Tension Overwhelms the Deutsch Fresh Food Market

Price-sensitivity, stagnating domestic demand, high raw materials and personnel costs and more intense competition in manufacturing and trading were the market conditions for fresh food in 2015. Despite the stable economy and domestic demand, the situation is described as tense. Weak overall value growth and a small increase in the price of fresh food demonstrate the difficult situation due to market saturation. Fresh food in Germany continued to reach a state of immobility, allowing little leeway for change. With the relative saturation of fresh food, new market trends are crucial. The main two areas for growth remain organic and regional products, but with estimated overall shares of 6 percent for organic and 10 percent for regional, growth is limited. 

Regionality is more of a driver of growth than organic, since many German customers are aware of regionality as a key part of “conscious shopping”, which is the basis for a healthier lifestyle. If they can choose between organic bananas from Brazil or non-organic apples from their region, they are most likely to buy the regional alternative, since plastic packaging and long transportation distances for organic food have entered the public consciousness. Innovation in terms of packaging suitable for single households, smaller portions and convenience also performed well in 2015. Discounters sees a strong performance, but continues to battle with supermarkets. By international comparison, the share of discounters in Germany, with a 47 percent retail volume share in 2015, is very high. Due to strong price-sensitivity, supermarkets such as Rewe and Edeka continued their marketing strategies and increased the presence of their private label brands in fresh food categories, in direct competition to discounters such as Aldi and Lidl.

“Innovation in terms of packaging suitable for single households, smaller portions and convenience also performed well in 2015”

In turn, discounters placed more branded products on their shelves. The role of weekly markets as a source for fresh food remains important, according to trade press, and 43 percent of Germans state that they buy regional and organic products, preferably at market stalls. Supermarkets are taking the trend of conscious and healthy eating into their sales concept: goods marketed as regional, organic and fair trade and the expansion of their fresh food departments aim to provide a convenient alternative to time-intensive Saturday morning shopping at weekly markets. Specialty shops for Turkish and Arab food are popular in big urban communities, since they offer foods which are not available in discounters or supermarkets. The German economy remains stable, and some Germans are willing to pay more for good-quality fresh food. General expenditure increased above-average in 2015, which was not entirely due to the weak overall price increase. People shopped for better-quality food from time-to-time for a treat, but daily fresh food remained very price-sensitive. As a result of the constant trend towards healthier lifestyles in German society, Germans know that quality has a certain price, and they are willing to accept this to optimize their daily routine. The credibility of producers and the availability of products are also crucial. 74 percent of Germans state that they are willing to pay more for better quality, according to trade press, and many of them would actually do so if the credibility of the company and also the availability of products encouraged them to do so.

Euromonitor International