Germany’s Food and Beverages Industry

Germany’s Food and Beverages Industry

With almost 84 million inhabitants and a high responsiveness to new cultural influences and culinary trends, Germany provides great business potential for domestic and international foods and beverages. 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 on Germany’s food and beverages audience – high expectations for a high-income population

The food sector in Germany is motivated not just by a desire to provide the finest, but also by a desire to actively adapt to changing customer desires and requirements. Increased health awareness, an aging population, and the resultant demand for health and wellness goods have aided a number of formerly niche market actors in becoming major industry players.

More than 170,000 distinct food items are offered to German customers from national and international enterprises operating in practically every section of the German food and beverage market, with consumers having spent 175.8bn Euros for food, in 2020. It can be said that the industry has reaped the benefits of the coronavirus outbreak, with organic food and online food retail seeing record sales.

As a consequence of rising worries about food quality, increased knowledge of environmental issues, and, among some, a skepticism of contemporary agricultural and food production practices, consumers in Germany have become increasingly sensitive of the food they eat, giving preference to locally grown and fresh food. Even a rising number of customers are taking the effort to identify and compare the ingredients in the foods they buy, in an attempt to reduce or avoid added sugar, artificial substances, and fat.

Consumers in Germany are becoming more conscious of their ethical and moral ideals. This manifests itself in decisions shaped by environmental, sustainability, animal welfare, production, and labor practices, as well as a desire to have a beneficial influence on communities and people. The advent of waste-free/packaging-free supermarkets, as well as a greater focus on recycling and renewable energy, reflect this growing trend. The worldwide market for ethical products is expected to grow, with Germany playing a key part in this development.

Food and beverages in digital markets

Discounters, conventional food retail, hypermarkets, drugstores, department and general shops, and other sorts of businesses make up a significant portion of the food trade industry in Germany. A grocery store is an example of a classic food retail outlet, but hypermarkets are substantially larger than supermarkets and sell products other than food. Year after year, the number of food retail establishments in Germany has decreased during the previous decade. The development of online food shopping is one of the causes behind this.

Because of the advent of online food retail, the food industry is already changing, not just for special, less accessible, or overseas items, but also for everyday grocery shopping. The spread of the coronavirus has boosted demand for online shopping and deliveries, with some supermarkets depending on their existing online stores and delivery services.

At the forefront of online retail in the food and beverages segment are, and Revenue of online retail in the food and beverages segment is estimated to reach 2.4bn Euros at the end of 2021, while Statista projects the market volume to reach 3.2bn Euros in 2025, an annual growth rate of 6.83%. Also, by 2023, 1% of total market revenue in the food and beverages segment will be generated through online sales, depicting a growing significance of online stores for German consumers.

Conventional Food Landscape is still dominating

Despite of the new trends and movements, German 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 also 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 on food and beverages is significantly lower than for example in the neighboring France. This illustrates yet again that one should be careful using too many stereotypes about German as a market; there are many different segments and geographies to deal with.

BDG as experts for foods and beverages in Germany

While BDG already helped a number of foreign clients to enter the food and beverages segment, it has also identified for online offerings to be a major factor of success. Having unique online offerings that provide sustainable and environmental-friendly products, setting up a local production facility and working with sustainable supply chains make it possible to generate a strong foothold on the German market. But adoption of online retail is no easy endeavor. Key issues in this industry include making it easier to transport perishable items quickly, eliminating the last-mile problem, and lowering the high cost of flexible, same-day delivery.

As these entry barriers prevent small and medium enterprises to effectively conquer the digital marketplace and reach German consumers, it is advantageous to have a domestic consultancy knowing the ins-and-outs of the brick-and-mortar business and the online market to strategically lead you into the right direction. BDG is such a consultancy with expert knowledge in the food and beverage industry being able to support your business endeavor in Germany.

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