Strategic market assessment of the European Union

An overview of the largest market in the world

The European Union (EU) is Canada's second-largest trading partner, and continues to maintain approximately 20% of the world's gross domestic product (GDP), with a market of over 510 million consumers, and imports of over C$115 billion ($694 billion if you include intra-trade). The EU market is diverse, expanding, and full of opportunities for Canadian businesses.

Although it can be considered as a single economic unit in many regards, the EU is by no means homogeneous. A variety of cultural, linguistic, market and demographic differences exist, and marketing efforts need to be geared to specific countries or segments in the region. A regional approach is necessary to target specific opportunities for Canada to compete and supply. The business culture in the EU values relationships and is driven by trade fairness and loyalty.

Major sector opportunities in the EU

Discover more information, strengths, opportunities and considerations for Canadian agri-food and seafood. Read our European agri-food market intelligence!

Are you interested in learning about how we select priority sectors?

Sectors were prioritized using a quantitative and qualitative modeling approach. Using the Global Trade Tracker database, we focused on over 100 products representing 52% of EU imports and 91% of Canada’s current exports to the region. In phase one of the modelling approach, all agri-food and seafood products went through a quantitative assessment, where each product was evaluated based on a series of quantitative criteria (i.e. size of market, market growth, Canada’s trade intensity, and tariff reductions, all of which were ranked over ten years of historical trade data.

Our analysis focused on assessing opportunities from a strengths and challenges perspective:

  1. Strengths were defined by high performance in large EU import sectors, and high growth. Other sectors of interest were those that were expecting to make important gains due to the lowering of tariffs as a result of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
  2. Challenges were defined by the issues that industry might face while trying to take advantage of market opportunities.

In phase two, the products were further categorized into eighteen super sectors and were assessed by Agriculture and Agri-Food Canada (AAFC) and ten provincial experts through a survey. The experts assessed the opportunities and identified the challenges that may remain despite the presence of CETA.

All priority agri-food and seafood products are both imported by the EU and within Canada’s capacity to produce and supply internationally.

Growth through value-added products

While the EU is an important market for commodity exports, it is one of the few markets in the world where Canada can grow exports of value-added products, given its wealth and relatively stable economy. As of 2016, Canada supplied C$873 million in processed foods to the EU, a figure that has been growing steadily since 2012. High performing products include pet food, frozen lobster, frozen fruits, and scallops.

Value-added exports provide an income multiplier; exporters can compete in a growth environment, which is less sensitive to market share and price point. Margins tend to be higher for value-added products. Exporting these products also tends to be less volatile than commodities would be.

Processed foods currently represent 21% of all Canadian agri-food and seafood exports shipped to the EU.

It is in Canada’s interest to position differentiated, high-value, unique and niche products. The EU market offers Canadian businesses an opportunity to position products that consumers identify with Canada, such as bison meat, cranberries, blueberries, ice wine, wild rice, lobster, maple products, and others. Canadian businesses can take advantage of Canada’s brand and positive image to enhance their product offerings to the EU market.

Canadian processed food exports to the EU
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Dog and Cat food 13%
Frozen fruits 12%
Frozen lobster 11%
Frozen scallops 7%
Naturally healthy product ingredients 6%
Others (Baked goods, meats, whiskies etc.) 51%
Source: Global Trade Tracker – October 2017.

Canada has a significant comparative advantage in the production of many high quality commodities in the grains and oilseed sectors as well as other areas such as pulses. While the EU market has been very responsive to those Canadian products often sold in bulk, there are also great opportunities to extend the value of our quality commodities by identifying ingredient opportunities in high-end processed food products, particularly those in the health and wellness industries, such as pea powder as a high protein replacement for certain flours, especially for consumers with celiac disease.

Given the market size, the diversity and the openness of consumers and buyers to experience Canadian food and beverage products, the target markets for value-added products are: France, the UK, the Netherlands, and Belgium.

Canada’s competition

As of 2016, Canada has 1.91% of the EU agri-food and seafood market, before the implementation of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). Products where Canada has a strong presence in the processed food sector have been able to maintain strong market share because non-EU competitors are more focused on products where Canada has less interest. There is, however, strong competition in beef products, naturally healthy product ingredients, honey, and various oilseed products.

Canada’s main non-EU competition in the EU for value-added food and their top 3 export products in 2016
Country Percent of total EU processed food imports Top three value-added food exports (% share of country's value-added food exports)
Brazil 10.15% Soybean oil (36.6%), orange juice (14%), meat and offal (5.8%)
United States 7.32% Whiskies (10.8%), wine (6.4%), livestock feed (5.2%)
Argentina 7.22% Soybean oil (61.6%), bovine meat (8.5%), lemons (7%)
Switzerland 6.21% Roasted coffee (29.6%), processed cheese (8.4%), chocolate (6.1%)
China 5.17% Animal guts, bladders, & stomachs (12.2%), dried vegetables (4.6%), molluscs (4.5%)

Opportunities for Canada - Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

CETA will help provide opportunities for Canadian producers, processors and exporters to reach the EU's 510 million consumers.

It can support you by:

  • Reducing or eliminating tariffs on products imported into the EU
  • Improving and expanding market access for Canadian products
  • Providing a competitive advantage with preferential access to EU markets

Find more details: CETA for agri-food exporters.

We can help you grow your business

In today’s competitive markets, knowledge is the key to success.

We offer free international market intelligence services for Canadian agriculture and agri-food businesses, including:

  • Identifying new and existing market, sector and product trends and opportunities abroad
  • Providing economic, business and consumer trend forecasts
  • Analyzing distribution channels, including international e-commerce platforms
  • Customized analysis that meets your organization’s unique needs

Contact us for market intelligence services: mas-sam@agr.gc.ca

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