For the purposes of this report, the market
for industrial food processing equipment is divided by product type into the following
eight categories (see Chart 1.1):
- Drinks processing equipment
- Bakery processing equipment
- Dairy processing equipment
- Meat and poultry processing equipment
- Fish processing equipment
- Fruit and vegetable processing equipment
- Confectionery processing equipment
- Other food processing equipment (segment
includes soups and sauces, milling pasta, extruded snacks and edible oils)
The term industrial food processing
equipment refers to any equipment that can be used in the processing of food from its raw
material state through to the packaging of the food. This equipment may be used anywhere
along the processing line or may be part of or a whole system used in the preparation of
food. This study is about food for human consumption only and is not concerned with pet
food.
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By GlobalDataThe following eight geographical regions
have been defined for the European market for industrial food processing equipment.
- Germany
- France
- Italy
- United Kingdom
- Benelux (Belgium, the Netherlands and
Luxembourg) - Scandinavia (Denmark, Finland, Norway and
Sweden) - Iberia (Portugal and Spain)
- Rest-of-Europe (ROE – Austria, Greece, the
Republic of Ireland and Switzerland)
Summary of Major Findings
Market Growth, Opportunities and
Total Forecast
The European industrial food processing
equipment market has existed since the early 1900s when the large dominant companies of
today’s marketplace were first established. The 1960s attracted a growing number of new
companies into the market because opportunities brought about from investment programmes
for rebuilding and strengthening the western European economy and infrastructure after the
Second World War resulted in growing industrial activity.
Currently this market is in a state of
maturity, exhibiting few signs of expansion and technological growth. Growth is attributed
primarily to the replacement of equipment, either as a result of its condition or the need
to upgrade it to satisfy new legislative requirements. Manufacturers have used strategies
such as advertising the benefits of particular food products, investing in equipment
technology that prolongs the shelf life of products and introducing PC and process
instrumentation control technologies to enhance and speed up the manufacturing stage of
food production.
Despite this manufacturers are faced with
the reality of maintaining sales in a mature market and have subsequently seen slower than
average growth in sales. In order to sustain growth, manufacturers have to some extent
neglected the western European market and have started to focus on the growing regions
outside western Europe.
Several issues are expected to affect the
total European market in future. The most important drivers of the European market for
industrial food processing equipment include:
- Growth in the drinks market
- Technological development
- Diminished threat of bovine spongiform
encephalopathy (BSE) - Growth in the frozen foods and ready meals
markets - Niche markets
- Improvements to PC software
- Research and development investment
- Improving end-user awareness
- Potential of undeveloped regions/markets
- Reunification of Germany
Restraints on the market include the
following:
- North European market saturation
- Improving end-user awareness
- Lengthening of product life cycles
- Decline in manufacturing industry
- Decline in world markets
- Technology saturation
- Low investment
- Economic downturn
Analysis by Major Segment
Drinks Processing Market
The drinks processing equipment market
accounted for 17.4 percent of total revenues in 1998, and this is forecast to rise to 18.1
percent in 2005.
Total revenues in the drinks processing
equipment market in 1998 were $2.35 billion. Growth in this market is expected to be
driven primarily by replacement of equipment and as a result of the millennium
celebrations, which are expected to see a greater demand for industrial drinks processing
equipment. Thus, this market is expected to rise to $3.30 billion in 2005.
Market Drivers
- The approach of the millennium
- Niche markets
Market Restraints
- Mature market
Bakery Processing Market
The bakery processing equipment market
accounted for 20.5 percent of total revenues in 1998, and this is forecast to rise to 21.2
percent in 2005.
Total revenues in the bakery processing
equipment market in 1998 were $2.78 billion. Growth in this market is expected to be
driven by a growing demand for ready meals. A growing number of people are finding less
time to cook at home causing a rise in demand for ready meals and takeout, and thus demand
in industrial equipment used in fast food outlets, such as that used in Pizza Hut, is
forecast to sustain growth in future. In 2005 this market is forecast to reach $3.87
billion.
Market Drivers
- Growth in ready meals market
Market Restraints
- Mature market
- Longer product durability
Dairy Processing Market
The dairy processing equipment market
accounted for 8.3 percent of total revenues in 1998, and this is forecast to fall to 8.1
percent in 2005.
Total revenues in the dairy processing
equipment market in 1998 were $1.12 billion. Future growth in this market is expected to
come from manufacturers focusing on niche markets and targeting industries that have
previously been neglected because of food health concerns. Other technological
advancements to machinery with the employment of process control are also forecast to
drive growth. In 2005 this market is expected to rise to $1.48 billion.
Market Drivers
- Growth in the low-fat and non-fat product
markets - Industry targets new opportunities
Market Restraints
- Longer product durability
- Technology saturation
Meat and Poultry Processing Market
The meat and poultry processing equipment
market accounted for 19.9 percent of total revenues in 1998, and this is forecast to fall
to 19.2 percent in 2005.
Total revenues in the meat and poultry
processing equipment market in 1998 were $2.62 billion. The diminishing threat of BSE is
forecast to have a large impact on overall growth in future. The introduction of more
hygiene equipment and improvements to processing environments is forecast to encourage
customer confidence and also contribute to growth. In 2005 this market is expected to
reach $3.50 billion.
Market Drivers
- Diminished threat of BSE
- Growing demand for frozen foods and ready
meals
Market Restraints
- Technology saturation
Fish Processing Market
The fish processing equipment market
accounted for 12.8 percent of total revenues in 1998, and this is forecast to fall to 12.6
percent in 2005.
Total revenues in the fish processing
equipment market in 1998 were $1.74 billion. Manufacturers are expected to raise
investment in niche markets; however, a generally mature market is forecast to dampen
customer confidence. This market is expected to rise to $2.30 billion in 2005.
Market Drivers
- Rising demand for seafood and tuna
- Niche markets
Market Restraints
- Mature market
- Lengthening of product life cycles
Fruit and Vegetable Processing
Market
The fruit and vegetable processing
equipment market accounted for 6.3 percent of total revenues in 1998, and this is forecast
to rise to 6.5 percent in 2005.
Total revenues in the fruit and vegetable
processing equipment market in 1998 were $1.74 billion. This market is forecast to see
steady growth in demand brought about by improving equipment quality and the use of more
process control technology. This market is expected to reach $1.19 billion in 2005.
Market Drivers
- Growth in organic foods
Market Restraints
- Technology saturation
- National markets
Confectionery Processing Market
The confectionery processing equipment
market accounted for 8.9 percent of total revenues in 1998, and this is forecast to fall
to 8.8 percent in 2005.
Total revenues in the confectionery
processing equipment market in 1998 were $1.20 billion. The maturity of this market is
forecast to restrain higher growth in future, but demand is forecast to rise as a result
of new products entering the market. This market is expected to rise to $1.61 billion in
2005.
Market Drivers
- New products entering the market
Market Restraints
- Lengthening of product life cycles
Other Food Processing Market
The other processing equipment market
accounted for 5.9 percent of total revenues in 1998, and this is forecast to fall to 5.5
percent in 2005.
Total revenues in the other processing
equipment market in 1998 were $769.6 million. Poor growth in the milling industry and a
lower need to replace equipment because of longer product durability are forecast to
restrain growth in future. Manufacturers are likely to focus on niche markets to sustain
growth. In 2005 this market is expected to rise to $1.01 billion.
Market Drivers
- Niche Markets
Market Restraints
- Strained growth in the milling industry
- Lengthening of product life cycles
Analysis by Geographic Region
Germany has a large food processing
industry and accounts for the largest percentage of revenues in the total European market.
In 1998 it accounted for 27.0 percent of total revenues; however, its share is expected to
drop over the forecast period. The UK market is forecast to see a large rise in revenue
share from 14.4 percent in 1998 to 15.4 percent in 2005. This rise in revenue share in the
United Kingdom may be attributed to a strong economy and rapid technological developments.
The diminished threat of BSE is also likely to contribute to overall growth in the market.
The Italian and French markets are the
third and fourth largest markets. The Italian market is expected to see a marked rise in
revenue share because of a strong economy forecast to initiate higher industrial
investment, in addition to large growth in the bakery sector both in the domestic and
export markets. The French market, though, is forecast to decline in revenue share because
of less industrial activity.
Iberia is forecast to receive significant
European Union (EU) funds to upgrade equipment quality to a level similar to that in the
rest of the EU and consequently boost growth and in turn revenue share. With the exception
of the ROE region, the remaining countries in this report are forecast to lose share due
to faster growth in other regions, notably to the United Kingdom and Italy.
Competitive Analysis
Over 75 companies are active in this
market. Competition in the market is based on product technological capabilities, price,
quality and customer service and support. This market is fairly fragmented, with some
companies specialising in niche markets, while the larger more financially strong
companies offer a wide range of equipment.
Competition also differs geographically; in
northern Europe it is the larger European competitors that retain the vast majority of
market share, while in the southern European regions, such as Spain and Italy, competition
is more fragmented with medium-sized domestic companies having stronger customer loyalty
and holding strong market positions.
As more global sourcing takes place the
number of acquisitions and mergers in the market-place rises. Some companies, aiming to
increase their market positions, are combining forces to become complete suppliers of
equipment for a wider range of food industries.
In order to improve customer relations,
many of the large competitors are forming alliances with leading customers with the
intention to better understand the environment in which customers operate and hence meet
their specific requirements. Both parties benefit from this because customers receive
tailor-made processes and suppliers build a strong reputation and better market positions.
Conclusions
The European market for industrial food
processing equipment is a mature market in which competition has intensified over recent
years because of limited growth in most product segments.
Despite the saturated state of the market,
the need to replace outdated equipment and the effects of legislation are expected to
sustain growth in future. Investing in equipment technology, prolonging the shelf life of
products and improving the nutritional value, taste and quality of food are primary
factors that will influence the market in the coming years.
Advertising campaigns undertaken by food
companies to tap into food markets that have previously been neglected because of health
and other concerns have helped raise demand for these foods. Manufacturers have
subsequently increased investment in such niche and other potential growth markets.
