Five questions on the German food industry

How has the food sector performed in the last six months?

While the food industrys turnover remained stable in the first half of 2010, at around. 72.9 billion and down just 0.2% year-on-year, retail turnover has decreased slightly: down 2.4% between January and May 2010. Competition is still fierce, and price pressures are felt at all levels by producers, wholesalers and retailers. Despite a stagnating domestic market, German food producers have been able to improve turnover by increasing exports into Europe, helped by their reputation for high quality standards, which gives them a competitive edge.

What is the current trend in payment delays, payment defaults and insolvencies?

Food producers generally face long payment terms demanded by food retailers, but efforts are afoot to try to make terms consistent throughout the supply chain. However, the number and value of overdue payments and claims received from clients in this sector have decreased since Q4 of 2009, and overall the economic crisis has had no significant impact on the sector.

What should companies selling products into the food sector pay particular attention to?

Continuing concentration has resulted in market power resting with just a few large companies, both in the food production and distribution subsectors. For smaller businesses in particular, margins have come under pressure due to differing payment terms along the supply chain and the high quality standards demanded. It is therefore necessary to carefully examine the payment behaviour, especially of smaller and newly-founded buyers.

What is Crédito y Caución short term outlook for the food sector?

Prices - at all stages of production and distribution - will remain low, and businesses will try to make further savings and optimise their cost structure. With its relative resilience to economic volatility, Crédito y Caución expect the food industry to remain stable in the coming months, and to benefit from the opportunities offered by export markets.