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Agriculture, Food and Beverages Sector Profile - The Embassy of Canada to Austria

May 2010

Contact
Mrs. Susanne Schmidt-Knobloch
Trade Commissioner
Vienna, Austria


1. Sector Overview

Austria boasts one of the most modern and successful economies in the European Union, despite having one of Europe's smaller populations with only 8.4 1 million people. Since its accession to the EU in 1995, Austria's GDP has grown to a resounding 277.17 billion Euro (2009) 2, with the 4th highest GDP per capita in the EU-27 at 30,000 Euro 3. Austria continues to be a strong and stable country.

With an annual turnover of 55 billion Euro in 2006, the Austrian food industry contributes 14% of the annual GDP and offers 27.125 jobs. 4

The effects of the global financial crisis touched Austria as well. But the Austrian food and drinks industry was one of the few to do well – even better than that. Austria´s agricultural and food industries are booming. Annual revenues of the Autrian food industry amount to Euro 7,7 bn. With an export rate of 60%, the Austrian agricultural and food industries are a key driver of exports.

Over the last years, the Austrian food sector has seen successful development. Accordingly, 2008 ag-food exports rose by 8.9% when compared to 2007. 5The balance of trade in goods of food and beverages was -0.85 bn Euro in 2008. 6 The most important export partner for Austria have been Germany (with a quota of 30,8%) and Italy, quoting 16,6%. In particular the CEE market has been important for Austria. The national food and agricultural industries could use the advantageous geographic location and reaped economic success in this sector.

The success of the Austrian food industry is based on the sustainable production of high quality raw materials and products, which largely responds to consumer demands for healthy and organic choices. Well trained employees and internationally recognized brands are also major success factors.

The Austrian food and beverage industry comprises 221 7 industrial manufacturers, in addition to 7,500 smaller format stores, bakeries and butcher shops, among others.

The Austrian food and beverages sector is already cooperating on a broad basis. In 2008 the cash flow between Austria and Canada reached an amount of 4,2 bn Euro in importing and 28 bn Euro of exporting goods. 8

At present, there are approximately twenty importers of Canadian food products in Austria, primarily importing fish and seafood, maple syrup, wild boar, beef, wild rice, jelly, juices, corn, frozen vegetables, processed fruit, spices, eggs & egg products, pulses, whisky & wine.


2. Market and Sector Challenges (Strengths and Weaknesses)

Austria serves as a unique western gateway to the markets of Central and Eastern Europe by virtue of its advantageous location, political neutrality and its historical, cultural and linguistic ties to the region. Numerous organizations in Austria offer expertise on trading and investing into these countries.

Joint ventures and licensed production arrangements in Austria offer Canadian firms the advantage of free access to the EU market, improved access to Central and Eastern European markets, reduction of transportation costs to European destinations and high-quality production facilities. Joint ventures may be formed in Austria as companies, partnerships or other legal entities.

Canadian exporters to Austria may use domestic or foreign financing to make a wide range of payment arrangements, from advances to letters of credit and bank guarantees. Austrian banks can also help arrange financing for export and investment transactions in Central and Eastern Europe. A wide range of credit and financial instruments is offered by all of Austria's banks. The Austrian banking system is highly developed, with worldwide partnerships as well as offices and branches throughout North America and in other major financial centres.

In 2007 a new phenomna occurred in the foodstuffs sector. Although the prices of food and beverages was increasing significantly, the statistic data office of Austria published that less money was spent by the  people for food and beverages. In that year the average expenditure for food was appr. 13% of the houshold income, which means less than 400 Euro per household per month. 9

Currently, Austrians purchase 50-60% of their food and beverages from food stores as opposed to the hotel, restaurant and institutional food channel (compared to only 25% in the United States). However, fast food, home meal replacement and catering are gaining in importance and will see greater opportunities in the future.

Within the retail market, consolidation is wide-scale, with the three largest chains controlling a combined 80,8% market share (2009). These retailers include Rewe-Austria (33,1%). Spar-group (28,3%) and Hofer (19,4%). 10] It is expected that consolidation will continue through 2010 when analysts anticipate only three retail chains will survive. Competition is increasingly differentiated on quality, rather than price.

Retail chains do import directly, but only high-volume products. A local importer is essential to doing business in Austria for products in low-volume niche positions. Local partners provide vital insight into Austrian business practices, market characteristics and strategies, as well as legal and importation procedures. The type of partner required by a Canadian company will vary on a case-by-case basis but in general, food products require a local representative or distributor, selected with similar criteria as in Canada.

English is spoken quite extensively in Austrian business circles, much more so than French. Therefore, initial communications with potential business partners can usually be in English. Nevertheless, German product literature/information/communication increases chances for success. Austria applies all EU regulations, as a member of the European Union.


3. Sub-Sector Identification 11

Agriculture, Food & Beverages

  • Dairy & poultry products
    • Eggs, not in shell
  • Grains/seeds/special products
    • Grains
  • Oilseeds/fruits/grains
    • Animal hides, skins and parts
    • Other raw hides
  • Horticulture
    • Edible fruits and nuts
  • Livestock and wild game
    • Live horses, mules and hinnies
    • Live bovine animals
  • Meats & Meat By-Products
    • Beef, veal and by-product
    • Other meat & meat by-products
  • Processed Food & Beverages
    • Jams, fruit jellies or paste
    • Other beverage products
    • Processed food/ beverage
    • Soups, sauces, gravies
    • Sugars and syrups
    • Spirituous beverages

Fish & Seafood Products

  • Fish/crustaceans/molluscs etc
    • Fish/frozen/not fillets
    • Fish fillets & other fish meat
    • Crustaceans
    • Molluscs
    • Fish, smoked
  • Processed fish and shellfish
    • Processed fish/ caviar

4. Case Study

McCain's case study and success story 12

McCain is a Canadian success story in Austria. A multinational leader in the frozen food industry, McCain was founded as a small family business in Florenceville, New Brunswick in 1957 and now is the world's largest producer of frozen French fries with sales of $ 6 billion and 20,000 employees. McCain has an impressive market share of almost a third of the world's French fries. Other products include appetizers, pizzas, vegetables, desserts, entrees and oven meals.

McCain products have been sold in Austria since 1996. The Austrian subsidiary was founded in 1996. Initially, only the consumer market was being supplied, but two years later, McCain started serving the foodservice market in Austria as well.

Three years after market entry, McCain had already acquired 26 percent market share and hence became an unchallenged market leader. Today, McCain Austria has 12 employees and annual sales of 15 million Euro. The focus is on potato products (French fries and specialities), in the foodservice industry also on finger foods.

Since 2004, McCain has been handling their growing business in Central and Eastern Europe from Vienna. The Czech Republic, Slovakia and Hungary are all covered from the Vienna headquarters. Since the summer of 2007, Poland has also been added as a responsibility. Since summer 2008, Germany (established already 30 years ago) joined the region, which is now called Germany and Central Europe. Annual sales in Germany and CEE  countries amount to 160 million Euro and 350 employees work for McCain in the region (200 in a plant in Poland).

The CEO for McCain Austria/Germany & CEE, Helga Hofmeister, outlines that "Vienna is a perfect location for CEE and the opportunities in CEE are really exciting. Austrians can be very successful in CEE countries thanks to the shared cultural and historical ties. A headquarters in Vienna for the CEE region offers international companies not only security and liability but also guarantees an adequate transfer of know-how."

The objective for the joint management of Austria and Germany are increased cooperation, joint learning and also increasing efficiency.

The irrefutable conclusion of this Canadian success story is that for a well structured international company with clear objectives, efficient procedures and a good product, it is possible to flourish in these international markets at an amazing speed.


Canadian Government Contacts

Embassy of Canada in Vienna
Contact: Susanne Schmidt-Knobloch
Email: susanne.schmidt-knobloch@international.gc.ca
Website: www.tradecommissioner.gc.ca

Foreign Affairs and International Trade Canada
125 Sussex Dr.
Ottawa, ON   K1A 0G2
Website: www.tradecommissioner.gc.ca


Useful Internet Sites

On Austria (country and market information from Canadian and other sources)

Country sites

Key players in the industry

  • Rewe (owner of www.billa.at and www.merkurmarkt.com - market share of about 1/3 of total food retail market)
  • Spar (also market share of about 1/3 of total food retail market)
  • Hofer (first and leading discounter in Austria, about 11% market share)

Canadian sources


[1] www.statistik.at/web_de/statistiken/bevoelkerung/bevoelkerungsstand...
[2] www.wko.at/statistik/prognose/bip.pdf
[3] europa.eu/abc/keyfigures/qualityoflife/wealthy/index_de.htm
[4] lebensmittel.lebensministerium.at/article/articleview/54758/1/8140
[5] Die Lebensmittelindustrie: Zahlen, Daten, Fakten 2008
[6] Country Report 2010. Economist Intelligence Unit. United Kingdom.
[7] Die Lebensmittelindustrie: Zahlen, Daten, Fakten 2008
[8] Der Außenhandel Österreichs 2008. Serie 2 – Spezialhandel. Seite 126
[9] diepresse.com/home/wirtschaft/economist/322620/index.do
[10] BranchenReport Lebensmittelhandel Österreich 2009. Seite 26.
[11] Der Außenhandel Österreichs 2008. Teil 1 – Serie 1.
[12] www.mccain.at/

Date Modified: 2010-12-06

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