Table of contents
Key takeaways
The European food processing machinery market consists of businesses involved in the design, development and manufacturing of food processing equipment. These systems transform raw food ingredients into (pre-)food items. Machinery manufacturers serve a broad and international range of B2B customers active in the food processing industry. We segmented the market by product category into (i) general, (ii) fruit & vegetables, (iii) confectionery & bakery and (iv) meat, poultry & fish.
The food processing machinery sector is rather consolidated, with the top five players in multiple segments holding >50% market share on a global scale (interviews by Gain.pro). With food processing constituting one of the oldest and most mature industries, involving products with a rather low degree of regional differentiation, competition takes place in an international arena. Players either establish their own sales force overseas or access external sales networks to build a presence in foreign markets. In order to efficiently serve a diverse range of customers, players often use a standardised engineering blueprint to produce the basis of the machine (~80%), with only key processing components (~20%) being tailored to the end-customer’s needs (interviews by Gain.pro). However, this modular composition facilitates the market entry of Asian copycat players either focusing on the standardised body of the machine or on specific key functional components.
Sponsor-led interest remains limited given the industry’s already high degree of consolidation and high costs for customers to switch equipment providers. In addition, remaining family owners are particularly unwilling to sell their business given the industry’s slow but steady and resilient growth trajectory (interviews by Gain.pro).
ESG topics predominantly revolve around environmental sustainability as innovation is required to make food processing machines (i) more efficient to reduce food waste during processing cycles and (ii) more energy-efficient to reduce their overall carbon footprint.
Company benchmarking
Market growth
McKinsey & Company (March 2018) estimated that the global food processing equipment market would reach ~$59bn per year-end 2021, historically growing at a CAGR of ~6% (2016-2021).
Technavio (July 2021) forecasts the global food processing market to grow ~5% YoY from 2021-2025, implying a total market size of ~$69bn. With the strongest growth contributed by the APAC region, we expect growth rates in the European market to be slightly below this level. For example, CBS (December 2021) valued the Dutch market for processed fruits and vegetables at ~€12bn in 2020, thereby anticipating an annual growth rate of ~2-3% during 2021-2025.
An executive interviewed by Gain.pro expects the German market for bakery processing machinery to document ~3-5% YoY growth between 2020 and 2025.
Positive drivers
Continued growth in global food consumption. A persistently growing global population that needs to be fed is expected to reach ~10bn people by 2050 (UN, June 2022), increasing the sheer volume of total food consumption and boosting demand for corresponding processing machinery
Consumer preference shifts toward convenience food. Consumers’ emphasis on more convenience and ready-to-eat food, involving more automated processing, will drive further growth in the overall food processing industry (McKinsey, March 2021; interview by Gain.pro)
Continued innovation to reduce food waste. Industry-wide ambitions to reduce food waste during the processing stage will boost further innovation of new machinery whilst shortening the replacement cycle of existing equipment (interview by Gain.pro)
Negative drivers
Copycat risk from low-cost countries in Asia. Machines used for non-complex processes run the risk of being copied by Asian companies, subsequently supplying emerging customers in high-growth markets such as Asia, South America and Africa. This might slow down the growth trajectories of identified European players (interview by Gain.pro)
Structural shortage of skilled employees. With equipment manufacturers not being able to find enough qualified technicians (e.g. assemblers, hand-held tool cutters), growth potential might be curbed as players cannot fully address rising demand (Association of Equipment Manufacturers, January 2022)
Uncertainty coming from trade and geopolitical tensions. With global geopolitical tensions and economic uncertainty picking up, both identified players and their customers might decide to postpone significant CAPEX investments. This will put a halt to the growth of manufacturers, especially since the current Ukrainian war is directly affecting food ingredient availability (interview by Gain.pro)
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Food processing machinery industry.
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