Munich, 12 September 2022 – After a 6% growth in German machinery production to Euro 218 billion 2021, the economic recovery of the engineering sector in 2022 will be significantly slowed by the war in Ukraine and due to ongoing supply chain disruptions. “The industry’s order books are well filled. The order backlog is a good 11 months, but production continues to be severely hampered by supply difficulties for materials and primary products,” said Richard Clemens, managing director of the VDMA Food Processing and Packaging Machinery Association, at the VDMA press conference on the occasion of drinktec, the world’s leading trade fair for the sector, in Munich.
The economic situation in food processing and packaging machinery
In the food processing and packaging machinery sector, production increased by 7% to 14.8 billion Euros in 2021. This means that in the second pandemic year, the fourth-largest engineering sector almost returned to the record level of 2019 at €15.3 billion.
In the first half of 2022, the industry’s order intake is 9% higher in real terms than in the same period of the previous year. The growth has so far been driven primarily by orders from non-European countries.
“The market receives a push,” comments Volker Kronseder, chairman of the drinktec Advisory Board and VDMA Board Member, on the strong demand for food processing and packaging machinery. “Every year, the world’s population grows by more than the population of the Federal Republic of Germany. The increase in a middle class that is eager to consume, especially in the Asia/Pacific region, form the starting point for a dynamically growing world market,” Kronseder explains.
German companies continue to leaders global machinery trade
The German machinery industry is well positioned from a geographic point of view, as it is active in over 100 countries. According to VDMA estimates, the global trade volume for food processing and packaging machinery based on export data from 52 industrialized countries will amount to around 45 billion Euros in 2021, an increase of 9%.
21% of the global trade volume of food processing and packaging machinery comes from Germany. In some sub-sectors, German manufacturers are even stronger: For example, every third beverage packaging machine and every second brewery machine on the global market came from Germany in 2021.
In 2021, German exports of food processing and packaging machinery increased by 5% to 9 billion euros. The average export ratio last year was 83%. More than half of exports are delivered to non-European countries.
“The USA and China are the most important markets for manufacturers of food processing and packaging machinery. We were even able to generate double-digit growth in 2021, despite the difficult travel and residence conditions in China,” says Kronseder. He sees further growth markets in the medium term in the populous countries of Asia, Latin America and Africa, for example in India, Mexico or Nigeria. He also expects stable demand from European countries.
Sustainability is getting increasingly important
Kronseder sees the growing consumption of beverages in the growth markets and worldwide as one reason for the continued good market prospects. After a setback in the first pandemic year due to hotel and restaurant closures, just under 1 trillion liters of bottled and packaged beverages were sold in 2021. According to forecasts by the British market research institute Euromonitor International, sales will increase by around 17% by 2026. Euromonitor attests that the Africa/Middle East and Asia/Pacific regions will continue to achieve double-digit growth during this period, while beverage sales in the saturated markets will increase only slightly.
“For us, the industrialized countries are nevertheless strong customers and sources of impetus. Due to competitive pressure, product innovations are constantly coming onto the market here. At the same time, consumers are becoming more demanding in terms of sustainability,” says Kronseder.
Many companies in the beverage and liquid food industry (also outside Europe) are setting their own sustainability goals. Energy efficiency, avoidance of product losses, energetic recycling of residual materials, and optimized packaging are the most important topics on the agenda of food manufacturers in terms of sustainability. “Here we see ourselves as part of the solution. After all, who else but mechanical engineering can make a decisive contribution to making processes in manufacturing companies economical, efficient and at the same time sustainable,” Kronseder states. In this context, digitization has the important function of identifying potential for savings, optimization and improvement along the value chain.
Industry prospects in challenging times
The further outlook for suppliers to the beverage industry is positive. There is great backlog demand in the emerging countries. Production is being set up and expanded there.
The developed markets of Western Europe and North America are characterized by qualitative growth and nutritional trends. Product innovations combined with ever shorter product life cycles, price pressure on the one hand and the increasing importance of sustainability criteria in consumer decisions on the other are determining demand for capital goods.
“Machine manufacturers thus have a multitude of tasks, namely to enable the economic and safe supply of people with the best possible technology, while also focusing on the requirements of climate protection and the conservation of resources,” summarizes Volker Kronseder. This continues to present the industry with major challenges and considerable potential.