Food Wholesalers Note: Europeans Are Dining Out

Food Wholesalers Note: Europeans Are Dining Out

According to The McKinsey Quarterly, 2003 Number 1, retail sales of food and drink in Europe’s largest markets are at a standstill, leaving European grocery retailers hungry for opportunities to grow. Most leading retailers have tried e-commerce, with limited success, and expansion abroad. But almost all have ignored the wholesale food and drink trade.

Wholesale food and drink sales in France, Germany, Italy, Spain, and the United Kingdom (together representing about three-quarters of the European market) came to $167.9 billion (US)) in 2000—more than 40 percent of retail sales. Moreover, average overall margins are higher in wholesale than in retail and wholesale demand from the food service sector is growing quickly as more Europeans eat out more often.

In wholesale markets in France, Germany, Italy, and Spain demand comes mainly from two sources: independent mom-and-pop grocery stores, which unlike large retail chains are too small to buy direct from producers, and food service operators that cater to consumers when they don’t eat at home. Such food service operators range from snack machines to large institutional catering ventures, but most of these businesses are known in the trade as "horeca": hotels, restaurants, and cafes or, in some countries, catering.

The consumer's growing preference for eating out has increased consumption of food and drink in places other than homes from about 32 percent of total consumption in 1995 to 35 percent in 2000 and is expected to approach 38 percent by 2005. This development is boosting wholesale demand from the food service segment by 4 to 5 percent a year across Europe, compared with growth in retail demand of 1 to 2 percent. Moreover, demographic change (particularly the increase in the proportion of older, wealthier people in the population) will probably sustain this pattern.

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