------------------------Food Industry in France-----------------------------
U.S. agricultural exports to France totaled just over $560 million in fiscal 2003, and
there is potential for this number to go up, given the fact that French per capita income
is close to that of the United States, and consumers are increasingly interested in
foreign and exotic foods. These factors, along with other positive developments in the
retail food system, strongly suggest that U.S. exporters may want to take a new look at
exporting to France.
In France, supermarkets and city center stores account for 75 percent of total retail food
sales. These stores have experienced dynamic growth in recent years, offering a wider
selection of international products. This translates into growth opportunities for U.S.
exporters.
Although France is not a major destination for U.S. agricultural exports, it provides good
opportunities for U.S. exporters given the French market's similarities to that of the
United States.
Latest Trends in French Food Retail
Diverse and sophisticated describe France's retail distribution system, a network very
similar to that of the United States. French food retailers can be grouped into six
principal formats: hypermarkets, supermarkets, hard discounters, city center stores,
department stores and traditional outlets, including cash-and-carries.
The first five represent 75 percent of the country's retail food market sales, with a total
of 33,000 outlets; the sixth, which includes neighborhood
and specialized food stores, represents the remaining 25 percent of sales, with 52,300
outlets.
The French retail food sector was relatively stable in 2002. Major chains expanded the
size of their existing outlets rather than creating new ones. The French government
limits the number of store openings in the hyper- and supermarket categories. Only the
number of discount outlets increased with the opening of approximately 100 new stores.
According to the French Institute for Statistics, French consumers spent $115 billion on
food and beverages in 2002, or 15 percent of their household budget.
France's major retailers--Carrefour, Intermarche Leclerc, Systeme U, Auchan, Casino,
Cora and Group Monoprix--account for 90 percent of total retail food sector sales. They
are linked to four central buying offices.
For traditional stores, such as butcher shops, bakeries and groceries, sales increased
by 5 percent in 2002 compared to 2001 .These stores and their buyers and importers
represent an opportunity for U.S. specialty suppliers. These outlets, located in
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downtown areas, offer a wider selection of more sophisticated products than
supermarkets.
Food Import Trends
The largest and fastest growing imports are exotic and tropical fruits, including citrus,
fish and seafood, horsemeat, pork and frozen foods, including ready-to-eat meals and
items such as pizza and ice cream.
Opportunities also exist for wines, fruit juices and soft drinks, canned fruits, biscuits,
cookies, chocolates, teas, coffee, sauces and other prepared foods, especially ethnic or
regional foods with all American image, such as Alaska seafood, and items typical of
Louisiana, California and Tex-Mex cooking.
Health concerns and numerous tax increases on alcoholic beverages have decreased
French consumption of alcohol while increasing demand for nonalcoholic beverages,
such as mineral water and fruit juices.
Demand is rising for organic, health and diet foods among the increasingly health-
conscious French consumers. A desire to return to tradition is drumming up demand for
soups. The growing number of pets has stimulated demand for conventional and
organic pet foods. In addition, niche markets exist for chocolate bars and other candies,
wild rice and kosher foods, for which demand has been rising for several years.
A Road Map for Market Entry
To succeed in France, a U.S. exporter needs a reputable local agent or representative.
Local representatives can provide up-to-date information on business practices and stay
on top of trade laws and regulations, sales leads and marketing and distribution
strategies. In many instances, they also serve as importers and distributors.
The FAS Office of Agricultural Affairs in Paris maintains a list of importers and
distributors. Depending on the product, a U.S. exporter can penetrate the market
through a retailer's central buying office or a specialized importer or distributor.
New-to-market and niche products usually enter through importers or distributors. U.S.
exporters should submit product descriptions and price quotations; provide products for
laboratory testing; and ascertain sanitary and health certification and other import
document requirements.
Central buying offices can register and approve suppliers, apply tariffs and ensure that
products comply with French regulations. Once a product meets all the import
requirements, a central buying office can include it in its product catalog, offering it to
supermarket buyers who can then order the product directly.
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Central buying offices manage delivery of products according to store instructions. The
importer is responsible for the delivery of products to distribution centers. The trend is
toward a central buying office developing a network of distribution centers.
With its highly developed food sector, France is a major producer, processor and
exporter of agricultural and other food products in the EU (European Union).
In 2002, France's top foreign suppliers of food and agricultural products were the
Netherlands, Belgium, Brazil, Luxembourg, Germany; Spain, the United Kingdom and
Italy. Along with France itself, these countries are U.S. exporters' main competitors in
this market.
Most suppliers from within the EU conduct some form of market promotion in France.
Products such as flesh or preserved fruits and vegetables, wines, beer, fish and meats
are commonly promoted in trade shows, advertisements and supermarkets. Non-EU
countries promoting food products in France include Norway; Israel, Morocco, South
Africa, Argentina, Brazil and Canada, as well as the United States.
What Products Are in Demand?
A quiet revolution underway in France's food sector benefits U.S. exporters. In addition
to rising disposable income and increasing consumer purchasing power, several
socioeconomic and demographic changes are affecting food consumption and
purchasing trends. These include a greater number of women in the workforce, a
decrease in family size, a growing elderly population, an increase in environmental and
health considerations and an effort to consolidate food distribution channels.
In addition, there is a positive change in attitude, especially among the young
generation, toward U.S. culture, products and people. These factors should make it
easier to market U.S. products.
On the flip side, France has one of the most advanced and innovative food sectors in
the world. In addition, French consumers demand excellence and will not settle for
second-rate products. These two factors make the French market quite competitive.
Prospective exporters, however, should not feel daunted. Several products provide
good opportunities for U.S. suppliers interested in the French market. These include
fresh fruits (particularly tropical and exotic ones), fruit juices, frozen foods, snack food
such as cookies, chips, pizza, products with distinctive U.S. flavor and theme such as
Tex-Mex products, seafoods, innovative dietetic and health products, organic products,
soups, nuts, breakfast cereals and pet foods.
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Juice Sales Climb Steadily
Fruit juices are one of the more promising of these products. Over the past decade,
French consumption of fruit juice products has almost doubled. During the past year
alone, consumption of juices and nectars increased by 19 percent, to a total volume of
560 million liters.
U.S. exports of fruit juices to France consist mainly of grapefruit juice, frozen orange
juice and fresh orange juice, with market shares of 23, 12 and 1 1 percent, respectively.
U.S. frozen fruit juice imports into France have risen rapidly during the last few years.
U.S. exports of frozen orange juice increased threefold in 1991.
The potential to export fresh juice, particularly orange juice, has been enhanced by a
new preparation technique called "flash pasteurization," which extends shelf-life while
maintaining freshness, quality and taste.
Another group of products with strong export potential in the French market is Tex-Mex
products. With their U.S. image, Tex-Mex products have proven to be successful.
Consumption of Tex-Mex products has been rapidly growing in the last few years, at a
rate of 30 to 40 percent annually. The market has grown from virtually zero less than 1 0
years ago to over $5 million in 1991, all from imports.
About half of the Tex-Mex products are sold in super- and hypermarkets, while the other
half is consumed in Mexican restaurants or distributed through specialty food stores.
Tacos, tortilla chips and chili are among the leading Tex-Mex items consumed in
France. Blue corn chips and spicy sauces are also making strong inroads in the market.
Recent promotions in different supermarket chains indicate great potential for success
in the French market.
Potato chips represent a much larger market in France than do Tex-Mex products. With
about $200 million and 37,000 metric tons consumed in 1991, this market has doubled
in the past five years. About 80 percent are unflavored and most sales are made
through super-and hypermarkets. However, the French chips market is still seasonal,
with most of the consumption in the spring and summer.
A third example of an export niche with potential in France is the pet food market. Until
1990, this market was growing at about 9-1 0 percent a year. In 1991, the domestic
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market grew by only 4 percent. Pet food imports, however, are still growing at a faster
pace. In 1992, total French imports of pet food increased by 30 percent while imports
from the United States increased 50 percent to $12.3 million
The majority of France's pet food imports come from the European Community (EC).
However, U.S. exports of pet foods to France expanded 37 percent between 1990 and
1991. Also, an increasing number of sales are being made at super- and hypermarkets.
They currently provide about 60 percent of the purchases, compared with 10 percent
two decades ago.
How Do I Get My Foot in the Door?
While there is a perception among some U.S. exporters that the French market is
difficult to get into and that it is hard to do business in France, French import regulations
are fairly straightforward and easy to work with. The recent success of many new-to-
market products attests to this fact.
In addition, France is determined to compete successfully in the unified European
Market (EC-93), which opened the first of this year. Many French firms see closer ties
with U.S. businesses as a good way to prepare for increased competition. This has
resulted in strategic alliances, mergers, acquisitions and joint ventures with U.S.
companies.
Harmonization of EC import regulations should lead to the end of several French
regulations that currently prohibit the importation of some agricultural and food products.
Strategies Help Successful Exporters
U.S. exporters interested in the French market follow different strategies that vary in
their orientation. Some are based on consumer characteristics, such as singles, working
families or senior citizens. Others target specific times, such as holidays, or distribution
channels, such as supermarket chains.
For long-term success, U.S. exporters should concentrate on promotional strategies
that emphasize a product's unique characteristics, high quality and regional attributes
(for example, Florida citrus, California wine and Tex-Mex foods).
In-store promotions have proven to be useful in introducing products to French
consumers, particularly during "national week promotions," such as the British and
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German weeks. In February 1992, the first U.S. food promotion at the major French
supermarket chain Monoprix was held throughout France.
Another point to think about when deciding how to get your products to consumers are
the various well-developed food distribution systems in France.
Wholesalers Consolidate To Compete
There are currently about 27,000 wholesalers of food and agricultural products in
France. The industry, however, continues to consolidate and diversify, with firms adding
new services to their basic wholesale activities. Wholesalers are offering a menu of
services for small- and medium-sized food retailers and processors; delivery to
restaurants and other food institutions and distribution of new-to-market products for a
fee.
Despite consolidation, many traditional French wholesale food companies continue to
lose ground to large super-and hypermarket chains that are expanding their own
wholesale activities.
French Supermarkets Flourish
For retail trade, super- and hypermarkets have become increasingly important. There
are almost 7,800 super- and hypermarkets in France and the number continues to grow.
In some cases, in order to improve their control over prices, a group of retail companies
relies on a common buying organization, which exporters may want to contact.
However, to get a product on the shelves of a major retail chain, it is often necessary to
contact individual store managers who still have a significant say about what is sold in
their stores.
According to many French industry analysts, there are too many super- and
hypermarkets in France. With the dawn of the EC single market this year, only the
largest chains are expected to survive. In preparation for EC-93, all the major French
retail chains expanded domestically and internationally.
Internationalization of the French retail food trade could benefit U.S. food exporters and
processors. Also, increased competition from large retail companies based in other EC
member states should drive down French listing prices and open up the relatively
closed French retail food industry to greater competition.
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Other advantages on the horizon for U.S. companies include harmonized labeling and
product ingredient regulations (due this year), EC-wide distribution channels and
harmonization of EC food and drink taxes.
Stores Offer Exporters Convenience
Despite the growth of mass distribution outlets, such as super- and hypermarkets, small
neighborhood convenience shops and specialized food stores still handle about 40
percent of retail food distribution in France. Specialized stores such as bakeries,
cheese, vegetable and fruit stores, butcher and deli shops are still well placed in the
French food market.
Convenience stores that offer quick one-stop shopping are successful in targeting local
customers. The success of these stores depends on their ability to offer flexible store
hours, a wide range of different products and special services, like home delivery.
Today, there are about 60,000 convenience stores in France.
Growing numbers of these convenience stores, in fact, are owned by larger retail
distributors. A small neighborhood store chain may provide U.S. suppliers entry into the
French market that would otherwise be impossible if the only other choice were
negotiation exclusively with a large supermarket chain.
Although possibly too small to interest most large U.S. suppliers, some privately owned
retail stores specialize in U.S. food products. There are four of these stores in the Paris
area, and they are reportedly doing well.
French Labeling, Strict but Clear
French packaging and labeling legislation, is strict, clear, concise and logical. For the
French market, packaging must be appropriate and not misleading in terms of contents,
protection and preservation. Label requirements are rigorous but can be summarized in
the following elements: -- The product must be defined using
words from an approved list; -- All text must be in French, but other
languages are allowed on the label.
Labels must be clear, legible and
indelible; -- Terms for shelf-life must use "used
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by," "best before" dates and
storage requirements; -- Precautionary information or usage
instructions must be included if
applicable; -- Statement of contents and
ingredients weights, volumes, etc.,
must be in metric units; and -- Manufacturer's lot or batch number
must be included. (1) The data used in this article are French government figures based
on cost, insurance and freight data and also include transshipments. They do not
include agricultural trade in spirits, wood products and manufactured tobacco.
Serving France's food industry
In 2001, France's hotel, restaurant and institutional (HRI) food sector served
approximately 6.8 billion meals worth almost $51.4 billion in 175,000 outlets .That's a lot
of food. And future prospects are bright. Over the next few years, French HRI sales are
expected to grow by at least 5 percent per year. The snack and fast-food segments of
the market are expected to surge by 13 percent.
U.S. exporters who focus on product quality, innovation and variety can penetrate
France's HRI sector through importers, distributors, cash-and-carry stores and
wholesalers. Developing a strong relationship with a savvy and reputable French
importer can help an exporter in meeting such challenges as duties, import and sanitary
certificates, labeling, paperwork and other documentation.
U.S. suppliers wishing to enter the French market should keep in mind the following
consumer trends:
* Children and teenagers prefer ethnic foods such as Chinese, Tex-Mex, North African
and Indian.
* Consumers, especially older men and women, are becoming increasingly health-
conscious.
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* Consumers are demanding variety and high-quality food products that are certified by
government authorities as safe.
Best Product Prospects
Currently, 65 percent of France's food imports comes from fellow European Union (EU)
members, such as the Netherlands, Belgium, Luxembourg, Germany, Spain, the United
Kingdom and Italy. Only 3 percent comes from the United States. To expand market
share, U.S. exporters must adapt their products for the HRI sector. For example, frozen
foods such as fish, vegetables and desserts that are easy to use have great appeal to
caterers and restaurateurs. There is also strong demand for salad dressings and tomato
sauces.
Other products with particularly good sales potential include:
* Nonalcoholic beverages--Consumption of nonalcoholic drinks rose 1.8 percent in
2001. Fruit and vegetable juices, especially orange and grapefruit juices, have the most
promise.
* Seafood--France is a major importer of seafood. Currently, about 40 percent of all
seafood imports comes from the EU, and the rest from Norway, Thailand, Iceland,
Senegal and the United States. U.S. seafood with convenient packaging and innovative
formats has the best chance of selling to French restaurants. Fresh salmon, cod and
shrimp are best sellers, and demand is growing for lobster, scallops and canned
salmon. The popularity of fish fillets and ready-to-eat seafood is increasing.
