The European market potential for spice mixes

Source: Eurostat, 2022

United Kingdom: where curries are as common as native foods

The United Kingdom is one of the largest importers of spice mixes in Europe. What’s interesting is that the UK’s exports were low compared to other large importers. This shows that the UK has a large domestic market for spice mixes, either for consumption or processing. The country imported on average 12,000 tonnes of spice mixes and exported 1,900 tonnes in the 2017-2019 time frame.

The main reason for the UK’s large role in European spice mixes imports is the large consumption of curries. The UK has a large diaspora from India and Bangladesh. This has made curries a very common dish in the UK. In 2016, the most recent count, the country had about 12,000 curry houses, serving mainly curries. These restaurants had an estimated turnover of €4.8 billion in 2015 and account for much of the spice mixes sales in the UK, in addition to sales through ethnic food shops.

Although the widespread consumption of Indian curries in the UK does not automatically imply large direct imports of spice mixes from India, there are three reasons for the large role of India in spice mixes supplies:

• The historic relationship between the UK and India, and particularly the large diaspora, has resulted in many relations between Indian suppliers and buyers in the UK;
• Many consumers in the UK, both Indian diaspora and native British, prefer authentic spice mixes made at origin using the original recipes;
• Indian suppliers have the technological and logistical capacity to supply relatively small orders of spice mixes according to the quality standards of the UK.

In general, many players in the European ingredients trade regard the United Kingdom as the most innovative market where trends start and new, exotic ingredients are first adopted. Reasons for the high level of innovation in the UK include economic and cultural factors. The high purchasing power in the UK allows people to spend more money on food and dining than in many other countries. In addition, the UK maintains strong relations with different countries around the world. Apart from the large diaspora from India and other former British colonies, many consumers are accustomed to products from faraway countries, such as curries. To illustrate, both Indian diaspora and native British people visit curry houses. The wide exposure to products and recipes from countries across the world makes consumers in the UK more receptive to exotic products. This also means that there is a large market for various spice mixes.

The UK’s spice importers are united in the Seasoning and Spices Association, the leading voice in the British seasoning and spice industry on behalf of its members, food manufacturers and consumers. SSA members represent 95% of all labelled herb and spice products sales in the UK.

Spice mixes manufacturers in the UK include EHL Ingredients and Dani Organics. Dani Organics specialises in the supply of organic ingredients for the food industry and has a large network of farmers who supply a wide range of spices. Like many spice mix manufacturers, they mainly import single spices and then steam-sterilise, grind and blend the spices into mixes in their central processing facility in the UK. They offer spice mixes they created themselves and also manufacture spice mixes for clients according to specific requirements.

Germany: a major consumer market and re-exporter

Germany is a net producer of spice mixes, as on average the country imported 8,300 tonnes of spice mixes and exported 8,400 tonnes between 2017 and 2021. The main export market for Germany’s spice mixes is its western neighbour, the Netherlands. In 2021, roughly 65% of Germany’s exports went to the Netherlands. Likewise, Dutch exports to Germany account for nearly 25% of Germany’s total imports.

In 2021, Germany imported 9,806 tonnes of spice mixes and exported 8,858 tonnes. While the average value of German imports from producers amounted to €1.03/kg, the average value of German exports amounted to €1.20/kg. This reflects the value addition in Germany through processing and packaging.

Major sources of spice mixes for German importers are India (34% of import volumes), Turkey (14%), China (7.6%) and the Netherlands (50%).

Germany has a large population of 83 million, making it the largest consumer market in Europe. Germany is also a major re-exporter of food ingredients and processed foods. Many spice importers and food manufacturers in Germany supply their products throughout all of Europe.

Germany has a very large food industry which uses extensive amounts of various spices. The food industry produces large amounts of convenient processed foods, including sauces and marinades, ready-to-eat meals and processed meat products. Spice companies in Germany are organised in the German Spice Association, which has 92 members.

Value for money is important in the German retail market, as reflected in the large market share held by discounters. The leading spices manufacturer, Fuchs, dominates the market for low-end spices. The brands Fuchs, Ostmann, Ubena and BioWagner are all owned by Fuchs, which has a 75% market share. In addition to its own brands, Fuchs also packages spices for several German private labels. The main private labels in Germany are Kania (by discounter Lidl), Le Gusto (by Aldi Süd and Aldi Nord), Gut & Günstig (by Edeka) and REWE Beste Wahl (by REWE).

The Netherlands: trade hub for spices

Despite having a small population and limited domestic consumption, the Netherlands is a major trade hub for spices in Europe. Importing wholesalers in the Netherlands play a large role in the processing and, particularly, the re-export of spices and spice mixes to other European countries.

Between 2017 and 2021, the Netherlands imported on average 12,100 tonnes of spice mixes per year and exported on average 22,100 tonnes per year. This makes the country a net producer of spice mixes, with on average 10,000 tonnes more in export than import. Within the European Union, Belgium (23%), Germany (15%), Poland (12%) and France (3.5%) are the largest export destinations for Dutch spice mixes. Outside the EU, the largest export destinations are Curacao (14%) and Bonaire (8.7%), which can be explained by their relation to the Netherlands: Curacao is an independent country within the kingdom of the Netherlands and Bonaire is a special municipality of the Netherlands.

In 2021, the major importing countries supplying spice mixes to the Netherlands were Germany (61%), India (10%) and Belgium (8%).

The Dutch Spice Association in the Netherlands strongly supports sustainable sourcing of spices. The association is committed to Corporate Social Responsibility. A leading group of spice importers in the Netherlands established the international Sustainable Spices Initiative, consisting of members from the Netherlands and other countries.

Retail chains like Albert Heijn (AH label), Aldi (De Kruidencompany label) and Jumbo control much of the spice mixes retail sales in the Netherlands. The leading independent brands of spice mixes in the Netherlands are Verstegen and Euroma. Euroma aims to be among the top-3 spice and spice mixes suppliers for the European market with a large presence in both the food industry and retail market. For the development of spice mixes, Euroma analyses market trends and works closely with their clients on taste and concept development. To develop the right taste, they have a strong product development department that includes a sensory panel. Concept development includes branding and packaging design.

Belgium: important entry point for spice mixes to the European market

Like most major importers of spice mixes in the European Union, Belgium has a large port via which it imports goods. The port of Antwerp is the second-largest in Europe, welcoming over 10 million containers in 2018. Because of this, Belgium functions as hub for the region. Like the Netherlands, its northern neighbour, Belgium does not have a large domestic market either, so a large percentage of imports are re-exported.

In 2021, Belgium imported 7,780 tonnes of spice mixes, 70% (4,966 tonnes) from the Netherlands. Another 11% came from Germany and 6% from India. Belgium re-exported 2,265 tonnes (32%) in 2021.

Belgium’s’ spice companies are united in the Belgium Spices Association; this organisation focuses on food safety and monitors changes in rules and regulations in the spices sector.

Evlier is one Belgian importer of spices and spice mixes. The company specialises in the sourcing, grinding and blending of spices and uses a network of distributors to supply its products to food manufacturers and retailers in Belgium. European Spice Services is a distributor of spices warehousing in Belgium. This company specialises in sourcing large volumes of spices and is a member of the Sustainable Spices Initiative.

Belgium has many retailers, mostly large, well-established companies with stores in several European countries. The retailers with the largest number of stores in Belgium are Aldi, Carrefour, Spar, Lidl and Delhaize. Of these retailers, only Delhaize is Belgian. The others are German, French or Dutch.

France: major user of spice mixes

At 65 million, France has the second-largest population in the EU. With their traditional use of spices in cooking, the French consume relatively large amounts of spices per person. Another reason for France being an interesting export market is its well-established gastronomy sector. France ranks as the country with the second-highest number of Michelin restaurants (628 in 2019) in the world. Restaurants with Michelin stars are known to be the world’s best for fine dining. This is interesting for spice mix exporters, as such restaurants tend to have a high interest in trying new and innovative food products.

Additionally, France houses the port of Marseille, one of the EU’s largest seaports. This port is the fourth largest in Europe, contributing to France’s role as a hub. Despite this, France’s role in European spice mixes is smaller than that of Germany and the Netherlands.

In 2021, France imported 5,825 tonnes of spice mixes, 27.7% (1,618 tonnes) from the Netherlands. The second-largest supplier was Spain, providing 24.7% (1,443 tonnes) of spice mixes to France. Germany supplied 15.3% of France’s imports in 2021, with a total of 892 tonnes. France’s northern neighbour, Belgium, was the fourth-largest supplier of spice mixes, with 11.6% (676 tonnes). India was the fifth-largest supplier of spice mixes, with 4.7% (276 tonnes).

Like many northern European markets, the retail market in France is highly concentrated. France houses a number of large retail chains like Carrefour, Delhaize and Intermarché, which all take up a large part of the domestic spice and spice mixes sales.

Poland: importing spice mixes through other European countries

Poland is the fifth-largest importing country of herbs and spices in Europe. In 2021, Poland imported 4,743 tonnes of spice mixes. In the same year, the country exported 290 tonnes of spice mixes, which makes it the tenth-largest exporter of spice mixes in the European Union. This contrasts with many other large importing countries, which also export a large percentage of their imports.

Of the imported spice mixes, 53% (2,494 tonnes) came from the Netherlands. Another 25% was imported from Belgium (1,175 tonnes), and 18% (851 tonnes) from Germany. It is interesting to note that China is the leading developing country supplier of spice mixes, but only accounts for 0.59% (28.4 tonnes) of total Polish imports. This is a pattern that can be seen in all European countries, which is very different from the import of single spices or herbs. While developing countries are well positioned to supply single spices and herbs, European competitors are in control of the spice mixes market.

Polish traders like Rolmex and TomPol import spices. German spice manufacturers in Poland, most notably AVO, also import spices. This is because they have production facilities in Poland. Additionally, Poland is home to production facilities of the British company AB World Foods. This is the parent company of the two major European brands of Asian sauces and pastes, Blue Dragon and Pataks.

Polish retailers Biedronka, ABC and Zabka are the largest retail chains in the country. Combined, they have roughly 18,000 stores throughout the country. With this large number of retail stores, they are able to supply consumers with their spices, herbs and spice mixes.

4. Which trends offer opportunities and threats on the European spice mixes market?

Sustainable sourcing remains high on the agenda of food manufacturers

Sustainable sourcing is key in Europe. Consumers are becoming more aware of the impact of their purchases on people and the environment. They have growing concerns about global issues, such as climate change, and expect suppliers to do more about corporate social responsibility (CSR). Non-governmental organisations (NGOs) have often taken the lead in stimulating companies to improve their CSR and source sustainably. Together with leading brands and manufacturers, they originally focused on commodities, which allowed them to maximise their impact.

The sustainability of commodities, such as coffee, cocoa, tea and sugar, has already received wide attention from European stakeholders. The spices market has only recently come to the attention of NGOs and other initiators of sustainability schemes. One of the supposed reasons for the spices market lagging behind these other markets in terms of sustainability is that food manufacturers have difficulty promoting sustainable spices as such to consumers. Spices are an important ingredient, but not the main substance in end products.

A good example of involvement of NGOs and leading companies in the spices sector is the Sustainable Spices Initiative (SSI). Some of the main sustainability issues in the spices sector that SSI recognises are:

• Farmers often face poverty and food insecurity;
• Excessive agrochemical use; and
• Concerns around spices production, especially with regard to long-term supply, food safety and traceability due to poor agricultural practices, lack of adequate processing facilities and growers switching to high-value crops or jobs.

Transparency

In line with sustainable sourcing, transparency in spice supply chains is of growing importance. Consumers do not merely accept sustainability claims made by brands. They increasingly demand proof of these claims, leading to ever more transparent supply chains. Some brands tackle these transparency demands by providing QR codes on their packaging, which shows consumers exactly where their product was produced and by who, and what price was paid for the product. Other companies provide pictures, stories, or the exact location of their production on their packaging.

A benefit of this increased demand for transparency is that it helps trace any mistakes or faulty batches back to the producer. This makes it possible to guide producers in offering higher quality. Although transparency and traceability are still mainly addressed in commodities, it is expected that these demands will eventually impact all sourced products.

Search for healthier ingredients

European consumers are searching for healthy ingredients. It is believed that this trend was boosted by the Covid-19 pandemic, which had a major impact on consumers’ health. To avoid getting sick with Covid-19, or as a result of seeing others get very sick, consumers became more aware of their health. This led to an increased interest in healthy food. This is one of the most important trends in the European food and beverages market.

Consumers perceive ingredients like salt, sugar and synthetic additives as unhealthy. They are being increasingly replaced by other products that also add flavour, such as spices and herbs. This trend leads to a higher demand for spices. While many food manufacturers are very interested in formulating healthier foods to respond to consumer demand, they need support to develop products that are both healthy and tasty. To achieve this, food manufacturers link up with companies that have the research & development capacity to identify consumer expectations regarding taste, develop matching taste profiles with suitable spice mixes and other ingredients, test newly formulated products with sensory panels, and advise about the processing characteristics of the spice mix when using it as an ingredient in a finished or semi-finished product, like a sauce.

Many products in Europe contain a large percentage of salt, which is exactly the type of ingredient that consumers are trying to avoid. In many European countries, salt reduction initiatives (PDF) aim to reduce salt intake. Manufacturers are trying to limit the percentage of salt in new products because this will be perceived as more beneficial by consumers. However, salt reduction can negatively affect taste and brand value, and requires manufacturers to add other ingredients, like spice mixes.

Concerns over adulteration affect spice mixes imports

A recent study by the EU shows that many spices imported to Europe are adulterated with unwanted substances. Some of these adulterants are rather harmless, such as leaves from other plants. Other adulterants, such as unauthorised food additives, are a potential health threat. With the increasing demand for spices and the climbing costs of raw materials and transport, the pressure on suppliers to deliver stable volumes at acceptable price levels rises. These developments cause some suppliers to adulterate their product.

Concerns over adulteration of spices cause European buyers to take action to preserve their reputation as suppliers of pure and authentic spices. Together with laboratories they are constantly looking for better technologies to detect adulterants, such as High-Performance Liquid Chromatography coupled with High Resolution Mass Spectrometry (HPLC-HRMS) and Site-Specific Natural Isotope Fractionation studied by Nuclear Magnetic Resonance (SNIF-NMR®).

However, high-tech laboratory testing is expensive and only financially feasible for large volumes. To keep the costs of testing, administration and transport to a minimum, European importers mostly buy full container loads of single spices. This may negatively affect smaller suppliers.

Storytelling: search for a unique product

A small group of European consumers are increasingly experimenting with unique cuisines and making dishes that are associated with a specific country or region. In their pursuit for unique cuisines, consumers search for foods that are new and unknown to them. They are inspired by new spice mixes with exotic recipes on the product label. When making these dishes, a specific set of spices and herbs that are specifically used in that recipe is key. This creates opportunities for producers of spice mixes, as a select group of consumers in this niche is willing to pay premium price for new and ethnic flavours.

The uniqueness of a spice mix depends on its composition, but also on the story behind the product. The story can contain elements about the spice’s region of origin, its traditional use, the people growing the spice, or a combination of these elements. European companies often add a story to their products to make them more unique. For example, the Jonnie de Boer range by Euroma offers a variety of spice and herb mixes from different world regions and provides background information about the spices. Their range includes Caribbean spice, Chinese 5-spice and Thai green curry.

Organic

Demand for organic spice mixes is growing slowly. Organic certification strengthens the perception of natural and healthy characteristics of your product. While demand for organic products in other categories, such as fresh fruits and vegetables, dairy and meats is stronger, the spices market follows the general trend where consumers demand more organic products. Part of the reason for the slower uptake of organic spices is the low dosage of spices in many food products. Spices often make up only a low percentage of the product and the European organic regulation allows products with at least 95% of organic ingredients to be labelled as organic. Hence many food manufacturers do not prioritise the sourcing of organic spices.

Certification bodies are now becoming stricter about the use of non-certified ingredients in organically certified food products, and this also affects spices. Certification bodies state that since the availability of organic spices is increasing, European organic regulation for organic labelling should now be fully applied to demand 100% organic content for spices.

While demand for 100% organic products is growing slowly and certification bodies are becoming stricter about the use of non-organic spices, several buyers in Europe are reluctant to adapt to these market developments, as they have concerns about the legitimacy of organic certificates. Laboratory analyses of organically certified products sometimes show residues of chemicals that are not allowed in organic farming. While this could be the result of cross-contamination from nearby conventional farms, some buyers question the certification process. This is slowing down the uptake of organic spices and spice mixes.

This study was carried out on behalf of CBI by Kasper Kerver of ProFound – Advisers In Development.

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