SMEs could gain €0.5 billion, capitalizing on the inherent competitiveness of Greek food products
The food & beverage industry proved to be resilient during the crisis. With its turnover stable close to €15 billion, the industry's contribution to the total business sector sales increased to 7 per cent in 2017 from 5 per cent in 2008. The main supporting factor was exports, which with an increase of 45 per cent helped offset the impact of slightly lower domestic consumption (-11 per cent over the last decade).
Even though the share of food SMES in total sales in the sector declined to 32 per cent in 2017 from 41 per cent in 2008 (mainly due to the closure of enterprises), the NBG field survey on a sample of 200 food SMEs indicates that food SMEs that survived the crisis managed to increase their sales by about 10 per cent over the last decade (corresponding to the sales pattern of larger enterprises).
In particular, SMEs that have survived the crisis appear to have been able to capitalize to some extent on the upward trend in the global food trade (which has grown by 80 per cent over the last decade). The – undoubtedly positive – rise in exports by Greek food SMEs by 30 per cent over the past decade has not been enough, however, to maintain their share in the (expanded) international markets (which has declined to 0.12 per cent in 2017 from 0.16 per cent in 2008).
It is important to note that other Greek food exporters have managed to keep their international market shares steady (at 0.36 per cent) – indicating that Greek food is inherently competitive in the international marketplace. In light of the above, now is the right time to develop healthy structures and well-designed strategies so as to fully exploit the competitive advantage of Greek food products. A recovery in the share of Greek food SMEs in the global market could increase Greek exports by €0.5 billion annually.
Improvement measures should initially be carried out in those sectors where the majority of businesses are export-oriented:
- Olive oil is the product of the Greek food industry that presents the greatest comparative advantage and accordingly the biggest potential for generating greater value added. However, its intrinsic high competitiveness has already secured healthy profitability, meaning that olive oil SMEs only have limited appetite for change in the marketing model from bulk to branded sales.
- By contrast, wine and dairy are segments that are more receptive to change, and ripe for restructuring. As they have already introduced best practices from the enterprises' perspective (focus on quality and developed markets), emphasis now needs to be placed on the strategy of the sector overall. In the case of wine, there is a need for consolidation of various forms in order to attain economies of scale, while in the dairy sector, partnerships need to focus on the upgrade and expansion of the distribution network.
- In the case of fruit and vegetables, although there is a willingness to see restructuring in the sector, the changes required are quite extensive. Specifically, besides a radical reformulation of strategy (both in respect of the product and the target markets) significant investments are needed in order to upgrade production technology and expand the distribution network.