Whether sausage, cheese or caramel candies, German foods are increasingly finding their way onto stores shelves around the world. The industry now earns every third euro abroad. What makes German products so popular?
For five days in the year, Cologne is transformed into a mecca for foodies when Anuga, the world's leading food fair, opens its doors to delights from around the globe. More than 6,000 food producers, including many German companies, will showcase their products at this year's event, from October 5 to 9.
Meats, dairy products, confectioneries, bakery products and alcoholic beverages are among the major exports of the German food industry. The industry is the fourth-largest in the country. From January to September 2013, food producers increased revenue by nearly 3 percent compared with the same period a year earlier. Every third euro in the sector now comes from exports.
High-growth emerging markets
"The EU accounts for the majority of food exports, namely 57 percent," said Stefanie Lehmann of the Federation of German Food and Drink Industries (BVE). "But due to the economic slowdown, consumption in the European Union has declined and we are now observing a growing focus on third countries," she told DW.
The United States, Russia and Switzerland are also strong markets for German products, with the high-growth markets emerging in Asia. Food worth over 1 billion euros was exported to China in 2012.
Since 1993, the EU internal market guarantees the free movement of goods for food producers and distributors; tariff and non-tariff barriers to trade are prohibited. "It's different outside of the single market," said Lehmann. "Special registration procedures, other requirements for food safety, labeling, expiry dates are among the many regulatory, non-tariff barriers that currently make it very difficult for small and medium-sized businesses to tap attractive markets."
In particular, Russia, which has been a member of the World Trade Organization for a year and is an important market for German companies, has drawn hefty criticism for introducing non-tariff trade barriers. German companies are heavily impacted by the move.
Quality, customer focus
But few are prepared to abandon the market. "Even if there is some sand in the gears here and there and everything isn't going as smoothly as it could, Russia remains a very interesting market for us," said Josef Tillmann, CEO of the meat food producers Tönnies. One quarter of Tönnies' production goes to non- European countries, with plans to expand in Asian markets, notably China, Japan and South Korea.
“Quality, customer focus and reliable delivery are what consumers and retailers appreciate abroad, according to Hermann Cordes with the German dairy co-operative DMK. "There have been many food scandals around the world, especially with milk, a very sensitive product," he said. "German producers can score points here with quality since consumers abroad are more willing to pay more for quality products than those in their home market. This is a door-opener for us."
DMK produces about 7 billion kilos of milk yearly, with exports accounting for 37.5 percent of its revenue. The company has its sights set on foreign expansion, already operating offices in Moscow and Shanghai.
We have good climatic conditions in Europe and well-trained farmers to produce milk so we expect milk production here to grow in the coming years,” Cordes said. "That said, milk consumption is declining in Germany and is expected to grow only in a few countries in Europe. That's why we need to look for new markets."
Sausage in Shanghai
They include emerging countries with improving income levels and logistics infrastructure, according to Cordes, who expects growth for milk products to be driven by non-European markets in the coming years.
Does German sausage in Shanghai taste just same as in Bavaria? Or do some location-specific ingredients need to be mixed in? "If the product is a German specialty, it must taste that way," said BVE's Lehmann, noting that producers still need to make adjustments in some cases certain products. "Producers exporting to extremely hot countries need to adapt their products to the local climatic conditions," said Lehmann, pointing to the need to package sweets so they don't spoil and also occasionally changing the recipe to meet specific customer requirements.