Food and beverage to Spain

Trends and opportunities

The market

Spain has a population of 41 million people, but it is unique in that it literally doubles its population each year through an influx of between 50-70 million tourists. Spain is a country with an important food tradition. However, as the Spanish market becomes more international in its buying habits, greater demand is created for innovative food and beverage products including niche processed foods, gourmet and fine food products and premium wines.

The traditional Spanish diet is the 'Mediterranean Diet', which is based on seafood, salads, vegetables, fruits, olive oil and wine. Due to the changes in working habits and increased awareness of international foods and cultures, consumption of prepared and ready to eat products, organics and ethnic foods are increasing every year.

In Spain, there is a bar, cafeteria, hotel and restaurant for every 173 inhabitants, three times more than in the USA. It should be also noted that Spain has 17 different autonomous regions (states) which all have slightly different local cuisine preferences, and significantly different standards of living.

The Spanish food processing industry is experiencing growth and is currently the fifth largest in Western Europe. Raw materials for the processing industry are sourced from all over the globe and can fluctuate dramatically depending on factors such as drought, production quota changes set by the European Union (EU) and/or changes to fishing rights.

Seafood

Spain is a major world consumer of fish and seafood ranking second after Japan. A large variety of fresh and frozen seafood is consumed in Spain, however, the preference is generally for fresh product. Fresh fish accounts for approximately 46 per cent of all seafood products consumed in Spain, followed by molluscs and crustaceans at 30 per cent, frozen fish at 15 per cent (increasing steadily), and canned seafood products at eight per cent of total consumption.

The main species consumed are as follows:

• hake
• sea bass
• monkfish
• squid
• cockles
• mussel
• anchovies
• whiting
• shrimp
• sardine
• prawn
• salmon
• clam
• megrim
• octopus
• trout
• sole
• codfish
• oyster
• sole
• baby eels
• guilthead bream
• turbot

The current market preference is for King Red Spot, King Western, Endeavour and Banana. Imports of Tiger prawns (from Australia) are very limited because of the higher price range and are mainly destined for up-market restaurants.

Price is an important issue in the Spanish market, with consumers generally paying considerably less for seafood products than their other Western European counterparts. Spain is also a major producer of fish and seafood in its own right, however, Spanish production is estimated to account for only 40 per cent of domestic demand and it is decreasing due to limited fishing quotas. As a result, Spain is a major importer of fish and seafood, both fresh and frozen.

Meat

Spain is the world’s sixth largest producer of pork and is also a significant local supplier of chicken, beef and lamb products. Apart from the competition from local production, another limitation to significant Australian sales in this area is the existence of European Union quotas for beef and sheep.

There are also quotas covering frozen and processing beef. Organic meats are covered under these quotas. Products can be brought in outside of quota, but there are additional import charges to pay. As a result, Australia’s sales of meat and meat products to Spain are limited.

According to AICE (Spain’s meat processing association), Spain has approximately 1500 abattoirs and about 4300 factories in operation. In addition, there are large numbers of small to medium-sized operations, which would service small local areas and are therefore not recognised in official statistics.

Beverages

Wine: Spain is the world's third largest producer and exporter of wines and in general, Spaniards prefer their own wines to foreign wines. Australian wines are now being directly imported into Spain, but they are still considered to be very unusual.

Beer: Spain is the third largest beer market in Western Europe. Cruzcampo, a Spanish brewer, accounts for over 25 per cent of the market, but brands from all over the globe are readily available. Many of the foreign brands are in fact brewed in Spain, rather than imported.

Coffee and tea: Generally speaking, tea consumption is very low compared to other European markets such as the UK and Germany. While the most popular hot beverage in Spain is coffee, tea is becoming more popular among younger consumers (aged 25 to 40) and women, who consider tea as a 'free' remedy to lose weight rapidly.

Other non-alcoholic beverages: There is a constant influx of new drinks on the market (eg. functional and nutraceutical milk/soya based drinks, energy drinks, sports drinks, etc.) in an increasingly wide range of flavours and they are constantly growing in popularity.

Opportunities

Spanish consumers spent approximately €46 billion on food and beverage products, indicating a five per cent increase on the previous year. Within this, the three largest 'spend areas' were meat and meat products, seafood products and dairy products. Australia’s share of this market is tiny and is contributed mostly to crustacean sales.

Australian products do enter the Spanish market directly, however, as with many other Australian exports,  market entry is often via other European markets (ie. through importers in the UK, Germany, Netherlands, France and Italy).

Opportunities for Australian suppliers exist in the following sectors:

• Seafood - prawns, lobster and reef fish
• Meat - game meats, high quality beef and lamb (please note these products are covered by quota) and offal
• Groceries
• innovative prepared and ready-to-eat products (ambient prepared meals) and beverages
• prepared ethnic and novelty foods (ie. Tex-mex, Asian and Italian)
• gourmet jams, sauces and condiments
• macadamia nuts
• snack foods
• organic foods
• hospitality industry products
• ingredients for the food processing industry
• neutraceutical products
• Beverages - wine

Tariffs, regulations and customs

Spain is part of the harmonised trade system of the European Union (EU). Common Customs Tariff (CCT) is applicable to goods from non-EU countries, including Australia. Most duties are ad valorem (%), based on the GATT Valuation Code (approximate CIF value).

Food imports are highly regulated for hygiene and quality reasons and the following issues should be considered. It is worth getting confirmation from the authorities before shipping.

Agricultural products are protected by quota, managed by a licensing system.  Imports of specified products without a quota license are prohibited. Products include:

• cereals
• rice
• beef and veal
• sugar
• isoglucose
• oils and fats
• seeds
• milk and milk products
• wine
• processed fruit and vegetables 
• sheep meat
• buffalo meat
• goat meat

Food products of animal origin, including fish and honey, must be produced in a EU approved establishment. The Australian Quarantine and Inspection Service (AQIS) will carry out the inspection and approval process on behalf of the EU. The establishment number must be quoted on the health certificate. Meat and Livestock Australia (MLA) can also provide advice to meat exporters.

A health certificate must accompany food products from Australia.  Details can be obtained from AQIS. Some foods will require an import license. Most food products will also require an export certificate issued by AQIS before leaving Australia. All Spanish importers must be licensed by the Ministry of Commerce.

There is EU, and Spanish legislation covering almost every aspect of food production and sale. Careful investigation is required before offering any product for sale. Much of this legislation is based on due diligence, putting the onus for compliance on the manufacturer or producer.

Legislation covers:

• ingredients
• label design and content
• jar or pack size
• additives
• need for a German or EU address
• product descriptions and names
• products of animal origin
• packaging materials
• Labelling

Spanish regulation determines that all ingredients, including additives and preservatives, must be listed, in Spanish, on the label together with product name, net weight or volume, expiry date, instructions for storage and use, country of origin, lot number and importers name. Percentages of ingredients in the formula are not necessary although some food manufacturers prefer to indicate this information.

Industry standards

The manufacture, import and selling of food for humans is highly regulated. EU regulations form the platform for food regulations in Spain, however, each industry and, in fact, each autonomous region may apply their own standards, as long as those standards do not contravene EU or WTO conventions.

Please view the EU website for information on food requirements in the EU.

Food safety issues in Spain are monitored by the Ministry of Health and Consumption (Ministerio de Sanidad y Consumo).

Standards required for foods vary from self-regulatory to legally enforced.  These include:

• Hazard Analysis Critical Control Point (HACCP)
• EUREPGAP
• Produce marketing standards (from the UK Government’s guidelines)

Most retailers will have their own standards for suppliers, which often include issues of environmental concern and corporate culture. These are not covered by any laws or standards, and will vary from retailer to retailer. Most retailers will want to undertake an audit prior to placing a major order.

Marketing your products and services

Market entry

Suppliers of food and beverage products have a number of potential distribution channels:

• Retailers – multiple and specialist
• Food service industry – restaurants, hotels and mass catering
• Food processing companies – supply of raw materials
• Direct to consumer – this needs massive logistical support from the supplier

In order to succeed with any of these channels, you will need a presence in Spain. Category management is common, and buyers reduce sales costs by limiting the number of suppliers.

Market entry strategies include:

• Appointing a Spanish distribution partner to handle importing and customer liaison
• Appointing a Spanish agent to represent your brand in the Spanish market (Please note: that Spain has 17 autonomous communities and it is common practice to appoint more than one agent to operate in different regional areas)
• Working through a consolidator (this is the best option for gourmet suppliers)
• Setting up an office in Spain
• Sending one of your staff to Spain or Europe as a representative
• Manufacturing or bottling your products in Spain or Europe under contract or license
• Undertaking a joint venture with a Spanish company

Of these options, the most effective is probably appointing a distribution partner or agent. A Spanish company will understand how to best present your products, provide advice on changes to your packaging and will understand how to manage the customers. Most importantly, the Spanish partner will have the local customer network. These skills take time to acquire and demand long-term exposure to the country.

Smaller distribution partners often specialise in a particular product sector and may service customers on a regional basis or may supply only certain types of retailer. You may require more than one distribution partner in order to access the entire market. 

It should be noted that the number of experienced importers from non-EU countries is limited, and it is important to check for conflicts of interest. You may need to work with a smaller or less experienced company as a long-term project and build sales gradually.

Currently, Australia isn’t a major supplier of food products to Spain. Importers and retailers will need to be convinced of your capabilities in the following areas:

• Supply lead times
• Exportable volume
• Exports costs (transport and duty) are you prepared to offer 'Delivered duty paid in customers warehouse' terms?
• Labelling: to assist your importer/distributor, be prepared to sticker goods with the legally-required Spanish text, as a first step before Spanish labelling.
• Shipping times - both ex-works to Australian port and also Australian port to Spanish port

Australian firms should take note of the following:

• Consider sustained, joint promotional efforts involving suppliers, local importers and retail outlets to establish Australia as a high quality source for your product.
• Spanish importers seek reliable, long-term supply partners. Consistency is the key.
• Actively assist with branding and promotion, plus all sales and marketing activities.
• Spanish consumers are traditionally conservative. Use original packaging, the novelty of new varieties, value-added products to attract and keep their interest.
• Australia is considered a clean, green environment, in terms of marketing organic produce - this is a good advantage.
• Attend Austrade-recommended food trade fairs such as Intervin, SAL, Alimentaria or Club Gourmets International Fair*.
• Carefully think about your target consumer before presenting your products to a Spanish buyer. Don’t assume that your Spanish consumer will have the same characteristics or habits as your Australian consumers.

When presenting your product to a Spanish retailer, either direct or via your distributor, you will need to consider the following:

• What is the value to the retailer of listing your product?
• How your product ‘fits’ in the current product offering
• Who the target buyers are?
• Projected level of sales
• What the retail price will be?
• What margins the retailer and distributor expect?
• How you are going to promote the product?
• Are you willing to change the product ingredients or packaging to suit the retailer?
• Is an exclusivity deal appropriate?
• Are you ready to provide product samples?

To be successful, you will need to tailor your presentation for each buyer. Visit as many stores as possible to build up a picture of the retailer’s consumer base and consider how your product fits their needs and aspirations.

Research the market and your potential competitors thoroughly before making contact with customers. Take advice from your distributor.

Spanish companies prefer to have brochures and product samples, rather than relying on websites for information. Brochures don’t need to be expensive, but they should:

• Accurately project the values of your company
• Include technical information (physical and chemical detailed analysis of your products, might be requested by importers/distributors)
• Give full details of all products in the range

Mention the benefits of the product or success stories to the retailer – perhaps include a case study of an Australian company.

Pricing information should be in Euros (€), or at least in US dollars with reference to a current exchange rate. It is not recommended to quote in Australian dollars, as Spanish companies are not familiar with the Australian dollar.

Distribution channels

Retail

Spanish consumers prefer to buy fresh produce, meat and seafood from traditional specialist retailers, although the supermarkets are gaining share rapidly.

The food distribution sector in Spain is characterised by the concentration of strong groups, which are progressively absorbing smaller companies within the sector.

Department stores such as El Corte Ingles and hypermarkets such as Carrefour and Hipercor are the large retail distribution groups in Spain. There are 300+ stores throughout Spain.

Supermarkets - there are more than 12,000 stores, the main food distribution companies being, Auchan (with Alcampo supermarkets and Supermercados Sabeco), Eroski, Mercadona and Gupo Unigro (Laurus Netherlands). Within the food trade, supermarkets have higher market share than the hypermarkets, being a very well established format with the advantage of being located in the cities.

Convenience stores, including both franchises such as 7-Eleven and small independently owned convenience stores. (Estimated 13,000+ in Spain).

Discount food outlets – main players in this segment being Lidl and Dia (also franchises).
Many of the big names in Spanish retail are owned by French, Dutch or German companies (ie. Carrefour, Lidl, Spar).  It is worth making contact with head-office as well as local management, as many of these companies are looking towards centralised buying strategies.

Very few of these retailers will buy direct from an overseas company, and most have a list of preferred suppliers. The concentration in the retail sector makes it difficult for small companies to be seen, so make sure you select a partner with access to your target retailer.

Food service

Spain is the second largest tourist market in terms of volume of visitors, after France. Most of these tourists are from wealthy and sophisticated EU markets such as Germany, UK and France. As such, Spain has a large hotel and restaurant industry, although the levels of sophistication exhibited across the industry tend to vary considerably. Hotels, restaurants and catering companies who support this industry account for a quarter of Spain’s total expenditure on food.

The food service industry is still highly fragmented by both region and sector (eg. hotels/restaurants vs airlines vs catering companies). Only the very large HORECA (hotel, restaurant and catering) chains tend to have a central purchasing office, although even then many do not import directly themselves but will prefer to purchase supplies from a local food distributor who looks after the certification, importation and distribution side of the business themselves.

For the bulk of the industry, which consists of smaller operations, the bulk of their food requirements, including stocks (liquid or dry form) are normally purchased from wholesale markets, wholesale food retailers, supermarkets or hypermarkets.

Because the food service industry is so diverse, suppliers need to be flexible and able to work with customers of any size in a variety of locations. A whole distribution industry has grown-up to supply the commercial and institutional food service sectors.  These include wholesalers such as Makro – part of the German cash and carry group, and Grupo Unigro – part of the Dutch central purchasing group.

Food processing

Raw materials for the food processing industry are often sourced directly from the 22 wholesale markets located around Spain. The network of markets is managed by Mercasa and reportedly accounts for 65 per cent of fruits and vegetables consumed in Spain and 55 per cent of fish and seafood. The largest fresh product market in Europe is the Mercamadrid.

Specialised importers/distributors are also equipped to handle incoming fresh or frozen produce with integrated temperature controlled storage, logistics and transportation (air, water, rail or truck) to the final Spanish destination. They can also provide advice on customs clearance, labelling, packaging and sanitary requirements.

Links and industry contacts

Food and beverage–related resources

Mercasa – www.mercasa.es 
Mercamadrid – www.mercamadrid.es 
Food and Beverages Industry Federation – www.fiab.es
Alimentaria Trade Fair – www.alimentaria.com
Club Gourmets International Fair - www.gourmets.net

Government, business and trade resources for Spain

Ministry of Health – www.msc.es
Ministry of Agriculture, Fisheries and Food – www.mapya.es

Contact details

The Australian Trade Commission (Austrade) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.

Austrade offers practical advice, market intelligence and ongoing support (including financial) to Australian businesses looking to develop international markets. Austrade also provides advice and guidance on overseas investment and joint venture opportunities, and helps put Australian businesses in contact with potential overseas investors.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

(Last updated: 13 Jul 2007)