Stable growth in the agrifood sector:
- 2015 and 2016 to be defined by steady growth.
- All food segments set to grow, difficult times ahead for beverage industry.
- Increased knowledge sharing as a means for Dutch agrifood companies to gain a unique edge.
Agrifood sector to continue steady growth in 2015
ABN AMRO expects that in 2015 and 2016 the agrifood sector will continue to develop steadily in the same direction as in prior years. As the economy improves, the sector will benefit, though growth will be held back by the sensitivity to economic fluctuations to which the sector is predominantly susceptible. Export will continue to be an important growth factor for agrifood during the coming years, and ABN AMRO predicts a slight growth despite the lingering impact of the Russian food boycott during the first half of the year. The bank also believes that exports to countries outside the eurozone will receive a strong boost from the euro’s continuing depreciation against the US dollar and the British pound.
Beverage industry to shrink, unlike other segments
The ongoing demand for high-quality food will buoy growth in primary sectors, the processing industry and commercial enterprises. These export-oriented segments will further benefit from the weak euro. This can be seen in the meat industry: despite a series of food scandals this segment has managed to realise a growth in production. For example, production of chicken meat is up an impressive 28 percent from 2008, owing principally to the relatively lower prices. The market for pig meat also started to improve in 2014, benefiting from lower purchase prices and increasing exports, particularly beyond Europe. The outlook for dairy is similarly encouraging – one contributing factor being the rising demand in Asia and Africa – while other foodstuffs are also on the increase. This overall pattern is disrupted by the beverage industry, however, where the effects of the economic crisis, changing consumer habits and other factors have forced consumption down. ABN AMRO expects the decline in this segment to continue this year, with only a slight upturn foreseen for 2016.
Opportunities through increased focus on knowledge sharing
The prospects for the agrifood sector should remain favourable in the long term. However, the Dutch foodstuffs sector could expand its focus on knowledge sharing as a means to raise itself above the competition. An example of how this might be given shape would be to create closed supply chains: the separate links in the production chain join forces and share information in order to improve the end product. This structure will also offer increased opportunities for benefiting from societal issues, for example the demand for information about the provenance of products and efforts to cut food waste. ABN AMRO believes that reducing portion sizes, reusing component elements and extending the use-by dates of product groups, for example, will help achieve this. Increasing its focus on uniformity of quality and reliability of supplies will give the Dutch sector an edge.