Food and beverage sector in Romania
• Automation & Robotics • Technical Articles • South-East European INDUSTRIAL Мarket - issue 2/2020 • 22.06.2020
Romania’s economy is one of the fastest growing in the EU, having reported a 7% growth in 2017, which is the highest since 2008, and a 4,1% growth in 2018. Household consumption has been the main contributor to the GDP growth in Romania as a result of an increase in purchasing power due to higher wages and tax cuts (VAT cut from 24% to 9% for food products). The country is remarkable in Eastern Europe in terms of consumer market potential with a population of almost 20 million inhabitants.
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Over the last few years the food processing industry in Romania has experienced a rapid development. A lot of significant investments have been made in order to optimise the production flows. Many of the major players in the food industry used EU funds for expansion, construction of new facilities and modernisation of their processing capacities and storage spaces. Some of the companies on the food processing market in Romania (especially those active in meat processing) operate their business as part of an integrated system starting from farm, slaughterhouse, processing unit and own stores. This kind of approach ensures a sustainable growth of the food market, as well as national and regional economic development. Through the years Romanian farmers and food manufacturers have advanced a lot in terms of productivity and optimising the solutions for livestock farming and processing capacities. However, experts from the Flemish government agency Flanders Investment & Trade believe that due to the increasing market demand and the required quality standards, the food processing sector in Romania needs further development and modernization.
Eurostat data shows that in 2018 Romania imported food and live animals worth EUR 6,07 billion, up 2% in comparison to 2017, while exports increased by 3,6% up to EUR 4,2 billion. According to National Institute of Statistics data for 2018, the amount of prepared foodstuffs, beverages and tobacco accounted for EUR 1794 million in terms of export and EUR 3377 million in terms of import, with the trade balance being EUR -1583 million.
The main sub-sectors of the food processing in Romania and products categories are as follows:
- Meat processing: ham, salami, liver pate and sausages being the main popular; canned meat as well however less;
- Milk and dairy processing: milk for consumption, cream, yogurt and other acidified products-butter and cheese – soft cheese being the most popular together with the traditional "telemea" (soft cheese similar to feta cheese);
- Fish and fish products: canned fish, salads and other fish products (mackerel, herring, sprat, trout etc);
- Fruit and vegetables: jams and marmalades, juice, frozen vegetables and mixtures, canned vegetables;
- Bakery: bread, pastries, cakes, biscuits, breakfast cereals.
The ready-meal segment has been gaining more and more popularity, especially in urban areas where people have a busier professional life and less time available for cooking at home. The Romanian market of ready meals is covered by menus and salads.
According to a survey on the food processing and retail in Romania by Flanders Investment & Trade the current level of consumption of various food categories in Romania is at a relatively low level as compared to the standards of other European countries, although it is increasing year by year. Data from the National Institute of Statistics for example, demonstrates that the monthly average consumption of fresh meat and meat products in Romania amounted to 4,8 kg/person in 2018, which means a yearly average consumption of 58 kg/person. When compared to Spain, Austria or France, which recorded the highest average consumption on the EU market, 94 kg/person, 90 kg/person and 86 kg/person respectively, this amount is rather low. Pork continues to be the most popular type of meat in the Romanian market, with an average consumption of 29 kg/year, followed by poultry meat at around 20,1 kg/year. The relatively low current level of consumption in Romania is also valid for dairy products, fruit and vegetables and fish. In terms of bread consumption in the country, there have been records of about 82 kg/person/year which is above the European average of 78 kg/person/year.
Crops held the largest share in terms of agricultural production in 2018, accounting for 70,3% of the total production, followed by animal production with a share of 28,3% and agricultural services with 1,4%. Romania’s agricultural production was worth RON 90,2 billion (EUR 19,6 billion) in 2018, up 7,2% compared to the previous year, all sub-segments (crop, animal and services) having registered growth.
Wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes for crop production, and pork, poultry, milk, wool and eggs for animal production are the main locally produced agricultural products. Data from 2018 shows that the production of cereals for grains (wheat, rye, maize) was higher in terms of volume than in the previous year, but lower for leguminous plants for beans, potatoes and sugar beet.
Compared to 2017, in 2018 the weight of the animals and poultry to be slaughtered for consumption increased for poultry and decreased for pigs and cattle. The total milk and wool production registered an increase as well while the egg production decreased.
According to KeysFin data, the Romanian agriculture operates around 12 727 companies specialised in plant cultivation, which generated over 64% of all agricultural businesses. Of these, more than 3247 companies (29% of total turnover) are active in animal husbandry and 1272 – in the mixed agricultural activities sector, which provides 7,6% of the total agricultural business.
As the agro-food production industry contributes significantly to employment and creating added value, it is one of the most important sectors in Romania. Data from the country’s Trade Registry shows that companies operating in the food and beverages industry with production activities in Romania registered a turnover of EUR 12,2 billion in 2016, up 3% compared to 2015.
An analysis by FRD Center states that the meat processing sector in Romania is quite dynamic and most of the players are vertically integrated. According to official data from the National Institute of Statistics meat production in Romania recorded 815 821 tonnes in 2018, which represents an increase of 2,8% in comparison to 2017. Moreover, in 2018 compared to 2017, the Romanian manufacturing of meat products expanded by 3,5% and of tinned meat by 11,9%.
Data from the Romanian National Institute of Statistics shows that the slaughtering of animals in Romania in November 2019 compared to November 2018 increased for pigs by 1,8% and for sheep and goats by 10,5%, decreased for poultry by 3,6% and remained constant for cattle. With continuous investments in manufacturing and processing technology, logistics and branding, the Romanian meat processing industry continues to be on a positive trend for the medium term. According to FRD Center’s study, the main producers of meat and meat products in Romania are Unicarm, Aaylex Prod, Recunostinta Prodcom Impex/CrisTim, Agricola International, Caroli Foods Group, Elit, Diana, Fox Com Serv Distribution, Doly-Com Distributie. In 2018 they recorded a cumulated net turnover of EUR 905 million, which was an increase of 7,4% when compared to 2017.
Romania has a long-standing tradition in the dairy industry and the sector is characterised as quite dynamic. Major international companies operate in the country’s dairy producing sector, including several foreign players which entered the market through the acquisition of local enterprises. In 2018, compared to the previous year, the dairy manufacturing in Romania increased for milk (+4,8%), fresh milk products (+10,9%) and cheese products (+7,1%), but decreased for butter (-12,1%).
Data from the National Institute of Statistics shows that the amount of cow’s milk collected by processing units from agricultural holdings and collection centres in Romania in the first 11 months of 2019 compared to the first 11 months of 2018 rose by 1,2%, reaching 1 037 683 tonnes. Moreover, in the first 11 months of 2019 compared to the same period of 2018, the country registered increase in production for drinking milk by 7,4%, acidified milk (yogurt, drinking yogurt, curd and other similar milk products) by 4,6%, cheese products by 2,4% and cream by 1,5% while the production of butter decreased by 2,2%. In a market study FRD Center points out the main players active in the dairy production sector in Romania – Danone Productie si Distributie de Produse Alimentare, Fabrica de Lapte Brasov, Frieslandcampina Romania, Hochland Romania, Dorna Lactate, Simultan, Lacto Food, Prodlacta, Carmo-Lact Prod.
Sugar and oil
Before 1990 there were a total of 34 sugar beet factories in Romania but since then that number has drastically decreased. At the moment, there are only five sugar producers in the country – Agrana Romania, Tereos Romania, Zaharul Oradea, Antrepriza Zahar, Bod Lemarco Cristal. In 2018 they realised a cumulated turnover of EUR 217 million, which accounts for a decrease by 31% compared to 2017. According to data from the National Institute of Statistics the production of sugar from sugar beet in Romania reached 108 187 tonnes in 2018, a decrease of 43% in comparison to 2017.
Romania had dozens of oil processing plants in 1989, but after a number of successive privatizations and resales, many of them closed. In the recent years, the vegetable oil market in Romania underwent an extensive concentration process. In 2018, 309 592 tonnes of edible oils were produced in the country, up by 5,7% compared to the previous year. Among the main producers of edible oils in Romania are Bunge Romania, Expur, Prutul Ardealul, LTA Mondial Argus. They reached a cumulated turnover of EUR 942 million in 2018, recording a 5% growth compared to 2017.
Processed fruit and vegetables
According to a FRD Center report the Romanian sector for processed fruit and vegetables is a very dynamic one and is expected to keep expanding in the medium term. Data from the National Institute of Statistics shows that 71 190 tonnes of tinned vegetables were produced in Romania in 2018, which represents an increase of 0,8% compared to 2017. The domestic production of tinned fruit also increased by the remarkable 39,2% in 2018 compared to 2017, reaching 3355 tonnes. Among the major producers of processed fruit and vegetables are Contec Foods, Annabella Fabrica de Conserve Raureni, Mandy Foods International, MGC International Investments, which registered a cumulated turnover of about EUR 62 million in 2018, recording a decrease of 3,2% in comparison to 2017.
Approximately 216 072 tonnes of confectioneries and pastries were produced in Romania in 2018, 5,5% less compared to 2017. The main bakery and pastry producers identified and selected by FRD Center are Chipita Romania, Vel Pitar, Boromir Ind, Pambac, Sam Mills Europe, Dobrogea Grup, Croco, Trans Agape. In 2018 they registered a cumulated turnover of EUR 422 million, up by 3,3% compared to 2017.
The annual average wine consumption in Romania amounts to around 20-22 litres per capita. A 2018 study by CrameRomania.ro and ReVino.ro shows that the majority of Romanian respondents consume wine 2-3 times per week, 22,5% once a week, 18% daily, 7,4% once a month and 7,1% only at special occasions. According to the same study, the Romanians consume mainly red wines (56,6%), followed by white wines (28%), rose wines (13,4%) and sparkling wines (2%).
Wine making in Romania has surpassed 5 million hectolitres in 2018, up by 18% compared to 2017. The country holds 12th position in the world and 6th in Europe in terms of wine production. Romania’s 37 vineyards are distributed over eight wine regions, the largest one being the Moldova hills region which covers almost 70 000 hectares.
Currently, there are more than 180 wineries that produce bottled wine in Romania and their number has registered a steady growth over the last few years. Some of the main wine producers in Romania are: Cramele Recas, Jidvei, Cotnari, Vincon, Crama Ceptura, Cramele Halewood, Domeniile Viticole Tohani, Vinexport Trade Mark, Domeniul Coroanei Segarcea.
In 2018 Romania imported 34,5 million litres of wine. Data shows that only 3,5% of Romanian wine production is exported, mainly to the UK, Germany, China, the Netherlands, Italy, Spain, USA, Slovakia, Estonia and Canada. Among the main importers of wine in Romania are Lerida International, Vinimondo Import, Vinexpert, BDG Import, Pancom, Cristalda Impex, Top Intercom, Lizar Shop, Wine Advisor, PPD Romania.
According to the Brewers of Romania Association in 2018 the country’s beer market registered a 3% growth compared to 2017 in terms of demand and consumption, reaching 16,6 million hectolitres. Over the same year the annual beer consumption per capita in Romania was 85 litres. Lager beer held a share of 93,61%, followed by the specialties category (dark, unpasteurised, light, ale, red beer etc.) with 2,25%, beer mixes and flavoured beers with 2,27% and non-alcoholic beer with 1,87%. The number of craft beer brands in retail is growing, but they are facing the powerful competition of classic beers, so they still take limited space on the shelf.
Beer production in Romania generates directly and indirectly over 85 000 jobs, driving the country’s economy forward. In 2018, there were 56 brewers in Romania, compared to 39 in 2017. According to Eurostat data, the Romanian production of beer made from malt (excluding non-alcoholic beer, beer containing < 0,5% by volume of alcohol) has registered almost 1770 million litres in 2018, 0,5% more than in 2017. The production of non-alcoholic beer and beer containing < 0,5% alcohol has recorded 47,7 million litres in 2018, which is an increase of 12,8% compared to 2017. Some of the main brewers in Romania are Ursus Breweries, Heineken Romania, Bergenbier, United Romanian Breweries Bereprod, Albrau Prod, Romaqua Group, Martens and Bermas.
Data from the Brewers of Romania Association shows that beer imports on the domestic market have amounted to 0,54 million hectolitres in 2018, a slight increase of 0,07 million hectolitres compared to the previous year. Only 3% of the beer consumption in Romania is covered by imports. Beer exports have reached 0,54 million hectolitres in 2018, according to Brewers of Romania Association. Some of the main beer importers in Romania are BereBauturi Bucuresti, Alma Tim Distribution, World of Beer Distribution, Best Beverage Group, BDG Import, Cristalex 94, etc.
The Romanian soft drinks market has registered a constant growth over the last few years. The country’s domestic soft drinks market was estimated at nearly EUR 1,3 billion in 2018. The average annual consumption of soft drinks in Romania records approximately 71 litres per capita. The most popular brands of soft drinks in Romania are Coca-Cola and Pepsi. Over the last few years the healthy living trend has had serious influence on the Romanian soft drinks market, changing not only consumer behaviour, but also the marketing strategies of the companies, active in this sector. Following this trend, new products are being launched with a focus on reduced calories, reduced sugar content, replacing natural sweeteners and added vitamins.
Romania is a regional production centre of soft drinks in CE and SE Europe. Eurostat data shows that the production of water with added sugar, other sweetening matter or flavoured, i.e. soft drinks (including mineral and aerated) has reached 1,926 million litres in 2018, increasing by 5,9% compared to 2017.
Coca-Cola HBC Romania is the leading producer of soft drinks on the domestic market. Its sales of carbonated beverages have jumped by 10,4% in 2018 compared to 2017. Among the producers of soft and carbonated drinks in Romania are also Quadrant Amroq Beverages, Maspex Romania, Romaqua Group, European Drinks, Alconor Company, etc.
Keywords: food industry, beverage production, agriculture, dairy industry, meat processing, brewing industry
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