Food safety rules fuel Europe’s processing equipment market
San Antonio, TX—Despite its relative maturity, players in Europe’s 13.14-billion-euro industrial food processing equipment market are confident of slow, steady revenue growth, according to recent research by Frost & Sullivan.
San Antonio, TX— Despite its relative maturity, players in Europe’s 13.14-billion-euro industrial food processing equipment market are confident of slow, steady revenue growth. In fact, recent legislation supporting improvements in product quality and subsequent replacement sales are expected to push the market to 15.12 billion euros by 2009, according to recent research by Frost & Sullivan .
Responding to increased concerns about hygiene and food safety, the European Commission (EC) has passed directives to safeguard consumer health. To meet more stringent EC regulations on product quality and safety, food manufacturers are investing in more advanced food processing machinery, which is expanding the equipment market. In addition, the European Union (EU) is raising consumer awareness of the nature and provenance of foods. This means traceability has become more important, and so manufacturers are incorporating more tracking systems into their machines. New food safety standards are also spurring an increase in software-based industrial food processing equipment.
At the same time, heightened competition is also supporting almost constant product innovation. Here, the effort has been to boost productivity and reduce labor costs with flexible automation and higher capacity machines. This will likely allow companies to pass on savings to customers. 'Intense competition has put customers in a good bargaining position. They want higher specification and better equipment, which means higher output and more flexible machinery for the same price. The challenge for manufacturers is to remain price-competitive and retain market share in this highly charged environment,' states Frost & Sullivan.
As a result, development of technologically advanced machines with dual-application capabilities is expected to assume greater relevance due to changing tastes. As consumers demand greater variety, there is expected to be a corresponding rise in demand for processing equipment with crossover applicability. 'With increasing demand for home meal replacement and convenience foods, end-users are putting pressure on food processing equipment manufacturers to innovate and create equipment that can produce new product categories. These new products require new designs, such as different sweetening, packaging, and flavoring systems,' adds the study.
In addition, changing demographics, such as the prevalence of one-person households, and changing lifestyles are also driving expansion of the food processing equipment market. For example, demand for food processing equipment in the bakery segment is expected to increase due to the growing popularity of ready-to-eat, takeout meals and snacks, rather than traditional home-cooked meals. Growing purchases of premium products, such as Italian bread, are also likely to spur demand from the bakery segment.
With a share of 20.8% in 2003, the bakery processing equipment segment has been, and is expected to continue being, the largest product segment of the overall food processing equipment market. Along with the fruit and vegetable segment, it is also forecast to be the fastest-growing segment. The meat and poultry processing equipment segment and the drinks segment are expected to retain their positions as the second and third largest revenue contributors to the overall market.
Frost & Sullivan adds that nearly 80 companies are active in the highly fragmented European industrial food processing equipment market. A few companies, such as FMC FoodTech, Alfa Laval, APV, Tetra Laval, GEA AG, Stork N.V., Klockner, Krones, Buhler and Baader, account for a significant part of the total market share. However, many recent mergers and acquisitions have affected these and other competitors during the past five years. These consolidations have sought to augment product lines and become total equipment suppliers for many food industries. Strategic alliances are also viewed as a way for many companies to become globally competitive.
These competitive pressures are expected to remain strong over the long term, placing enormous pressure on prices and eroding profit margins. 'Key points of competition are expected to include the products' technological capabilities, price, quality, automation features, flexibility and customer service and support,' the study concludes. 'Most competitors are also expected to focus on offering a complete product range and being a one-stop shop. Competition is also increasingly expected to lean towards complete, automated flow lines.'
Control Engineering Daily News Desk
Jim Montague, news editor