In recent months, we’ve talked a lot about export opportunities in Southeast Asia and the Middle East. But, what about the European market? While trade talks between Australia and the European Union remain ongoing, it’s a good time to start looking at the opportunities available in the European market.
In particular, France has many of the makings of a strong export market–from a high-income consumer base to an urbanised population and consumer trends which largely mirror Australian patterns. This includes the rise of eco-friendly, plant-based, convenience and health foods alongside non-alcoholic alternatives and multicultural cuisines. France is also the third largest retail consumer packaged goods market in the EU! With that said, let’s dive into a few key trends and challenges in the French food and beverage market.
A Large Economy With Moderate Recovery Forecast
France is evidently one of Europe’s economic powerhouses, ranked as the third-largest economy after Germany and the UK. Yet the economy has been plagued by pandemic pressures in recent years, as well as supply chain challenges posed by the ongoing conflict between Russia and Ukraine. Inflation remains elevated on a plateau at around 6% which is only set to slow down to 2.5% in 2024. This is seeing consumers strip back their spending, with 60% of consumers becoming increasingly price-conscious. This is especially evident in sectors such as food where prices have grown by an average of 20% between 2021 and 2023.
Yet compared to other eurozone countries, France’s economic performance is relatively strong. The economy managed to grow faster than the 0.1% increase expected in the previous quarter, experiencing 0.5% growth. Overall, while economic activity is forecast to remain restrained this year, activity is set to pick up in 2024 with a predicted modest GDP growth rate of 1.4%. This will provide a much-needed boost to domestic demand and household purchasing power, boosting overall consumption. So, while economic conditions remain far from ideal, some relief is in sight as the global economy sets its sights on expansion and post-pandemic recovery in tourism and demand continues, with moderate growth forecast in coming quarters.
Ongoing Trade Talks With Australia Yet No Agreement Reached
France and Australia’s trading relationship stretches back several centuries, with close cooperation across many fields from defence and security to climate change mitigation. And our bilateral relationship continues to strengthen, with the Second France-Australia Foreign and Defence Ministerial Consultations held in Paris in January 2023.
Over the last few decades, Australia’s exports to France have grown at an annualised rate of 1.35%. However, the development of a free trade agreement has not yet been achieved despite negotiations stretching back to 2018. With talks ongoing, several hurdles remain before an agreement can be finalised–most significantly, the European Union will need to offer more generous tariff reductions to Australian farmers. If signed, the agreement would be extremely valuable for Australian exporters, offering improved access and a competitive edge in the massive, high-income EU market.
A Large, Urbanised and Ageing Consumer Base
With a population of approximately 65 million, France’s population more than doubles that of Australia. As such, exporters entering the French market can access a much larger consumer base. In fact, France houses the second largest packaged food market in Europe, and 5th largest globally. And much like other European economies including Switzerland, Belgium and Germany, France also maintains one of the highest per capita disposable incomes in the world.
France’s population is also highly urbanised, with over two-thirds of consumers concentrated in cities. As such, most consumers can easily access supermarkets and hypermarkets for their grocery needs. Yet in recent years, consumers are turning more and more to close-proximity, smaller format mini-supermarkets. While this trend is largely a lingering impact of the pandemic, it is set to stay as the demand for convenience grows. Strong urbanisation and demand for convenience is also accelerating the rise of e-commerce in France.
Another key demographic trend to note is France’s rapidly ageing population, with just over a quarter of the population aged above 60. This growth is owed to the baby-boom post-World War II, which saw France experience the strongest demographic surge in Europe. With studies showing that spending on health and food increases with age, this may prompt increased spending on functional products such as supplements and fortified foods.
Healthy Lifestyles Become Increasingly Important
With the pandemic prompting consumers to re-evaluate their lifestyle choices worldwide, France has been no exception. French consumers have become much more focused on health behaviours such as reading nutritional labels (33% of the population do so), reducing their alcohol consumption, and consuming diet foods and supplements to promote weight loss. 45% of consumers also actively seek out healthier ingredients in the products they buy. Health trends have also manifested in the form of reduced demand for meat products, and prompted greater spending on fresh fruits and vegetables.
However, compared to global standards, French consumers are behind the pack when it comes to other health behaviours like taking supplements daily, or exhibiting a higher willingness to pay for health foods, with only 12% of the population willing to pay more for healthier foods.
Taste, Sustainability and Value For Money As Key Purchasing Factors
When it comes to purchasing food and beverages, taste remains the most important factor for French consumers. This is closely followed by a focus on all-natural, sustainably-sourced and eco-friendly food products, as well as locally manufactured options. Nutritional benefits are also important, and so is the absence of perceived harmful ingredients such as genetically modified organisms and preservatives.
However, price and value for money continue to be relevant in consumer purchasing decisions. While France–and Europe in general–are generally classified as high-income markets, recent developments have seen consumers become much more price-conscious. Only 12% of French consumers intend to increase their overall spending across the next year, while the intention to save money is much stronger. This frugality extends to food purchases as well, with consumers having become more conscious around food prices. This is manifesting in more purchases of private label and low-cost products, and some spending more time cooking or baking at home rather than eating out. Total food consumption also fell by 4.6% amid soaring inflation in 2022.
However, at the same time, premiumisation is also a rising megatrend. Despite ongoing inflation prompting rising price-sensitivity, they still seek out high-quality goods. This trend is most prominent amongst older generations like Baby Boomers.
Sustainability and Plant-Based Foods Taking Off
Like much of the Western world, the growth of sustainability concerns and plant-based foods is heavily shaping France’s food and beverage industry. French consumers are very concerned about the impacts of climate changes, and this is actively influencing both the food and beverages consumers are purchasing, and the production practices of producers.
These trends stretch across food and beverage industries, with wine producers like Moet Hennessy focusing on sustainable agricultural practices. While France is often well-known for its gourmet cheeses and meat dishes, from coq au vin to steak frites and boeuf bourguignon, plant-based alternatives are also on the rise. Dairy and meat aren’t expected to disappear from the French dining scene anytime soon, however plant-based alternatives including vegan cheeses and patisserie favourites are proliferating, as well as more vegetable-forward restaurants.
On the sustainability note, consumers are also seeking out brands which offer greater traceability from farm to table. Products with certifications and clear labelling, such as organic certification, are therefore experiencing strong demand. In fact, consumption of organic products has more than doubled since 2018, while 26% of French consumers also prefer to buy food from eco-friendly brands and 36% look to buy locally sourced foods.
The Rise of Non-Alcoholic Beverages and Multicultural Cuisines
The emergence of the COVID-19 pandemic accelerated many food and beverage trends around the world. As we’ve seen, one such trend was the rise of consumer health-consciousness, which saw a growing demand for functional foods as well as free-from products. In France, the rising thirst for non-alcohol alternatives has gained traction, from wine to spirits. While demand for wine in the French market won’t disappear overnight, sales have experienced a downward trend in recent decades, dropping by over two-thirds in the last 60 years and even leading some wine producers to destroy their vineyards altogether.
Another global pandemic trend making its way to France is the rising interest in multicultural cuisines. With most consumers restricted from travelling in the past few years, many sought out more diverse cuisines as a form of experiencing other cultures at home. Plus, like many European countries, France is also home to a largely multicultural consumer base, and this diversity means that there’s practically a market for any food product. In the last five years alone, the number of foreign citizens in France grew by 5%. Just look at the foodservice sector in Paris, where Mexican restaurants, Vietnamese cafes and Syrian bakeries are popping up, and foreign chefs are fusing French and foreign cuisines to offer truly unique flavour experiences, like French wine-infused spanakopita.
Demands For On-The-Go Products and Convenience Set To Grow
As consumer lifestyles become busier than ever-before in the post-COVID-19 world, more consumers are eating outside their homes and buying meals to consume on-the-go. This is prompting stronger demand for convenient meal solutions.
The demand for convenience is also manifesting in ordering food for takeaway or delivery, despite home cooking being the most popular meal choice. Reheating ready meals is also gaining traction, while some consumers simply replace meals with snacks to save time. Younger French consumers especially–including millennials and generation z–are also willing to spend money to save time, with 48% of young consumers indicating their willingness to do so. This typically manifests in the form of ordering food rather than cooking at home because they simply don’t have the time to cook, or would rather spend time on other things.
Categories to Watch
As we look towards the future, we can clearly see how the above trends are set to shape France’s food and beverage sector. In the alcoholic beverages segment, beer and cider sales will see almost 6% annual growth to 2027, while wine rates remain consistent yet considerably slower at 4%. Meanwhile, the rising interest in plant-based foods is evidenced with meat substitutes growing annually by over 6% in coming years, while meat and dairy sales slow to under 3%. The demand for convenience foods is also reflected in the strong forecast growth rates for soups, prepared meals and canned, dried and frozen foods.
While the outlook is promising, key challenges remain which may limit ease of market access. The spring of 2023 was plagued by social and political unrest, with citizens outraged by the raising of the retirement age and police brutality. While the lasting impact of these events is set to remain relatively contained, they did dampen consumer confidence and spending alongside inflationary pressures.
Compared to other European markets, France also carries strict standards for food and beverages products which can make product registration timelines longer. Industry regulations often exceed EU standards, and in order to sell products in the country, exporters require prior authorisation from the DGPP.
Further, one key consumer trend threatening exporters is the rising demand for ‘made in France’ products. In fact, almost 80% of French consumers are actively choosing to buy local. There are several reasons for this. One is the belief that locally-produced products are more eco-friendly than imported items, while another is the willingness to support the local economy, especially following the struggles created by the pandemic. Additionally, some consumers simply believe French products to be of higher quality. And in a market where competition is already exceedingly high given the plethora of local and international products available, this certainly adds an extra layer of difficulty to market entry.
Key Market Entry Factors To Consider
Let’s wrap up by running through a few key practical considerations when examining the French market. To successfully enter any export market, it’s important to understand your market entry strategy, target consumer and relevant laws.
To ensure market acceptance, it’s important to factor in suitability to the French palette, that product usage is understood, and can clearly demonstrate a competitive advantage, together with compliance to French regulations, taking into account the Egalim laws.
As we’ve covered, retail and food service are extremely competitive sectors in France, where retail operators such as Leclerc, Carrefour, Intermarche, Systeme U, Auchan and Casino dominate the sector. Depending on whom you engage with, buying will either be centralised, or at store level, therefore choosing the appropriate retail operator for your products is essential, together with an in-market distributor to partner with. They will guide you on market entry specifics, together with trade and activation investment requirements to support a successful entry.
If you’re thinking of checking out what’s on offer yourself, there are a number of trade shows you can attend in France, of which SIAL is the largest, however for organic and fine foods, Natexpo and Gourmet Selections would offer excellent alternatives.
That sums up our look at the French food and beverage market. As a market where consumer trends mirror Australia in many regards, there are certainly an abundance of opportunities available for Australian F&B exporters. However, the need to exercise caution is key. Like many European F&B markets, competition in France is intense, while exporters also need to balance social, political and economic challenges as well.
We hope you’ve found these insights on the French market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.