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Drivers of performance: market analysis of European meat industry

Jeroen Lustig published on September 1, 2021

The European meat industry continues to face several challenges. Shifts in consumer behaviour, driven by emerging concerns around sustainability, animal welfare, and public health, are causing a major rethink within the industry. How is the industry responding to these challenges? Read more about the latest developments and performance indicators in our trend report.

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A-INSIGHTS has developed a unique company classification system, which captures detailed information on the activities of each company in the Agri-Food industry. This allows us to perform multiple cross-section analyses that uncover driving dynamics in the European meat industry.

Key insights into the European meat industry

The meat sector appears to be at a crossroads. After years of steady growth in European markets, a slow decline is predicted for the years ahead. Margins are thin and consumers are shifting to new products as a result of emerging sustainability trends. Nevertheless, there remains some reason for optimism in the industry. Based on our in-depth analysis of publicly available market data from 2016-2020, we identified key insights into trends and developments:

Struggling for growth

There’s no avoiding the fact that the current growth prospects for the meat sector are not particularly promising. Real market growth was marginal between 2016 and 2019, with most of this coming from exports. By 2030, the European Commission predicts that total meat production will have decreased by 2.3% when compared to 2020 levels.

Retail-focused meat companies faring better 

Our analysis of various sales channels shows that retail has grown fastest between 2016 and 2019, a trend that looks set to continue. With food retailers allowed to remain open throughout the COVID-19 pandemic in most markets, this sales channel is also the least likely to have been adversely affected over the previous 12 months.  

Profitability contrasts are steep

When taking a country-by-country approach, the difference in profitability levels was stark. Polish meat firms, for example, were able to maintain profit margins through a combination of less stringent regulations and lower staffing costs. By contrast, the industry in Spain showed impressive profit levels largely due to a focus on added value items that are not produced in other markets. This suggests that there is more than one way for businesses in the meat sector to return to more favourable profit levels.  

The challenge in the meat industry is to restore the imbalance by reorganizing the supply chain structure: built up from whole animals, instead of parts. This will allow the industry to better retain and distribute the added value across the value chain. To get here requires the involvement of all parties: large buyers such as retailers, producers and processors, and farmers. As growing numbers of shoppers look to reduce their meat consumption, can the meat industry redefine itself and restore profitability?

Read all about drivers of performance in our trend report: "Drivers of performance: market analysis of European Meat Industry". In the series Drivers of Performance, our analysts have also analyzed the following markets:

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Jeroen Lustig

Jeroen Lustig Jeroen.lustig@a-insights.eu +31 (0) 6 39 855 600