Promising EU export markets for spices and herbs Summary The EU is one of the world’s largest markets for spices and herbs, led by the UK and Germany. It is an expanding market for specific products, mainly triggered by ethnic cookery. Besides the UK and Germany, the group of most promising EU export markets includes The Netherlands, France and Spain. Since EU countries do not have suitable agro-climatic conditions to cultivate most spices and herbs, they depend heavily on imports from moderate - or semi-tropical countries. However, some specific spices and herbs are produced in the EU, mainly in Eastern but some Southern European countries. The EU is a global trading centre for spices and herbs, in terms of imports from producing countries, but also in trading among its members and other countries. Developing countries are the main suppliers, led by countries such as China, India and Vietnam. Pepper, together with the product group ‘paprika, chillies and allspice’ holds the highest share of all spices and herbs. Prices of spices and herbs vary significantly from product to product, so trade figures will look very different in terms of value or volume.

The EU market for spices and herbs According to RTS resource, a market research company for the food and ingredients industry, the global market for industrial seasonings, spices and herbs amounted to 1.5 1 million tonnes in 2008, representing a total value of € 4.0 billion . Western and Eastern Europe together are responsible for approximately 31% of this, making it the second largest 2 market after NAFTA . The West European market for seasonings, spices and herbs totalled € 888 million, while Eastern Europe represented another € 342 million. Apparent consumption of the spices and herbs selected for this survey amounted to 306 thousand tonnes in 2009, having remained fairly stable since 2005. The largest EU market was the UK, closely followed by Germany. At a distance, Romania, France, Hungary and Spain complete the list of largest EU markets for spices and herbs. Together, these countries account for nearly 75% of the total EU market. The leading spices consumed in the EU are pepper (mostly black pepper) and paprika, while leading herbs include parsley, thyme and oregano. Due to the increasing interest in ethnic cookery, and the success of Mexican and Thai restaurants, some spices and herbs (e.g. coriander leaves) are now more appreciated in Europe than ever before.

Production of spices and herbs Production of most spices and herbs has been traditionally concentrated in the moderate and semi-tropical regions of the world. This is the result of both climatic conditions and 1 2

Converted against an exchange rate of $ 1 = € 0.68, www.oanda.com. North American Free Trade Agreement, consisting of Canada, the USA and Mexico.

Promising EU export markets for spices and herbs

low wage rates, as production of spices and herbs is labour-intensive. Given these factors, the EU is not a major producer if compared to other regions of the world, but it does account for a significant production of specific spices and herbs. Spices Spice production in the EU has in recent years been facilitated through new production techniques, including greenhouses, drip irrigation and farming technology improvements. Nonetheless, FAOSTAT reports an annual average decrease of 7.0% in EU production between 2005 and 2009, amounting to 100 thousand tonnes in 2009. Note that the data only cover (dried) paprika & chillies, spice seeds, vanilla and other spices, including mixtures. The bulk of the spice production in the EU is concentrated in East European countries such as Romania, Hungary and Bulgaria, although Spain is also an important producer. Hungary and Romania are the leading producers of (dried) paprika and chillies in the EU, together accounting for over 80% of total EU production, followed by Spain, Czech Republic and Slovenia. Between 2005 and 2009, production decreased at an annual average rate of 11%, mostly due to the decline of Hungarian production of paprika. EU production of spice seeds amounted to nearly 40 thousand tonnes in 2009, having had a slight annual average increase of 0.6% since 2005. Bulgaria is the leading EU producer, accounting for over 70% of total EU production, followed by Romania and Hungary. At the same time, EU production of vanilla is almost negligible. FAOSTAT reports a vanilla production of a small amount of 15 tonnes in Portugal only. Production of other spices amounted to 4.6 thousand tonnes in 2009, the main producers being Spain, Hungary and Bulgaria. Herbs As it is commonly used in many dishes across the EU, it is not surprising that parsley is the most cultivated herb. Other commonly grown herbs in the EU are: basil, bay leaves, celery leaves, chives, coriander, dill tips, chervil, fennel, juniper, marjoram, oregano, rosemary, sage, savoury, tarragon, thyme and watercress. France, Italy and Greece are major producers of dried herbs, although consumption in these countries is low, fresh herbs being usually preferred.

EU spices and herbs trade The EU is a global centre for the trade of spices and herbs. Not only does it receive supplies directly from producing countries, but there is also a dynamic trade amongst its member states. In 2009, EU imports of spices and herbs amounted to 443 thousand tonnes or € 1.1 billion, having increased at an annual average rate of 5.5% in volume and 9.6% in value since 2005. While intra-EU imports and developing country (DC) imports grew steadily, supplies from extra-EU countries declined in the review period. Intra-EU imports accounted for 39% of total EU imports in terms of volume (49% in value), whereas imports from DCs accounted for 59% of imports (49% in value). EU importers Germany was the leading EU importer of spices and herbs in 2009, holding an import share of 19% in terms of both volume and value. The Netherlands was the second largest importer, with a share of 17% in volume and 12% in value, followed by the UK (15% in volume, 12% in value) and Spain (12% in volume and value). France, the fifth largest EU importer, accounted for 7.2% of total imports in volume and 10% in value. These top-five importers of spices and herbs in the EU had their position secured in terms of both value

Promising EU export markets for spices and herbs

and volume throughout the review period, all increasing at significant annual average rates. Other EU countries, with the exception of Romania and Cyprus, experienced an increase in their imports as well. East European countries performed well and reached substantial growth rates in the imports of spices and herbs, examples being Czech Republic, Bulgaria and Slovakia. All of them grew particularly fast in terms of both value and volume between 2005 and 2009. DC suppliers spice up the market As mentioned previously, DCs play an essential role in supplying the EU with spices and herbs. Imports of spices and herbs sourced directly in DCs amounted to 261 thousand tonnes or € 542 million in 2009, having increased at an annual average rate of 4.7% in volume and 10% in value since 2005. Germany was the largest EU importer from DCs in 2009, accounting for 21% of total EU imports in volume (23% in value), followed by The Netherlands (20% in volume, 15% in value), the UK (19% in volume, 14% in value) and Spain (18% in volume, 20% in value). Central and East European countries are relatively small Leading DC suppliers of spices and herbs (2009) players in imports sourced directly in DCs. Particularly following their Volume Value entry into the EU, it has become easier for these countries to trade with 1. China (16%) 1. Vietnam (7.3%) other EU member states. The leading DC suppliers of spices and herbs in 2009 are shown in the box ‘Leading DC suppliers of spices and herbs (2009)’, in terms of both value and volume. In general, imports sourced in China, India and Vietnam experienced a strong increase (in value and volume) in the review period, whereas imports from other suppliers such as Brazil and Peru had a decline. Imports sourced in Iran and Indonesia experienced an increase in terms of value, but declined in volume.

2. India (9.4%) 3. Vietnam (8.3%) 4. Peru (5.1%) 5. Brazil (4.2%)

2. China (6.7%) 3. Iran (6.5%) 4. India (6.4%) 5. Indonesia (4.0%)

Source: Eurostat, 2010

The role of specific DCs in supplying spices and herbs to the EU varies widely according to different products. Whereas Vietnam, Brazil and India were in the lead when it came to pepper supplies in 2009, China and Peru played the most significant role among DCs in supplying the EU with paprika, chillies and allspice. Ginger supplies were dominated by China as well, while India was the leader in spice seeds and turmeric. Another instance is saffron, of which the imports from DCS were dominated by Iran. Note that, in the case of mixtures, no DC suppliers played a dominant role, since these are products usually produced in the EU – DCs accounted for only 8.4% of EU mixtures imports in 2009. A matter of price and quantity The trade in spices and herbs looks fairly different, depending on whether it is analysed in terms of value or volume. Different spices have very varying costs, thus are traded under different conditions and quantities. An extreme case is saffron, which accounted for only 0.2% of total EU imports of spices and herbs in volume in 2009 but, due to its high cost, it reached 10% of imports in value. Pepper, the king of all spices, retained its throne in 2009. Although it was second to paprika, chillies and allspice as

Import shares of selected spices and herbs (2009)

paprika, chillies & allspice pepper ginger spice seeds mixtures cinnamon nutmeg, mace & cardamoms turmeric cloves vanilla saffron other

Volume 26% 20% 14% 11% 9.2% 3.6% 2.4% 2.1% 0.9% 0.9% 0.2% 9.8%

Value 19% 21% 5.8% 7.2% 9.9% 2.2% 5.8% 1.2% 1.1% 3.7% 10% 13%

Promising EU export markets for spices and herbs

the main product group imported into the EU in terms of volume, it was the leading product group in terms of value. See box ‘Import shares of selected spices and herbs (2009)’ for other examples.

Promising EU export markets No other market compares to Germany when it comes to spices and herbs. More than a fifth of total EU spices and herbs imports from DCs was imported by Germany in 2009, making it the largest buyer of spices and herbs from developing countries. It is both a large market and an insignificant producer; a perfect formula to indicate opportunities to DC exporters. The British and Dutch markets are comparable to the German market. The UK has the largest spices and herbs consumption in the EU and a large share of imports sourced directly in DCs (58%, in 2009). It is also a market which showed significant growth in the review period. Although The Netherlands’ growth rate was more modest in this period, the country kept its position as an essential trader of spices and herbs in the EU, revealing its importance to DC exporters. Dutch imports are, together with Germany’s, the largest in the EU, and more than 60% of them is sourced directly in DCs. Spain is also a large EU market for spice and herbs. It is true that the country has a high level of spice and herb production, but imports from DCs are in many cases used to complement this production. Not to mention that Spain registers the highest share of imports sourced in DCs among EU countries: 83%. Along with Spain, France is also a large market and significant trader of spices and herbs, especially when it comes to specific products such as vanilla. Note that the list of promising EU export markets should not be exclusive; interesting opportunities can also be found in other countries. Product-market combinations The selection of fact sheets for this sub-sector involves a number of factors. Firstly, countries which are large importers of spices and herbs are given priority, paired with whether they import considerable amounts directly from DCs. Secondly, the products selected for each market are products which have a generally important role in total imports of the selected market. However, this rule is not exclusive. The product-market combination not only considers the importance of a certain product within a country’s imports, but also the role of a certain country within the imports of a product. Finally, a certain degree of market knowledge was used in this selection. Factors such as the existence of niche markets (e.g. organic and Fair Trade) have had their weight in the final decision. The list of fact sheets is the following:     

Pepper: Germany, France and The Netherlands Paprika: Spain and Germany Ginger: The Netherlands and the United Kingdom Vanilla: France and Germany Turmeric: United Kingdom

Promising EU export markets for spices and herbs

Table 1

EU consumption, production and imports of spices and herbs, in tonnes

Total consumption Volume Growth 2009 ‘05-‘09 EU27 306,450 -0.6% Germany 56,021 2.7% Netherlands 9,636 -15% UK 60,660 8.7% Spain 19,687 3.4% France 20,629 4.9% Italy 2,539 -25% Belgium 7,963 -6.0% Poland 10,392 1.0% Sweden 7,258 5.4% Greece 4,683 4.6% Bulgaria 1,584 -18% Austria 7,556 8.8% Romania 39,489 -0.8% Hungary 19,824 -22% Slovenia 2,539 5.3% Slovakia 4,839 19% Portugal 2,446 4.2% Denmark 5,254 6.7% Czech Rep. 15,617 17% Estonia 862 3.1% Finland 2,020 4.8% Lithuania 1,110 77% Ireland 2,676 10% Cyprus 413 -8.6% Latvia 791 8.2% Malta 232 12% Luxembourg n.a. n.a.

Total production Volume Growth 2009 ‘05-‘09 99,920 -7.0% 0 n.a. 280 8.8% 0 n.a. 8,899 5.2% 0 n.a. 0 n.a. 0 n.a. 0 n.a. 0 n.a. 850 2.5% 29,800 0.9% 0 n.a. 40,063 1.3% 17,094 -25% 1,300 0.0% 56 -7.7% 15 11% 50 5.7% 1,513 -22% 0 n.a. 0 n.a. 0 n.a. 0 n.a. 0 n.a. 0 n.a. 0 n.a. 0 n.a.

Total imports Volume Growth 2009 ‘05-‘09 443,439 5.5% 85,270 2.8% 74,721 5.1% 68,064 8.6% 52,430 4.9% 32,106 4.1% 11,777 0.7% 17,862 1.1% 15,124 3.8% 8,871 6.6% 4,171 4.7% 4,090 28% 13,585 3.6% 5,558 -0.6% 5,568 5.3% 1,732 14% 5,292 22% 2,791 6.0% 7,009 6.4% 15,674 31% 1,614 8.2% 2,050 4.0% 2,509 18% 3,454 7.3% 421 -8.5% 1,107 6.5% 232 12% 357 3.1%

Source: Eurostat Prodcom (2010) and FAOSTAT (2010)

Imports from DCs Volume Growth 2009 ‘05-‘09 260,968 4.7% 53,595 2.9% 52,930 3.1% 50,930 10% 47,124 5.1% 16,277 2.4% 7,517 0.5% 7,348 6.7% 5,033 -5.0% 3,232 11% 2,822 0.1% 2,510 19% 2,413 16% 2,112 -12% 1,695 14% 748 15% 687 20% 685 19% 681 -6.8% 609 26% 508 53% 482 29% 369 -0.3% 250 30% 244 4.3% 101 16% 66 16% 0 n.a.

Share of DC in total imports 49% 59% 61% 58% 83% 44% 51% 29% 25% 40% 48% 56% 12% 15% 28% 21% 24% 8.9% 6.0% 4.0% 26% 18% 12% 4.9% 41% 4.4% 21% 0.0%

Attractivity index n.a. +++ +++ +++ ++ ++ + +/+/+/+/+/-