Special diet products enhance the positive outlook for Finnish food exports

Free-from products designed to meet the special dietary needs of people suffering from food intolerances could be the new jewel in the crown of Finnish food industry exporters, indicated the latest sector reports for the industry compiled by the Finnish Ministry of Employment and the Economy published on 25th November 2008.

Free from unsettling components

Free-from products are bought for medical reasons or simply for their good taste and the feeling of well-being they generate. The market is showing strong growth in many Western countries, driven for instance by consumers’ increasing interest in food quality and beneficial health effects, and the significant rise in public awareness of food allergies. Annual sales in e.g. the UK have tripled in value to MEUR 240 during this decade.

No lactose, no gluten

Lactose free and gluten free products are in greatest demand, and Finland has pioneered the development and production of both. Single grain oat products have recently been subject to official recommendation in Britain for inclusion in the diet of coeliac patients, and demand for these products is now rising. Producers are faced with the challenge of providing tasty gluten free value added products, such as delicious bakery items, ready-to-serve meals and frozen goods. The growing market provides export opportunities for companies both large and small.

Food industry investment not resolving profitability issue

The Finnish food industry has in recent years invested more relative to turnover than the average of other industries. Two-thirds of the investments have been directed at machinery and equipment, and one third to real estate. Nevertheless, the food industry still experiences lower levels of profitability than many other industries.

Increasing production costs have hampered profitability despite rising food prices in 2008, with investment led efficiency gains proving insufficient to raise the degree of profitability.

There is still a great disparity in levels of efficiency across the range of food industry sectors. Process based food sectors such as the brewery and soft drinks industry, in addition to abattoir business activities are the most efficient, whereas the bakery industry which largely comprises small enterprises with a low level of automation is the least so.

Meat industry seeking growth in nearby countries

Most meat industry investment has been made by the largest players. In fact, Finland’s two biggest meat processers account for some 80 per cent of domestic investment, and have also implemented substantial investment initiatives in the nearby countries of the Baltic States, Sweden and Russia. The big domestic players are looking to investment and acquisitions to achieve the growth they have been unable to realize in Finland.

Finnish food industry SMEs have in comparison demonstrated little willingness to internationalise, and there is no significant meat product export growth on the horizon from that source.

Total food product consumption, including meat and meat products, is increasing only slowly in Finland with meat consumption itself up just five per cent in 2007.

(Finfood)

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