The latest analysis of European food and drink industry trends from the CIAA, the confederation of the food and drink industries of the EU, also shows that while exports weakened in 2002 compared to the two previous years, as a whole the industry proved highly resilient to the effects of 11 September 2001 and the subsequent 'war on terror'.
Export growth last year was 3 per cent in value terms, less than the 5 per cent in 2001 and 12 per cent in 2000, but still better than 1998 and 1999.
Total exports in 2002 were €46 billion, with more than one fifth of all exports going to the US alone. Japan, Switzerland and Russia were the other main export destinations. But sales to Latin America were badly hit by the weakening economies there (Brazilian sales fell 17 per cent, while those to Argentina plummeted 77 per cent).
In contrast, Brazil and Argentina, along with the US, remain the biggest suppliers of the food and drink industry in Europe, accounting for 27 per cent of all EU imports.
With their imminent accession to the Union at the forefront of their minds, the eight countries in eastern and central Europe will be pleased to see a steady progression in their food trade with the EU. Although the 15 current Member States still export more food than they import from the central and eastern European countries (CEECs), trade between the two groups increased in 2002 (by 7 per cent). Poland was the exception, with trade now balanced with the largest of the accession countries.
The drinks sector accounted for a third of EU exports in 2002 - €14 billion - with spirits alone accounting for 40 per cent of total drinks exports, led by Scotch whisky. Beer exports grew by 10 per cent, while soft drinks and mineral water sales were up 15 per cent.
The CIAA also gave a progress report for the current year, which showed that exports in the first quarter of 2003 were down 2.4 per cent compared to the same period a year earlier - partly due to the continued decline (-15 per cent) in sales to Latin America. While primary food products struggled - in particular sugar, following on from a poor 2002, processed products such as confectionery, biscuits etc. proved far more resilient, increasing sales by 1.5 per cent during the quarter.
But the most widespread impact on the food industry has come from changing consumer spending patterns, in particular in northern Europe. In the UK, for example, expenditure on food and drink accounts for 9.7 per cent of total household expenditure, while in Portugal the figure is nearer 18.5 per cent. In the candidate countries, figures range from 18.9 per cent in Slovenia to 31.5 per cent in Lithuania.
What this means is that in countries in the north in particular, food producers have to fight much harder for their share of consumers' cash - a situation which has created a highly innovative food industry. In Germany, for example, an average of 2000 new products are launched every year, the CIAA said, and two thirds of food industry players market new products.
The dairy sector was the most innovative in 2002, accounting for 11.5 per cent of all new products launched across the EU. Ready meals, cheese, frozen products and soft drinks were also strong on the innovation front.
While convenience was once the main driver of new product development, the CIAA's data show that pleasure has now become the prime motivator - accounting for 47.6 per cent of all new products. Convenience is still important, however, accounting for 22.3 per cent, but it is fast being caught up by health (16.4 per cent) and well-being (13.7 per cent), again reflecting the rapid changes in consumer demand.
The full CIAA publication can be downloaded here.