consumers focus more and more on
regional and seasonal grown fruits and vegetables
due to sustainability reasons. Local growers, suchas farm stores, especially benefit from increased
sales of fresh fruits and vegetables. Rising market
prices, and a growing demand for regionallygrown as well as exotic fruits and vegetables,
offer new entrants ample opportunities toposi¬tion themselves in the market.

MARKET TRENDS

Health & Sustainability Drive Demand
Germans are becoming more sophisticated anddemanding in terms of variety and quality of foodproducts. Recent consumer trends in the German
food and beverage market have been influenced
by a number of far-reaching changes in society. A
more sustainable and ecological friendly lifestyleis fueling demand for alternative and new foodproducts or improved production methods. In
addition, consumers pay more attention to seasonal and regionally produced foods as well as fairtrade products.
Organic food products have long since reached themainstream, with fair trade products (such as coffee and cocoa) also enjoy growing popularity.
Overall sales reached almost EUR 2 billion in 2020.
Ethnic foods, beauty foods, “free from” foods (e.g.
lactose and gluten-free products), and regionallygrown foods are further trends currently finding
favor with Germany’s increasingly discerning consumer base.
Organic Foods
Organic food sales increased by more than 22 percent in 2020 to reach almost EUR 15 billion insales. Germany is a frontrunner in the production

and consumption of organic food products andthe largest market in Europe. Organic food sales
grew roughly twice as much as the food market asa whole, as people cooked and ate more at homeduring the pandemic and opted for healthy, environmentally and animal-friendly food.
These developments helped organic foods secure
a 6.4 percent share of the total food market. Per
capita sales of EUR 144 are almost twice as highas the EU-28 average of EUR 81. Although some ofthis growth can be explained by increased prices,most segments experienced real and significant
volume growth. The strongest growth in sales wasin the meat and poultry sector as well as fresh
fruits and vegetables. Other growth segments
include flour, cooking oil, and dairy products suchas cheese, curd cheese, yoghurts or fresh milk. The
rising demand for organic foodstuffs in the commercial catering sector is further driving the market. The Bio-Siegel (“organic seal”) logo attached
to organic foodstuffs promotes better consumer
orientation. Recipients of the seal are subject tofood and feed legislation as well as EU organic
farming provisions.

European Organic Foods Sales and Consumption 2019
Domestic market sales in EUR billion
Germany

Per capita consumption in EUR
12.0

France

11.3
3.6

Italy

Germany
France
Italy

Swiss

2.9

Swiss

UK

2.7

UK

Sweden2.1

SwedenSpain*

2.1

Spain*

Denmark

2.0

Denmark

Austria

1.9

Austria

Netherlands

1.2

144

Netherlands

174
60
342
40
215
47
344
216
71

* 2018 data; Source: BOLW Branchenreport 2021

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MARKET TRENDS
Some 3,500 shops operate in Germany selling
solely organic-produced products, of which 500
can be considered organic supermarkets. The
EU-wide organic food label eases the import andtrade of organic foods in Germany and other EU
member states. Today, all German supermarkets
and discounters sell organic foods. As well asbranded products, most supermarkets and dis
counter chains have successfully introduced own
organic label brands.

Milk alternatives
A similar development can be seen in the dairy
industry. Per capita consumption of milk and milk
products is shrinking, while sales of dairy alternatives are increasing strongly. Sales of plant-basedmilk grew by 42 percent, reaching around EUR
400 million in 2020. The most popular segment interms of value was oat-based milk based (EUR 184
million), followed by almond milk (EUR 82 million)
and soya milk (EUR 74 million) respectively.

Plant-based foods
Germany is not only the largest European market
for the plant-based food sector, it is also thestrongest growing (+ 53 percent in 2020). Turnover reached almost EUR 1 billion in 2020.

One out of every five households is consciously
reducing certain dairy products, with thisexpected to rise to one-in-three households in thenear future. Plant-based plain yoghurt (EUR 70
million), ice cream (EUR 67 million), fruit yoghurt(EUR 58 million), and cheese (EUR 44 million) arealso becoming increasingly popular. This is justthe beginning of a growing trend that is being
driven by young Germans in particular. In a survey
conducted by the German Federal Ministry ofAgriculture and Food (BMEL), 17 percent of people
between 14 and 29 years of age state that they
use alternatives to animal products daily or evenseveral times a day. However, it is not just the
young; many Germans are currently rethinking
their animal-based diet due to reasons of health,sustainability and animal welfare.

Meat alternatives
While meat production and consumption is decreasing, meat substitute consumption is growing, in
2020, production of meat substitutes increasedby 39 percent to 83,700 tons. Plant-based meat
segments with the highest sales value include
refrigerated meat, cold cuts and meat spreads andsausages. Some 39 percent of German households
consciously reduce certain meat products.

Plant-based Food Sector by Country 2020
in EUR million

Fruit and vegetables

82.3
64.4

Vitamins and minerals
Whole grain products

61.3

Nuts

61.2

Fish

60.3

Tea/Green Tea

53.5

Dietary fibers

52.0

Dairy products

47.8

Herbs and Spices

47.3
33.5

Fish oil

Source: ProVeg 2021, based on Nielsen MarketTrack

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Health & Well-Being
Around three quarters of all Germans see a direct
link between nutrition and physical fitness andhealth. More and more people in Germany also
regard food as a way to overcome general healthconcerns (such as obesity, diabetes, and celiac
disease), improve their sense of well-being andeven their performance levels. For 41 percent of all
Germans aged 60 years and older, healthy nutrition is key. This number increases to 54 percent
among people aged 70 years and older.
German customers are increasingly sensitive
to conscious shopping as well as healthy andsustainable nutrition. Popular products include
functional foods, whereby highly nutritious
components like probiotics, fiber, and vitamins
are added to make the eating experience more
beneficial in terms of positive health effects andtaste. Major segments in Germany include probiotic yogurts, yogurt drinks and beverages such asvitamin-enhanced waters. In addition, “free from”
products also enjoy growing popularity: In 2020,
around 2 million Germans bought gluten-free
foods on a regular basis.During the same period,
around 1.5 million people regularly purchased
lactose-free products.

R&D FRAMEWORK

Innovative Leader
Strong R&D Landscape
The German food and beverage industry as wellas public and private institutes alike continuously
conduct R&D activities to develop new products,
enhance nutrition, and improve general foodsafety. Research and development and innovation
spending in the German food and beverage industry reached EUR 1.9 billion in 2019. Twenty-eightpercent of all companies active in the industry are
expected to introduce new products or productvariations or invest in machinery and equipment
to improve processes and increase efficiency.
New or “me-too” products will create about five
percent of total revenues. Process innovations willaccount for an average unit cost reduction of 2.5
percent.
Digitalization
The digitalization of the food industry allows
manufacturers to continuously improve the quality of products and processes as well as enhanceplanning accuracy, traceability of products andcustomer communication. Real-time quality
checks, all-over product identification and traceability as well as improved energy efficiency levels
are of specific interest for both manufacturers
and consumers. Numerous national and international foodtech start-ups also support the digitaltransformation of the industry from farm to fork.
Technological playing fields include, for example,
smart and digital farming applications, individualized food production, options to minimize foodwaste, and new online delivery providers.

Research Facilities and Institutes
The non-profit Research Association of the German Food Industry (FEI) supports research projects in all fields of food science, food technology
and nutritional science. The main focus of the
FEI’s activities are the coordination and promotion of industrial collective research projects initiated by the Federal Ministry for Economic Affairs
and Energy. Germany’s federal and regional institutes support R&D activities with EUR 857 million
every year.
The federal states of Bavaria, Lower Saxony and
Brandenburg have the highest R&D spending on
public food science in Germany. The country’s
strong food industry R&D landscape is supported
by world-renowned public institutes such as the
Julius-Kühn-Institut (Federal Research Centre forCultivated Plants), the Max-Rubner-Institut (Federal Research Institute of Nutrition and Food), andseveral institutions of the Leibniz Association.
Main research areas include nutrition science,food technology, plant and animal production,
and aquaculture.

Digitalization in
the food industry
is improving efficiency and quality→ For further information about the German
food supplements market please visit:www.gtai.com/download-food-supplements

R&D Projects in Food Technology
SectorInstitutes

Ongoing projects

Finished projects

All projects

Food processing

474

276

860

1136

Food chemistry

153

51

415

466

Food microbiology

135

76

329

405

Overview of R&D Projects in Nutritional Science
Physiology of nutrition

165

72

332

404

Nutritional behavior

146

61

207

268

Toxicology

128

90

539

629

Home economics

23

1

25

26

Source: BLE 2021

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BUSINESS ENVIRONMENT

Market Location Advantage
Retail Landscape
Germany is Europe’s largest food retail market
and the ideal point of entry into both German
and European markets. Retail sales in Germany
skyrocketed in 2020 due to extraordinary demand
created by the partial lockdown of restaurants andother food service providers. Total sales grew by
8.2 percent over 2019 and reached around EUR 227
billion. Fully fledged supermarkets in particular
benefited from the Covid-19 restrictions, increasing
their sales by over 16 percent. Discounters also
enjoyed an above average growth of 8.8 percent.

Retail and online
sales have grown in
response to demand created by
the Covid-19 pandemic

In 2020, the products with the highest growth
rates were fruits & vegetables (+ 16 percent),
meat & sausage products (+15.9 percent) andalcoholic beverages (+15.1 percent). The German
retail landscape can be described as consolidated
and mature. In total, the top four German retailers (Edeka, Schwarz Group, Rewe Group, and Aldi
Group) have a market share of around 75 percent.
As the leading chains – including Edeka, Schwarz
Group, and Rewe Group – operate under morethan one distribution channel (e.g. supermarkets
and discounters), manufacturers new to the market still have multiple options for marketing andlaunching products in Germany. In 2020, the overall market share of discounters remained stable
at around 42 percent. Conventional supermarkets
fight competition by continuously enlarging the

product portfolio including the introduction ofpremium private labels, value-added services andinnovative shop layouts.
Online Food Sales
Although still very much in its infancy, theCovid-19 pandemic led to a massive growth inonline food sales in Germany. Turnover reached
EUR 2.67 billion in 2020, making it the strongestgrowing e-commerce segment with an increaseof 67 percent. The share of food in the German
e-commerce sales raised within one year from 2.1
percent to 3.2 percent.
The trend of buying food online will most likely
intensify in the future. Fifty-two percent of people surveyed state they want to buy food online
more often or significantly more in the future.
A growing number of established supermarkets
and new players are consolidating this trend andincreasingly serve customers online. International
actors can enter the scene relatively easily as theoverall market is growing, with only moderatebarriers to entry for cooperation with national
wholesalers and logistics providers.
Private Consumption
Despite the Covid-19 crisis, per capita disposable
income in Germany actually grew in 2020 by 0.6
percent, reaching around EUR 23,800. Of this sum,Top 10 Food Retailers in Germany in 2020
Gross Sales 2020
EUR billion

Number ofStoresSupermarket

67.0

11,207

Rewe, Rewe City

Supermarket

55.6

10,680Schwarz Group

Lidl, KauflandDiscounter,
Hypermarket

45.3

3,906

Aldi Group

Aldi Nord, Aldi Süd

Discounter

31.6

4,146

dm-drogerie markt

dm, Balea

Drugstore

8.5

2,024

Real

Real

Supermarket

7.8

276

Rossmann

RossmannDrugstore

7.3

2,196

Metro

Metro C+C

Hypermarket

5.3

103

GlobusCash & Carry,Fridel

Supermarket

5.2

47

Bartels-Langness-Gruppe

Bartels-Langness, Citti

Drugstore

4.9

120

238.5

34,705Company

Distribution Channel

Edeka

Edeka, E-Neukauf, etc.

Rewe Group

Total Top-10
Source: Lebensmittelzeitung 2021

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TypeEUR 20,560 was allocated for private consumption, a level significantly higher than the EU-27
average of EUR 15,400. In total, Germans spent
EUR 226.5 billion on food and beverages in 2020 –an increase of 8.2 percent over 2019. All told, 15.5
percent of private consumption in Germany was
spent on food and drinks.
Local Sourcing
Germany’s abundant farmland offers countless
opportunities for local sourcing and underpins
Germany’s attractiveness as a production
loca¬tion. In 2019, around 270,000 companies
cultivated around 16.7 million hectares of land.
Around 70 percent of the total available farmland
is used for farming. Approximately 50 percent of
the total German land area is used for agriculture.
Producers can benefit from shifting consumer
preferences towards more sustainable or regionally produced foods – not only in the fruit andvegetables segment but also across other categories. In a survey conducted by the Ministry ofFood and Agriculture, 82 percent of respondents
identified regional origin as important, second
only to taste (96 percent). The third most mentioned selection was seasonality (78 percent).
The number of organic certified farms grew by 3.8
percent in 2020, amounting to 13.4 percent of thetotal number of all farms. As a result, more thanten percent of all agricultural farmland is used fororganic farming.
Reliable Logistics Infrastructure
Providing a regular supply of food to a populationof around 83 million people makes significant
demands of the food logistics sector: customer
deliveries must be fast, secure, and on time.
Germany’s food logistics capabilities were provenduring the Covid-19 pandemic, with full-range
supply secured almost all of the time. A highperformance road infrastructure is an essential
requirement for customer-oriented delivery offood.
Germany’s infrastructure excellence is confirmedby the World Bank: The 2018 Logistics Performance Index of the World Bank ranked Germany
first out of 160 countries. Accumulated in thisscore for Germany are high marks for the qualityof roads and air transport, excellent railroads
and port infrastructure, as well as its information infrastructure. The study further points out
Germany as the best performer over the period
2007 to 2018.

Foreign Trade
With total import and export values of around
EUR 88.3 billion and EUR 72.6 billion respectively,
Germany was a net importer of processed foods
and agricultural commodities in 2020. The risingexport share of processed food and beverage
products underpins Germany’s competitive location factors and its excellent geographical position
to serve national and international markets. Germany’s main trading partners of processed foodproducts are other EU members led by the Netherlands, followed by France and Italy. Exports to
non-EU countries decreased slightly by 0.3 percent, largely due to border closing to combat thecoronavirus. The biggest non-EU buyers include
UK, China and Switzerland. Exports reached 33.2
percent of the total production value in total, falling by just 0.8 percent.

Germany's logistics
excellence hashelped maintainsupply throughout
the Covid-19 crisis

Competitive Labor Costs
High productivity rates and steady wage levels
make Germany an attractive investment location.
Since 2010, wages in the business economy haverisen in most European countries. While somecountries experienced a rise of close to or morethan five percent, Germany recorded one of thelowest labor cost growth rates within the EU atjust 2.4 percent. Flexible working practices further
enhance Germany's competitiveness.

Average Annual Labor Cost Growth 2010-2019
in percent

Spain

2.1

Germany

2.2

France

2.2

UK

2.3

Netherlands

2.4

EU-28

2.5

Czechia
Slovak RepublicHungary
Poland

4.2
4.7
4.9
5.2

Source: Eurostat 202011

INVESTMENT CLIMATE

Financing & Incentives in Germany

Please visit
our website formore incentives
information:
www.gtai.com/
incentives

Incentives programs in Germany are available
through different public funding instruments
and for different funding purposes. The individual
funding requirements may, for example, result
from investment projects, research and development activities, personnel recruitment, working
capital needs or other specific purposes. The different incentives instruments including grants,
loans and guarantees are generally available for
all funding purposes and can ordinarily be combined; thus matching the different business activity needs at different development stages of thecompany.
Investment Project Financing by Private Equity
Technologically innovative start-ups in particularhave to rely solely on financing through equity
such as venture capital (VC). In Germany, appropriate VC partners can be found through the
Bundesverband Deutscher Kapitalbeteiligungsgesellschaften e.V. (BVK – “German Private Equity
and Venture Capital Association”). Special conferences and events like the Deutsches Eigenkapitalforum (“German Equity Forum”) provide anotheropportunity for young enterprises to come into
direct contact with potential VC partners. Public
institutions such as development banks (publicly
owned and organized banks which exist at thenational and state level) and public VC companies
may also offer partnership programs at this development stage.

Incentives in Germany

Funding purposes

Investments

Working
CapitalResearch &Development

Specific
Purposes

Personnel

Financing supported by any of thefollowing public funding instruments(combinations of instruments usually possible)
Public funding instruments

Grants12

Loans

Guarantees

EquityCapitalIndustry Overview 2022/23  |  gtai.com

Mezzanine
CapitalInvestment Project Financing by Bank Loans
Debt financing is a central financing resource
and the classic supplement to equity financing
in Germany. It is available to companies with acontinuous cash flow. Loans can be provided tofinance long-term investments, working capitaland operational costs (R&D, personnel) and forbridging temporary financial gaps. Besides offersfrom commercial banks, investors can access publicly subsidized loan programs in Germany. These
programs usually offer loans at attractive interest
rates in combination with repayment-free startup years, particularly for small and medium-sizedcompanies. These loans are provided by the federal development bank KfW and also by regional
development banks.
Investment and R&D Incentives
When it comes to setting up production and service facilities, investors can count on a number ofdifferent public funding programs. These programs
complement investment project financing. Most
important are cash incentives provided in the formof non-repayable grants applicable to co-financeinvestment-related expenditures such as newbuildings, equipment and machinery. R&D projectfunding is made available through a number ofdifferent incentives programs targeted at reducing
the operating costs of R&D projects. Programs
operate at the regional, national, and European
level and are wholly independent from investment
incentives. At the national level, all R&D projectfunding has been concentrated in the High-TechStrategy to push the development of cutting-edge
technologies. Substantial annual funding budgets
are available for diverse R&D projects.
Labor-related Incentives
After the location-based investment has been
initiated or realized, companies can receive further subsidies for building up a workforce or the
implementation of R&D projects. Labor-related
incentives play a significant role in reducing theoperational costs incurred by new businesses.
The range of programs offered can be classified
into three main groups: programs focusing on
recruitment support, training support, and wage
subsidies respectively. Labor-related incentives
play a significant role in reducing the operationalcosts incurred by new businesses.

SUCCESS STORYBest Practice Example: PlantA GmbHGermany Trade & Invest provides a range ofinward investment services to international
investors. After careful consultation with theindividual investor, a support program of consultancy and information services is drawn up
to help set the stage for investment success.
Here we provide a typical example of the services provided to a recent investment project.

PlantA Project Overview

A group of industrial investors, led by Norwegian
Rønneberg Group AS, established a new company
in Germany, PlantA GmbH, in September 2020.
After receiving support from Germany Trade &Invest and the state's economic development
agency, Invest in Mecklenburg-Vorpommern,
PlantA invested in the creation of a state-of-theart production facility for plant-based dairy alternatives in the city of Anklam.

PlantA Investment Project Time Line

Project Information
The investment volume is around EUR 8.5 million,
creating 25 new jobs. The production area is 2,000
square meters with a capacity of 25 tons per day.
Production will be fully automated to ensure
efficiency and safe food production. Core activity
will be the production of vegan products including
yogurt, desserts and beverages with a low-fat
content. PlantA’s long-term plan is to build moreproduction facilities and develop new productswith a greater range.
PlantA’s factory will produce oat-, soy- andalmond-based vegan food, recognizing the positive trend towards vegan nutrition in Germany.
The necessary raw materials will all be sourced
from the region, creating high-quality dishes fromplant-based ingredients. The manufactured products will then be distributed in Germany, Poland
and Scandinavia, mostly to a retailer client base.

Investment
project

Production of plant-based yogurt and other food products

Investment
volumeEUR 8.5 million

Jobs created25

Dec. 2019

First contact with Germany Trade & Invest
Introduction to the project, detailed discussion of potential
investment incentives

Jan. 2020

Site selection supported by GTAI and Invest in MecklenburgVorpommern

Feb. 2020

Site visit in Anklam, Mecklenburg-Vorpommern, andintroduction to regional and local contacts

Spring andSummer 2020

Feasibility study, application for investment incentives,
final location decisionSep. 2020

Company registration as PlantA GmbH in Germany

August 2021

PlantA GmbH begins construction of the production facility
in Anklam

2022

Expected start of production

Germany Trade & Invest Support
Germany Trade & Invest, together with Invest in
Mecklenburg-Vorpommern, supported Plant A
with information on specific site offers including
the organization of site visits as well as substantial
tax, incentive and legal information. Relevant laborand building costs indicators were also provided.

→ Contact our industry specialist to explore theindividual investment opportunities available toyour business in Germany’s fast-moving food &Location Factors
PlantA investors decided to establish a production
site for dairy alternatives in Germany due to theever-growing demand for vegan food. Decisive
location factors were the increasing demand inGermany and neighboring countries, the availability of investment incentives, an optimal logistics
infrastructure – with good transport connections
within the country and to other EU members – aswell as a lively local economy with potential forsynergies and availability of qualified personnel.
Food products made in Germany also drive export
opportunities.

beverages sector: daniel.lindel@gtai.com

13

OUR SERVICES

Germany Trade & Invest Helps You
Germany Trade & Invest’s (GTAI) teams of industry
experts will assist you in setting up your operations in Germany. We support your project management activities from the earliest stages of yourexpansion strategy.

Our team of consultants is at hand to provide youwith the relevant background information on Germany’s tax and legal system, industry regulations,and the domestic labor market. Germany Trade &Invest’s experts help you create the appropriate
financial package for your investment and put you
in contact with suitable financial partners. Our
incentives specialists provide you with detailed
information about available incentives, support
you with the application process, and arrange
contacts with local economic development corporations.

We provide you with all of the industry information you need – covering everything from key
markets and related supply and application sectors to the R&D landscape. Foreign companies
profit from our rich experience in identifying thebusiness locations which best meet their specificinvestment criteria. We help turn your requirements into concrete investment site proposals;
providing consulting services to ensure you makethe right location decision. We coordinate site
visits, meetings with potential partners, universities, and other institutes active in the industry.

All of our investor-related services are treatedwith the utmost confidentiality and provided freeof charge.

Our support services for your investment project

Strategy

Evaluation

Decision & Investment

Project management assistanceBusiness opportunity
analysis and market
research

Project partner
identification andcontact

Joint project management with regional
development agency

Coordination and support of negotiations
with local authorities

Cost factor
analysis

Sitepreselection

Site visit
organization

Final site
decision support

Market intelligenceand statistics

Financing & incentives
consultancy

Tax and Legal
information

Contact to financial
partners

Market entry
strategy support

Location consulting/Site evaluation
Identification ofproject-specificlocation factors

Support services
Facts onincorporation

14

Industry Overview 2022/23  |  gtai.com

CONTACT

Investor Consulting

Imprint
Publisher
Germany Trade and Invest
Gesellschaft für Außenwirtschaft
und Standortmarketing mbH
Friedrichstraße 60
10117 Berlin
Germany
Executive Board
Dr. Jürgen Friedrich, Chairman/CEO
Dr. Robert Hermann, CEO
EditorWilliam MacDougall, GTAI

Daniel Lindel is the senior manager responsible forthe food & beverage industry in Germany Trade &Invest’s Digital & Service Industries team within
the agency’s Investor Consulting division. He is an
acknowledged industry expert with a decade ofexperience and a proven track record in helping
international companies set up their business
operations in Germany.
For questions on how to establish your business orservice center in Germany, please contact Daniel
Lindel at daniel.lindel@gtai.com
For more information about the food & beverageindustry in Germany, please visit our website
www.gtai.com/foodContact us at our headquarters in Berlin:
Germany Trade & Invest
Friedrichstraße 60
10117 Berlin
Germany
T +49 30 200 099-555

LayoutDanielle Röbbenack, GTAI
Print
Kern GmbH, 66450 Bexbach
www.kerndruck.de
Picture Credits
Cover: gettyImages/Monty Rakusen
Page 15: Germany Trade & Invest
Notes
All rights reserved ©Germany Trade & Invest,
December 2021
Reproduction, in whole or in part, only permissible
with express prior authorization. All market data
provided is based on the most current market
information available at the time of publication.
Germany Trade & Invest accepts no liability forthe actuality, accuracy, or completeness of theinformation provided.
Order Number
20881/2

About Us
Germany Trade & Invest (GTAI) is the economic development agencyof the Federal Republic of Germany. The company helps create andsecure extra employment opportunities, strengthening Germany as
a business location. With more than 50 offices in Germany and abroad
and its network of partners throughout the world, GTAI supports ­German companies setting up in foreign markets, promotes Germany as a­business location and assists foreign companies setting up in ­Germany.
All investment services and related publications are free of charge.

Germany Trade & Invest
Headquarters
Friedrichstraße 60
10117 Berlin
Germany
T +49 30 200 099-0
F +49 30 200 099-111
invest@gtai.com
www.gtai.com

Germany Trade & Invest
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53123 Bonn
Germany
T +49 228 249 93-0
F +49 228 249 93-212
info@gtai.de
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