Food and Beverage Industry in the Netherlands - Research Paper Example

Food and Beverage Industry in the Netherlands Table of Contents: Food and Beverage Industry in the Netherlands 1 Table of Contents: 1 Introduction 2 Economic Situation of the Country 2 Food and Beverage Industry Statistics for Netherlands 3 Size and structure of the restaurant industry of the Netherlands 5 Trends in restaurant/food industry 5 Forecasted Expenditure within the Catering Industry 7 Commercial Catering 7 Institutional Contract Catering 7 Agricultural development, farming and fishing 8 Laws 8 The food and Drug Administration 8 Averages spend per person on Restaurants. 8 Cultural Impacts 9 Style of food consumption and the culture behind it 10 External Influences, like migration 10 Impact of the migrants 11 Conclusion 11 References 12 Introduction This research attempts to divulge the economic condition of Netherlands and evaluates the prevailing condition of the food and beverage industry of the country. The main focus of this study is to analyze the effects of the changing pattern of food consumption in the economy and also on monthly expenditure of an individual. This study makes a comparative analysis of human behavioral patterns in the prevailing economy and economies of other countries. Economic Situation of the Country Netherlands had been through a tough and stagnant economic position from the beginning of the 2000s. But now the economy is again back in shape. The economy has grown at a very fast rate during the past few years. The open nature of the economy has attracted investors from all over the world which has helped it to maintain its GDP growth rate. After going through a difficult phase the economy is again performing well in comparison to other countries. The Gross Domestic Product growth rate has been very strong during the time of its recovery. It was about 3% annually during 2006 to 2007. The per capita GDP is the highest in OECD (Organisation for economic cooperation and development). Rate of unemployment has come down to about 3.5 % in comparison to the rest of the countries in OECD. After breaching the Maastricht budget deficit limit in 2003, the fiscal position of the country has become strong and the budget has generated a surplus of 0.7% of the GDP in 2008. The debt ratio also fell to 45 % of the GDP. (OECD Economic Surveys, p.18). Food and Beverage Industry Statistics for Netherlands Following are the statistics on the food and beverage industry in Netherland. Netherland has a trade value of 50,088,904 thousands in exports. It has witnessed a growth of 45.56% in 5 years. For imports, Netherlands trade value is 33,912,044 thousand with a growth rate of 62.39% in 5 years. The following figure shows the export trade values (in thousands) of different countries. The following figure shows the import trade values (in thousands) of different countries. (Global Edge. 2007. ‘Food and beverage: Industry Stats’) Size and structure of the restaurant industry of the Netherlands Trends in restaurant/food industry Changes in the society have resulted in increased consumption of food in the “out of home market”. In the year 1975, 10% of all food products comprised of those that were sold through “food service markets”. Recently the figure has increased to 30%. It is also expected that the figure will rise to 50% in the next 10 years. This implies that the contribution of restaurants and snacks corners will increase over the years. The above figure shows the importance of Dutch food service industry. The figure shows a steep growth in this sector. The main reason can be attributed to the rise in the number of eating occasions or the consumption frequency. Forecasted Expenditure within the Catering Industry Commercial Catering “Horeca” is a term used to include all hotels, restaurants, cafes, snack bars and fast food restaurants. This is one of the popular words in Netherlands. Commercial catering would include Horeca, catering in flights and parties, leisure parks and garage forecourts. Institutional Contract Catering This includes company catering and also social catering. Social Catering includes healthcare, i.e., hospitals and nursing homes, educational institutions, public services like armed forces, prisons, etc. In the food-service market segment, some organisations do it themselves and others though contract caterers. Horeca has been showing a consistent growth for the last few years. In the year 1998, its growth was 6.7% and in 1999 it was 7%. Rise in consumer spending, increase in consumer trust, business developments and also growth of the Dutch economy has played a positive role in this growth. Share of the “commercial catering” sector has been 56% of the “food service market”. This sector has grown the fastest of all the sectors with fast food being the most important one. The difference between commercial and institutional catering has been reducing over the years. The so called “social and company catering” are now considered as services of high standards. “Social and commercial catering” are gradually taking the shape of commercial catering. They are making more profits and receiving fewer subsidies. (The Netherlands HRI Food Service Sector, p.8-9) Agricultural development, farming and fishing Agriculture and fisheries comprises 2% of the total GDP of the country. These include milk products, poultry, livestock, fruits, vegetables, flower bulbs, cut flowers, sugar beets, wheat, potatoes, barley etc. Services contribute three quarters of the national income of the country and that includes transportation, banking and insurance, logistics and distribution. Industrial activities account for the remaining one fourth of the national income. (Background Note: the Netherlands, US Department of State). Laws The food and Drug Administration The “Ministry of Agriculture and Fisheries of Netherlands” agreed to have the “Netherlands Inspection Institute for Milk and Milk Products”. “The Directorate General for agriculture and food” has to issue an export certificate to the food commodities that are being exported to US. These products should also contain “name and address of the manufacturer”, number and size of the containers, date of issue of the certificate and the seal of the authorizing official (Obligations of participants, FDA-The Ministry of Agriculture and Fisheries of the Netherlands). Averages spend per person on Restaurants. The following figure shows the average income of an individual that is spent on food and beverages in the hotels and restaurants.   1995 1997 1998 1999 2000 Food 14,515 15,374 15,875 16,250 16,753 Beverages, Tobacco 8,652 9,252 9,554 9,879 10,181 Hotels, Restaurants 6,318 6,892 7,266 7,695 8,204 (Income and household expenditure, Statistical Yearbook of the Netherlands 2004, p.211) Cultural Impacts Changes in the society have resulted in the increase in number of occasions for eating outside. Consumption of food have also increased, especially “out of home” consumption. The “food and drink” market is increasing. The restaurant market is increasing at a faster rate than the retail market. The above trend is leading to certain cultural impacts. Differences are developing within the traditional family. Increase in people mobility has resulted in less number of fixed eating meals. People have started consuming food according to their convenience. Increase in the number of one or two individuals households. Increase in the average spending ability of each household and also higher “out of home consumption”. Increase in the use of catering facilities. Style of food consumption and the culture behind it Researches conducted on the eating habits of the Dutch show that individuals spend less time in kitchens. Major portion of the Dutch population consume “take away meals”. Chinese food restaurants, “snacks bars and pizza couriers” are competing with each other in the Dutch supermarkets. They remain open for long hours so that people are able to buy food and drinks even at the late hours of the evening. Use of readymade foods like sliced vegetables, “pre cooked potatoes” and “readymade meat” have been increasing. Single person are consuming more readymade food. Frozen pizzas are a favorite among the young generation and household comprising of two members. Increase in the consumption of “out of home eating”. An example of this fact is seen in the rise of the sale of sandwiches. (The Netherlands HRI Food Services Sector, p.6). External Influences, like migration Netherlands has witnessed a wave of immigrants since the year 1960. Lack of economic integration and poor performance of the labor market have worked positively towards formulation of such policies which are aimed at making the selection policies of immigrants stricter. The entry schemes of the migration policy have been modified in order to facilitate immigration of highly skilled workers. The immigration policy has been so modified as to meet the requirements of the labor market and integrate them in the economy. 1.5% of total foreign employment works in the agricultural and fishing sector. 20.4% work in mining, manufacturing and energy generation. 8.2% of them work in hotels and restaurants. 12.1% work in health and community services. 15% and 5.4% work in the wholesale & retail trade sector and education respectively. 28.2% work in other services. Impact of the migrants Immigrants have added substantially to the growth of the Dutch economy. During 2006, it was found that 19% of the total number of workers comprised of first and second generation immigrants. The economy gains very little from the immigrants. Most of the gains are absorbed by the labors themselves due to the income they generate. It is seen that an increase of 5% in labor force raises production by about €10 billion. The surplus that the natives enjoy is about €0.3-0.5 billion. Wage flexibility in Europe is low. That is why the impact of immigration is much more palpable in Europe than in US ( The Netherlands HRI Food Services Sector, p.127). Conclusion The above study depicts a gradual shift in the food consumption pattern of the economy of Netherlands. The trend has shifted towards readymade fast food items. Previously, individuals used to spend most of their income on home products, whereas the young generation is more inclined towards readymade food items. Subsequently the expenditure on these items is also on the rise. References The sources of real income differences, 2006. No Date. OECD Economic Surveys Netherlands. June 22, 2010. < http://website1.wider.unu.edu/lib/pdfs/OECD-ES-Netherlands-Volume-2008-Issue-1.pdf> Food & Beverage: Industry Statistics. 2007. Global Edge, June 22, 2010. < http://globaledge.msu.edu/industries/food-and-beverage/tradestats/> The Netherlands HRI Food Service Sector. 2000 USDA. June 23, 2010, Economic Impact of Migration. January 2008, OECD. June 23, 2010, < http://website1.wider.unu.edu/lib/pdfs/OECD-ES-Netherlands-Volume-2008-Issue-1.pdf> Background Note: the Netherlands. January 12, 2010. US Department of State. June 23, 2010 < http://www.state.gov/r/pa/ei/bgn/3204.htm> Obligations of participants, No Date. FDA-The Ministry of Agriculture and Fisheries of the Netherlands. Income and Household Expenditure, 2004. Statistical Yearbook of the Netherlands 2004. June 23, 2010 < http://www.cbs.nl/NR/rdonlyres/3C60B3E9-09E0-491F-87F2-99B8E54936A1/0/2004a3pub.pdf> Read More