German food processing & packaging companies report growth
The German food processing and packaging machinery industry recorded 7% growth in 2021 driven by strong domestic demand. Despite concerns about rising prices and shortages of raw materials, the industry maintains a high level of confidence and optimism.
According to the trade association VDMA, the German food processing and packaging machinery industry posted revenues of €14.8 billion in 2021, up 7% on 2020. This result brings the country’s fourth largest manufacturing machinery sector almost back to the pre-crisis levels of 2019 when revenues stood at €15.3 billion.
In 2020-2021, the sector benefited from strong investments in the domestic market. The industry reported domestic sales of €384 million last year (+8%), driven by extremely favourable interest rates, financing provided by the KFW Bankegruppe for energy efficiency improvement in the production process, and significant investments in automated solutions.
The United States is one of the most dynamic export markets with 23% growth to more than €100 million, as difficulties in finding trained personnel in the country force food companies to invest in automation. Exports to China also saw double-digit growth, while demand in the EU-27, the most important market area with a 39% share, dropped below the 2020 level. Overall, foreign sales grew by around 3% year-on-year in 2021 to reach an all-time high.
Supply chain pressure
The positive market scenario is partly overshadowed by continuous supply chain disruptions and materials shortages. The war in Ukraine and China’s strict zero-Covid policy are placing additional strain on companies’ business operations, especially in terms of sourcing metals and metal products. So despite the growing order books (+4% as of March 2022), it is difficult to predict how the raw materials shortages and energy price increases will affect future business development.
A climate of confidence and optimism
Despite the objective difficulties, the outlook for the German food processing and packaging machinery industry remains positive. The price increases are set against a backdrop of dynamic growth in the global food industry, driven by demographic shifts, new dietary trends and ever-shorter product life cycles leading to steady investments in advanced, safe and flexible technology. Another factor fuelling optimism for the near future is the industry’s strong position in over 100 countries, more than half of which are outside Europe.
