Germany’s Food and Beverages Industry
When thinking about Germany’s food and beverages landscape, the classics like bratwurst, sauerkraut, and beer probably come to mind first. However, Germans actually love trying food from around the world and participating in culinary trends. This is illustrated not only by the massive sales rates of recent social media food trends like Dubai chocolate or the fact that doner kebab, a Turkish dish allegedly invented in Berlin, takes second place in a ranking of German’s favorite dishes. A study from 2019 also showed that the share of domestic cuisine in the German restaurant market was just 35.5%, which was the lowest share of all 17 countries examined. With this high responsiveness to international cuisine and a population of almost 84 million, Germany provides great business potential for new entrants in the food and beverages industry. Moreover, its strategic geographical location and leadership in technological innovations make Germany an excellent starting point to enter this segment of the European consumer goods industry.
Current trends – The great divide
The food sector in Germany is motivated not only by the desire to provide the finest products but also to actively adapt to changing customer needs and demands. Increased health awareness, an aging population, and the resulting demand for health and wellness products have aided a number of former niche market players to become major industry players. With sales of the German food and beverages industry reaching an all-time high of 195 billion euros in 2022, now is certainly the time to enter this market.
However, many German consumers still do not prioritize high quality food over other types of consumer goods. In 2023, Germans spent a mere 13.4% of their income on food products taken together with health and care products. This share of private consumption spent on food products was lower than in any of the other 26 EU countries. This low prioritization of food and beverages can also be seen in German supermarkets. At discounters such as Lidl or Aldi, you can buy half a kilo of minced meat for just 3.99€ or a liter of cooking oil for as little as 1.69€. To put this into perspective, most Germans will happily pay around 20€ for a liter of motor oil at the gas station, showing that they are much less concerned about the price of the oil they put in their car than the oil they put in their body.
On the other hand, some German consumers have become increasingly aware of food quality, sustainability, and agricultural and food production practices in recent years. A growing number of customers are even making the effort to identify and compare the individual ingredients in the foods they purchase in an effort to reduce or avoid added sugars, artificial substances, and saturated fats. In addition, especially the younger generation of German consumers is becoming more aware of their ethical and moral responsibilities when it comes to food and beverage consumption. The emergence of waste-free and packaging-free supermarkets, a greater focus on recycling and renewable energy, and new laws such as the requirement to pay for plastic bags in all German stores reflect this mindset shift. The global market for ethical products is expected to grow, with Germany playing a key role in this development.
Food and beverages in digital markets
Discounters, conventional food retail, hypermarkets, drugstores, as well as department and general stores still make up a significant portion of the food trade industry in Germany. However, the number of food retail establishments in Germany has been declining during the last decade. A significant driver behind this development is certainly the rise of online grocery shopping that more and more consumers are willing to try.
The advent of online food retail is already changing the grocery industry, not only for specialty, hard-to-find, or overseas items, but also for everyday grocery shopping. During the Covid-19 pandemic, many customers tried online grocery shopping for the first time, with some supermarkets relying on their existing online stores and delivery services. Convenience and quality have convinced a lot of them to stick with this modern method of grocery shopping even after the pandemic ended.
At the forefront of online retail in the food and beverages segment are rewe.de, flaschenpost.de, amazon.de, and hellofresh.de. After the massive jump in sales in German online grocery retail in 2021, sales in this industry reached 3.9 billion euros in 2024. Additionally, the market share of online retail in food sales was recently (2023) at 2.9%, depicting a growing significance of online stores for German consumers.
Current challenges in the food and beverages segment
Despite the openness of many German consumers to trying new international culinary trends, Germany still has large parts of its population going for conventional options in the food and beverage sector. Especially when it comes to basic products like flour, milk, sugar, coffee and meat products, the price competition is extreme. Stories about discounters reducing prices as a reaction to sales at the nearest competitor – just to keep the impression of “cheapest in town” – are well-known examples of this.
Furthermore, the average spent percentage of household expenses on food and beverages in Germany is significantly lower at 11.5% (2022) than the EU average of 13.6%. However, when looking at these statistics, one should keep in mind that food prices in Germany are only slightly higher than the EU average, but per capita income is significantly higher. Nevertheless, at a time when the cost of living is constantly rising and many consumers are considering more carefully how they want to spend their money, new entrants to the German food and beverages market should be particularly diligent when developing a marketing strategy for their product.
BDG as experts for food and beverages in germany
BDG has already helped a number of foreign clients to enter the German food and beverages segment. In doing so, we have identified online offerings as a major success factor. Having unique online offerings that provide sustainable and fairly produced products, in addition to setting up a local production facility and working with sustainable supply chains, make it possible to establish a strong foothold in the German market. However, launching an online business is not an easy endeavor. Key challenges in this industry include facilitating the quick transport perishable goods, eliminating the last-mile problem, and reducing the high cost of flexible same-day delivery.
As these entry barriers make it difficult for small and medium sized enterprises to effectively conquer the digital marketplace and reach German consumers, it is advantageous to have a local consultancy. At BDG, we know the ins and outs of the brick-and-mortar and online markets to strategically guide you in the right direction. We have the expertise in the food and beverages industry to support your business endeavors in Germany.