The Food and Beverage Industry in the Netherlands
One very lively sector in the Netherlands is the food and beverage industry, which is actually the largest industry in the country. In 2021, more than 6000 companies were active in the food, beverages and tobacco industry. The total turnover amounted to approximately 77.1 billion euros that same year. The share of companies in the food, beverages and tobacco industry recording an increase in turnover is also rising: during the first quarter of 2020, 52% of companies showed an increase in turnover, compared to 46% in the same quarter of 2019. This means, that the food and beverage industry can be seen as a very lucrative sector to either invest or start a company in. Moreover, it is a very versatile sector with an enormous amount of different opportunities. You can choose to stay on the logistics side and transport goods, such as refrigerated specialty goods. You can also choose to operate more on the consumer side, such as opening a restaurant, owning a store or operating as a franchise company. You can alternatively produce goods, which you can learn from some skilled Dutch who have been doing this for decades.
In any case: this sector offers a lot of possibilities and ways to expand. Due to the constantly changing methods of producing food and raw materials, this is also a very vibrant and innovative sector. Whenever some new procedure is invented to grow vegetables more efficiently, for example, the Dutch are always the first to implement it. These new methods are also often invented in the country itself, due to the intertwining of innovation and production within this industry. If you have expertise in one of these areas, then this sector will definitely offer you plenty of opportunities for growth and expansion. We will outline the basics concerning this industry in this article. We will also show you some current trends that are circulating, and how you can be able to use this to your benefit. Whether you are already active in the food and beverage industry, or aspiring to establish a Dutch business in the sector: there is always room for new ideas and entrepreneurs.
The current market situation of the industry
The Netherlands is quite known for its very modern and competitive food industry. The country is also one of the world's largest producers of everyday products such as fruit and vegetables, meat, cheese, dairy and a variety of dairy products, sausages, starch derivatives and luxury products such as chocolate and beer. The Netherlands is actually the second-largest exporter of agriculture in the world, which is amazing, considering the very small size of the country. This amounts to approximately 94.5 billion euros. Around a quarter of this sum is re-exported. That’s no small feat! A very large portion of the food and beverages that are produced in the Netherlands, are thus exported to different countries. It’s not really a surprise that the Dutch can export so much. When you look at the way they learned to mass-produce vegetables and fruits in greenhouses, for example, you see the sheer ambition that correlates with their success in these fields. If you are someone who is excited about the overlap between production and innovation, you will find that Holland is a perfect base of operations for any innovative company in this regard. The Dutch are always looking for new ways to perfect processes and procedures, and this is no different in the food and beverage industry.
Pricing pressure and how it affects farmers
In the past decades, discount supermarkets have been competing fiercely with already established big names such as Ahold-Delhaize (Albert Heijn), which is is one of the world's largest retailers. The company is actually also very well-known in the US. Nonetheless, the market share of certain discounter supermarkets is also increasing in the Netherlands. This leads to constant competition in all supermarkets, since brands like Ahold also need to step in with high-quality A-brands and discount promotions to be even able to compete. The total amount of sales in Dutch supermarket roughly amount to a total of 45 billion annually. The fact that the supermarkets keep fiddling with the prices, creates a rather unstable situation for Dutch farmers and crop producers. It requires them to grow food in innovative and more efficient ways, in order to be able to make a profit from their products. Nonetheless, the Dutch are pretty gritty when it comes to overcoming obstacles and thus, that is what they continually do.
Other potential issues in the food industry include the obligation to always guarantee food safety to all clients, which falls under international legal regulations such as EC1935/2004. Strict hygiene requirements and legal regulations make the food industry continuously challenging, which inevitably means that you always need to stay up-to-date regarding the latest legislation and regulations, when you operate within this industry. This is especially true, when you deal in high-risk components. If you want to be successful and make a difference, it’s important to simplify your work as much as possible and make the processes as clear as possible. Make sure you select the right materials and machinery, which you can base on industry criteria. Also, make sure all employees are sufficiently educated and carry the necessary diplomas to be able to carry out their jobs.
Legal conditions regarding the export and import of products fit for human consumption within the EU
Next to laws and regulations that tell you how to produce and prepare food correctly and lawfully, you also need to take into account that there are strict regulations covering the transportation of food, beverages and other products fit for human consumption. In general, you can conclude that if a product has been produced in any of the EU member states, and is currently still in free circulation in the EU, then it can also be sold in the Netherlands. The obligation to notify any imported goods lies with the Dutch importer, meaning you if you import food and beverages. This also applies to any form of packaging. Please be informed, though, that special rules apply to goods subject to Dutch excise duty. This includes goods such as alcoholic beverages, tobacco but also more ‘normal’ products such as fruit and vegetable juices, lemonade and mineral water. There are certain extra terms and conditions for importing and exporting such goods, due to their nature. You can read more about excise duty in this article.
Trends and developments in the food and beverage industry
From private label products to the meat processing industry and from dairy to industrial bakeries: the food industry is diverse and consists of all kinds of food producers. Developments in the food industry are moving fast. Consumer behavior is changing, which inevitably has consequences for the production and distribution of food and beverages. At the same time, the chain must become more sustainable and innovation is never standing still. Also, this industry is one of the most influenceable industries when it comes to its client base. This is fairly logical, since humans simply will not consume any foods or drinks that they do not like. Furthermore, the industry is heavily subject to temporary trends and hypes. Some examples included the startling popularity of products such as frozen yogurt (FroYo), coffee-to-go, fast food trends, churros and pokébowls: you probably still remember there was a phase when literally everyone was consuming these products on the streets.
This means that you need to be very flexible when operating within this industry, as these trends and hypes often change very fast. One of the most remarkable trends currently, is the fact that some consumers are increasingly looking for one-stop-shops, whilst other consumers are actually more interested in the origin of food, and thus, look for original products and specific markets to shop in. Especially local products of fair origin are popular within this latter group, whilst the formerly mentioned group simply desires the existence of stores where they can buy everything they can think of. It’s kind of a tug of war between practicality and sustainability.
It speaks for itself, that catering these two target groups simultaneously can be a challenge. But that’s the reality now, so being in the food and beverage industry requires you to think on the job and be creative with your ideas. Keeping your head above water is necessary, especially since the pandemic and lockdowns hit this sector so hard. If you want to stand out from the crowd, and you are offering end-products to consumers directly, you will need a flexible business model that caters different needs simultaneously. In practice, the boundaries between different niches in this industry are blurring, thus making it possible to establish so-called fusion businesses, that combine several niches in one service. In essence, supermarkets are already doing this. But keep in mind that starting a new supermarket or chain of supermarkets is almost impossible, due to several big companies that have already monopolized this specific sector. Nonetheless, you could probably still pull off an original concept store, when you offer interesting products of good quality for a reasonable price. Our advice would be to inform yourself about the possibilities in this regard, but make sure that you have enough practical knowledge and expertise to be able to run such a business.
Organic and sustainable products
As discussed above, a growing number of consumers are actively looking for products that leave less of an impact on the planet, and are also grown or produced without any pesticides, genetic modification and other forms of pollutants. Many studies have shown by now that a lot of our food is heavily polluted, which also has severe risks and consequences for our general health. Thus, a lot of companies have invested in organic products, or replaced existing products with organic variants. Sustainability is also a big deal nowadays. An increasing amount of products is shipped from sustainable farms or destinations, which are often also considered Fairtrade. Especially supermarket chains offer a continuously wide range of products, and doing so shape consumer awareness through targeted promotion of quality. In addition to sustainability and animal welfare, the taste and origin of the product also play an important role. As a result, the consumer is willing to buy higher quality products, provided the price-performance ratio is right, and the consumer also has faith in the origin of the product.
Buying products as close to the source as possible
Another big trend is buying as much locally as possible, in order to minimize one’s carbon footprint. Some products are shipped from countries on the other side of the planet, which makes the journey long and expensive, especially when you consider the sheer amount of fossil fuels being used to ship these products. Therefore, a large amount of consumers are actively trying to buy as much local food as possible. This also helps local farmers sell their goods for fair prices. This way, the consumers are guaranteed a certain level of delivery and quality. The corona crisis seems to have further reinforced this need, as many national and international logistics flows have been disrupted. Both retailers and industry are moving from 'just in time' inventory management to 'just in case'. Or rather, they are going to hold more stocks to be sure of delivery, instead of delivery of raw materials at exactly the time you need it. This makes buying local produce and food even more attractive, since you feel more secure as a consumer when you can actually visit a farm and check the stock yourself. Plenty of Dutch supermarkets have also picked up on this trend, and are now selling local products as an addition to their general stock.
Sustainability is becoming increasingly important
Next to the sustainability of products in the food and beverage industry, the term itself is becoming increasingly important. The current climate debate has thrown much fuel on the fire too, of course. Sustainability is important for consumers as well as entrepreneurs, but not everyone actually knows enough about what sustainability really means. In general, you can say that some consumers are well aware of the footprint of their food. This encompasses the impact on the environment, but also of the impact on their own health. Thus, consumers now place higher demands on the way food is produced and shipped. Radical transparency regarding the sustainability of any product is becoming the norm. We see entrepreneurs, farmers and producers responding to this by introducing specific ‘quality marks’, such as the Eco-Score and the Fairtrade logo. These trademarks and logos aim at providing consumers with more insight into the impact of the production of specific food products on climate and the environment overall.
Within this framework, you can distinguish five specific factors that you should be conscious about as an entrepreneur, especially when you want to enter the food and beverage industry.
- You should actively aim to reduce the impact of your products on the climate, and the (living) environment. To be able to do this, you should ask yourself questions such as: which consequences can I expect the production of my product to have on the climate, nature and the immediate environment? Needless to say that if you, for example, dump toxic waste into a pond next to your company, this is not considered positive, since the toxic waste will have a definite negative impact on the environment.
- Aim to make any kind of packaging you use more sustainable. You can opt for recycled plastic, or other materials that have a less negative impact on the environment. Or aim for plastic that can be returned via a deposit when the consumer buys the product.
- The improvement of animal welfare is also a hot topic. There is more attention nowadays to the often cruel and inhumane ways in which animals in the bio-industry are kept, and with good reason. If you breed animals yourself, then make sure they have enough space to walk around, preferably also outside. Animals need sunshine, just as humans do. Provide them with healthy food, as opposed to GMO-infested fodder and food full of hormones. If you import or resell animal products, then at the very least make sure that you know how the animal was bred, fed, transported and slaughtered. This will provide you with insight in the animal’s living conditions. A fairly large amount of consumers are very alert regarding this subject, mostly consumers with plenty of money to spend. So it makes sense to be informed about the welfare of animals, also because they deserve a proper life.
- Aim solely for healthy products, or at the very least as healthy as possible. More and more consumers are aware of their diet and try to eat food that matches a healthy lifestyle, such as going to the gym multiple times per week. There is also a lot more attention these days towards unhealthy additives in food, so it would be counterintuitive to produce food with a lot of unhealthy substances. The average consumer of today simply won’t buy it anymore.
- Try to dramatically reduce any food waste. A lot of food is thrown away and wasted in the chain, both by the consumer and by the industry, retail and hospitality. To reduce this, you can decide to work together with other companies, such as “Too good to go” and other companies who make sure food doesn’t end up in the bin.
If you take these guidelines seriously, chances are very good that your company can present itself as sustainable. This will enormously heighten your chances of success in the current food and beverage industry.
Home delivery of food is gaining in popularity
In the past, it was considered normal to go to the store whenever you needed something. Since the digitalization of our world, home delivery has become the alternative to going out shopping. At first, this concerned solely products such as appliances and non-food items, but during the years it became easier to order food from the comfort of your couch. Nowadays, you can order food from restaurants online, special meal delivery services, meal boxes and of course also your regular groceries. The chain is digitizing and data makes these developments possible. The future might lie in personalization of the offers for the consumer, such as tailor-made food. Nonetheless, most people also still like to go out for dinner, so it’s not foreseeable that the regular way of shopping will end anytime soon.
The food supply chain is changing and evolving
As we already explained in a former paragraph: the way people consume nowadays has changed dramatically, as opposed to, for example, three decades ago. Digitalization of our society has opened up almost endless possibilities, creating a standard consumer that is much more demanding and knowledgeable than ever before. With every business, the product needs to be tailored to the target audience to be successful and popular. As such, the formula for the business and the product assortment are based on the preferences of the target audience. This means that businesses need to be very flexible nowadays to stay popular, considering the fact that consumers change their minds a lot, next to constantly wanting the newest and best products. This has resulted in producers having to differentiate their products more often and adapt the formula to the target group. This can be anything, such as changing the taste or ingredients, different packaging, freshness, whether the product needs to be prepared or can be eaten as it is, et cetera. This can also be seen in supermarket chains, which have a dominant position throughout the entire food chain. At the same time, the growth of online retail and consumption outside the home creates more competition, so even big supermarkets are looking for ways to distinguish themselves, which in turn offers opportunities for the industry. If you want to stand out in the food industry, make sure you come up with something original and practical at the same time.
Private brands and A-brands are growing rapidly
In response to discount supermarkets such as Lidl and Aldi, supermarkets such as Jumbo and Albert Heijn have invested heavily in cheaper private labels, in order to be able to compete with the former. Not everyone has the money to spend solely on A-brands nowadays, which makes it necessary for supermarkets to offer a wide variety of products, also regarding the sale price. On the contrary, A-brands and more expensive labels have also gained immense popularity, mainly with the middle class crowd that now demands more than ever. Manufacturers of A-brands thus increasingly outsource their products to specialized (private label) producers, so that they can focus on product innovation and brand development themselves. If you aspire to launch a new product in the food and beverage industry, such as a restaurant, food product or beverage, then make sure that you tailor the product to the right audience. Marketing can do wonders if you are aiming for the most demanding audience in the industry. This audience can make your product instantly successful though, for example, with the help of influencers. Due to the increasing expressions of individualism by entrepreneurs in the food and beverage sector, it is now actually easier than ever to launch an interesting product and become highly successful.
Innovation and technology in the food industry
There are plenty of possible investors to support you within this industry, ranging from banks to crowdfunding initiatives and so-called angel investors. This is due to the fact, that the industry is highly experimental and prone to change, and therefore excellent for constant innovation. You can discern the continuous innovation in multiple areas:
- The traceability of a product: There is an inclining amount of transparency when it comes to the source of a product, where it was made and how it was made. This is in line with more sustainable production, the composition of a product, fair working conditions and animal welfare.
- Possible allergens in the product: More and more is becoming known about the exact effect certain foods and supplements can have on your health. This can be linked directly to consumers becoming more aware of their diets and health issues, and thus, deciding to consume more consciously. This requires food producers to add more information to the packaging of the product, so consumers can look up easily whether the product might contain something potentially hazardous to their health, such as lactose, nuts or shells of animals.
- The importance of circularity: Consumers are conscious about the need for a more circular economy and general way of life. Therefore, circular entrepreneurship involves taking measures such as better valorization of residual flows, the reduction of waste and the circular procurement of packaging.
- Clean label products are trending: The general consensus is that products need to be as clean and natural as possible, preferably with no additives at all. This is parallel with the consumer wanting to live a healthier lifestyle and limit the amount of unhealthy products on a general basis. This means the product itself should be as natural as possible, but the packaging and production process as well. Clean and simple is the new way to produce food.
- The way in which best to respond to consumer needs: This has been explained before, the way the consumer thinks is of the utmost importance in the food and beverage sector. Without consumers, there is no market. This means, that innovation and improvement in this field go hand in hand constantly. You will need to take into account that the packaging of any product might have to be changed on a continuous basis, that you will have to improve the quality of the product regularly and that new options or flavors will be required by the needy consumers.
- The topic of robotization, automation and artificial intelligence: The entire chain is being digitized step by step, which opens up entirely new production possibilities. This paves the way to positive changes such as improving production processes, using less energy, reducing waste and making better products.
In addition to production and distribution, we also see that smart industry is on the rise. Smart industry is the collection of a large number of technical innovations and digitization. Think of robotization, mobile internet, cloud computing, internet of things, 3D printing and data. This innovation leads to the emergence of smart factories in which machines and robots communicate with each other, detect and repair errors themselves. These developments have an impact on every company in the food sector. The general consensus is that it is important, that food is produced with respect for people, animals, nature and for the farmer in an economically viable manner. Robots can actually make the process a lot cleaner, more efficient and safer. That is also why developing various sustainable and innovative concepts as entrepreneurs in the food chain is so important. Wondering where your opportunities lie? Feel free to contact our team to chat about your options.
Trends that have a somewhat negative impact on the industry
Next to positive and neutral trends we mentioned above, there are also a few trends that might be seen as setbacks. This is entirely normal though, since the world of business is always prone to constant changes, additional legislation and laws, economic fluctuations, political changes and international happenings. This is no different in the food and beverage industry. The past few years especially brought on drastic changes, both nationally and internationally. Below you will find two examples of trends that had a negative impact on the food and beverage industry.
The industry is struggling due to increasingly critical consumers
The global population has steadily been growing, which has also enabled the prosperity to increase. Logically, this also means that the demand for food increases. Since the Dutch export a lot of food, this will lead to international export growing during the next years. The Dutch market, on the contrary, remains somewhat stable. This can definitely be linked to an increasingly critical consumer, as we have already discussed multiple time in this article. In poor times, people are happy when there is food on the table at all, whilst in more prosperous times, we can allow ourselves to become more decadent. And that is actually exactly what has happened during the past six decades or so. People don’t just eat to eat anymore, but they eat what they love. Nonetheless, consumers still demand a good price-quality ratio for groceries. Only for products with a clear added value, such as a premium product with a unique experience or taste, do people want to pay more. This has led to the entire middle segment struggling, including B-brands.
As discussed above, we mainly see growth in niches and specialties, such as organic, vegetarian and convenience. The latter is stimulated by the fact that the consumer is looking for more and more convenience. Segments that benefit from this are the home delivery of groceries and the offering of pre-cut, prepared items and fresh ready-made products. Consumers are also experimenting more in taste and are therefore open to international flavors and unique, exotic products. This can prove hard to realize for brands and producers who aim more at the middle and lower segment. Next to that, it becomes clear that the consumer is willing to pay an additional price for the service, such as home delivery or healthier food, but not so much for the product itself. For food producers, the challenge is to produce efficiently and with the right scale and at the same time to bind the consumer with unique products that consistently keep a stable quality and price. This way, you generate trust regarding your product or brand, and trust is a very valuable commodity nowadays.
Lockdowns have heavily impacted and disrupted the chain
The corona pandemic has caused a lot of chaos in every industry, but the food and beverage industry is one that has been hit especially hard. The lockdowns have limited all sorts of social activities, such as:
- Restaurant visits
- Social gatherings
- Sport events
- Cinema visits
- Theme park visits
- Swimming pools
- Catering services
- Access to specialty stores
All these activities have one major thing in common: food and drinks are served everywhere. This means, that not just these entrepreneurs but, in essence, the entire chain has been hit. For example, when a farmer depends on certain restaurants and caterers for his main income, the temporary closing of these businesses might also be the final blow for his already struggling company. The worst part is that not all entrepreneurs in the food and beverage industry survived, meaning that a substantial amount went bankrupt. The ones that did survive still struggle, whilst some other concepts and services actually flourish since the pandemic and lockdowns, such as home-delivery services. Due to the lockdowns, entrepreneurs have learned the value of being flexible and open to change, because everything around you might change at any instant. The effects of the corona outbreak will be felt until 2022, especially for producers who supply the hospitality industry and are not flexible enough to switch with more sales to food retail. Due to the corona pandemic, there are a number of strategic issues in the chain.
For example, the supply of raw materials is under constant pressure due to logistical challenges and speculation. Raw material prices are rising sharply and margins are therefore under pressure. Container prices and raw materials for packaging have also risen sharply. This means that end-product sellers have to inevitably raise their prices, which only stimulates more price changes. Next to that, labor costs in general are increased due to many people being ill and not being able to come to the workplace. There is also less and less qualified personnel available, which leads to more vacancies that can be filled in almost every industry. It can be suspected that part of the sales in the catering industry and other food services will be lost, and instead shift towards retail and online. More stock of essential raw materials and products therefore needs to be maintained, to be able to deliver whenever necessary. Moreover, further automatization and robotization of the process might provide some interesting benefits for the entire chain, such as more efficient processes and faster production. Something that also happens, is focusing on production and sales possibilities closer to home, as opposed to very distant countries. There are definitely a lot of plans in place to counterbalance all the negative effects of the lockdowns, but the industry is not there yet. The Dutch thus welcome foreign entrepreneurs with bright ideas, to benefit and expand this sector even further.
Opportunities for foreign entrepreneurs and investors in the food and beverage industry
In the Netherlands, there are excellent opportunities available for foreign entrepreneurs, who would like to join the Dutch (And European) food and beverage industry. With a highly densely populated country full of vibrant cities, there are endless outlets for creative consumer products. Further than that, the Netherlands is world-famous when it comes to the export of food processing) products and agricultural goods. This means that you will have a high-quality worldwide digital and physical network available, ready to ship all your goods to. Next to that, the organic products sector still shows excellent potential. The Netherlands also has a solid and good reputation when it comes to doing business in general, and is seen as a highly competitive and innovative country for all kinds of entrepreneurs. You can find highly schooled and multilingual personnel in the entire country for your company, as well as a vast array of freelancers in any niche and industry. The country is well-liked internationally, and other countries will happily do business with you, once they hear you are based in the Netherlands. The food and beverage industry is especially vibrant, as it is fueled by a legion of Dutch farmers who have passed down their businesses from generation to generation. You will have plenty of access to high-quality raw materials here, organic products and fresh items, to create any end-product you can come up with.
Business ideas in the food and beverage industry
Since this industry is very broad, it can be difficult to choose a specific company type within the food and beverage sector. You can roughly divide businesses between companies that produce food and raw materials, companies that package and combine food and products, companies that create products for the consumer and companies that sell food and beverage products. Of course, there are also businesses that transport these goods, but those fall into the general logistics category. We will provide you with some examples of all four business types
Companies that produce food and raw materials
If you want to start a company that produces consumer goods, you need to take into account that there are strict hygiene and safety laws covering this sector. This needs to be strictly regulated, to be able to protect consumers from food poisoning and other hazards. But if you follow these regulations, you have a good shot at success if you produce quality products that add something extra to the consumers’ experience. Some possibilities include:
- The bio-industry
- Cultivating vegetables and fruits
- Brewing of beverages
- Tobacco plantations
Companies that package and combine food and products
Once the main ingredients and raw materials have been grown or cultivated, these need to be packed for shipping. This is a very specific industry, since almost every product you can think of is packaged differently. This doesn’t only concern the packaging materials, but also the way something is packaged. Packaging is heavily influenced by current marketing trends, to appeal to the consumer. This means, you will have to stay up-to-date within your niche to meet consumer demands. Some possibilities include:
- Plastic packaging
- Glass packaging
- Metal packaging
- Paper and cardboard packaging
- Specialty packaging, such as holiday themes and packaging for frozen goods
Companies that create products for the consumer
Raw materials and ingredients can also be combined to create multipurpose end-products. This is the case in ready-to-eat meals and meal boxes, but also in the case of restaurants and other facilities where people can consume food and beverages directly. This industry also has strict hygiene regulations, since food that isn’t prepared or cooked properly can seriously harm consumers. Some possibilities include:
- Home delivered meals
- Take-out restaurants
- Assorted meals that are ready to cook which are sold in supermarkets
- Snacks and candy
- Specialty goods prepared by craftsmen
- Products created especially for the diet- and sports industry
Companies that sell food and beverage products
The last category basically consists of all stores and shops, that sell consumer goods such as food and beverages. These companies usually buy prepackaged products and re-sell them for a small profit directly to the consumer. This category is also very large, since nowadays, you can basically sell food and beverages anywhere (provided that you don’t sell any products you need a license for). Some possibilities include:
- Online web shops
- Stores with specialty goods
- Organic stores
- Liquor stores
- Candy stores
- Stores with overseas products
As you can see, there can be quite some overlap between the categories. Nonetheless, it should be possible to find a niche that suits your interests as an entrepreneur easily, especially if you already know the direction you would like to take with your company.
Intercompany Solutions can assist you with the establishment of your Dutch food and beverage company
Intercompany Solutions is specialized in the establishment of Dutch companies, as well as all extra services that come along with this specialty before and after the establishment. If you can send us all the necessary documents, we can register your company with the Dutch Chamber of Commerce in just a few business days. You can find more information regarding the detailed process of company registration on this page. After your company is registered, we can also sort out many different other things for you, such as:
- Opening a Dutch bank account
- Provide you with all necessary information from the Dutch Tax Authorities
- Help you with periodical tax returns
- Assist you with a business plan
- Provide you with legal advice concerning your business
- Connect you to other entrepreneurs in the Netherlands
If you would like to know more about our services, or would like to receive a quote from us for desired services, please do not hesitate to contact us. You can expect us to get back at you as soon as possible.