Farming's annual contribution to GDP
The number of food and beverage companies in Greece (2016)
The number of workers in the food and beverage industry (2016)
Average growth rate of Greece’s food business between 2009 and 2018
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As Greece’s innovative thinkers cooked up new ideas aimed at leading the country out of its economic problems, the solution for some was closer than they thought. In fact, it was on the plate in front of them.
Agri-food, the production of food agriculturally, is playing a growing role in Greece. Digging deep into the country’s national identity, traditional food companies are coming up with novel products and names in a bid to enter new markets. Food producers have been reinventing themselves to compete beyond the local market, seeking consumers abroad in a sector that can have far-reaching effects on the local economy.
“I believe that the food sector is one of the most important and dynamic industries globally, with undoubted importance for society. Covering fundamental dietary needs to new nutritional demands, the social footprint of this sector remains enormous,” says Panagiotis Throuvalas, Chairman of Marfin Investment Group (MIG) and Vivartia Group.
“It contributes significantly to the primary sectors of agriculture and animal farming while investing at the same time large sums in research and development in order to continually improve the quality level of provided products and services,” he says.
Food companies are the largest manufacturers in the country and Greece’s second-largest employer, offering jobs to one third of the workforce.
Greece’s main food exports include olives and olive oil, fish, flour-based products, honey, and processed items including meats, spoon sweets, preserves, and dairy.
Makis Voridis, Greece’s Minister of Agricultural Development and Food, wants a holistic strategy for the agri-food sector to create sustainable links with other sectors including tourism, culture, and the environment, as well as new structures and development standards.
In 2016, food exports topped the €3 billion mark, accounting for approximately one third of Greece’s total exports and up from €2.1 billion in 2010.
EU countries are Greece’s main export market, absorbing more than half of Greek food products. The bulk of Greece’s export value is directed to Italy (olive oil and fish) and Germany (fruit, vegetables, dairy), followed by the UK, Bulgaria, the U.S. and Cyprus. At the same time, Greek products are making inroads into other markets such as Russia and Egypt. Local food producers are going the extra mile to differentiate their products from foreign competitors. They have been producing and making efforts to export, albeit in small amounts, new and highly specialised items such as saffron, beans and lentils, traditional sweets, salt cured fish roe, and cured meats in smarter packaging.
Along with tourism, the food business has been one of the few sectors that has managed to withstand Greece’s economic problems, growing at an average annual rate of 1.9% over the 2009-2016 period, mainly thanks to export activity.
The opportunities in the business are numerous, whether they are in agriculture or the food business. The consolidation of primary food production using new technologies – the likes of hydroponics and greenhouses – coupled with high-value crops offers large potential for growth, as does investment in the packaging, export, and marketing of traditional staples of the Greek diet such as olive oil, herbs, and fish.
“For the next year or two, what we see is a good evolution because major international players are coming to produce in Greece. They will either buy out local companies and expand or will create new facilities from the bottom-up,” says Giorgios Firtinidis, CEO of FRIGO STAHL, a leading industrial construction company that caters to the needs of food manufacturers. Firtinidis foresees the bulk of incoming investments within the sector focusing on the dairy, meat, fruit and vegetable, and frozen products segments; or on packaging materials such as carton, plastics, and bottles.
Participation in the growth and consolidation of smaller, organic producers with strong export potential is another way to get into the industry. Tactics similar to this have been adopted by Coca-Cola Hellenic Bottling. 90% of its raw materials are from Greek suppliers, with the drinks company investing €150 million each year in local producers.
A customer-centric approach catapults FRIGO STAHL’s expansion beyond Greece’s borders, leveraging its leadership within Greece’s industrial manufacturing space, while favourable prospects for incoming investments in the food and dairy products sector reinforce the company’s commitment to the domestic market, says CEO of FRIGO STAHL George Firtinidis.
The face of the agri-food business in Greece has changed considerably.
The country’s high unemployment rate, which peaked at 28% in 2013, forced many young people back to their villages to work on their family’s farms. The benefit? Newly turned farmers are often internet-savvy, university-degree-holders who are helping modernise family operations.
Indicative of this trend are the new initiatives focusing on innovations in farming, a sector associated with older workers in Greece. Although most programmes focus on the food sector, a number of these also turn to the agri-industry.
In April 2019, the country’s Ministry of Rural Development and Food held the first crowdhackathon #agrifood meeting. The gathering brought together 350 participants to create digital apps that can be used by agri-food businesses.
Stella Ronner-Grubačić, the Netherlands Ambassador to Greece, says the Orange Grove initiative supported 181 innovative Greek start-ups since the peak of the crisis, more than half of which are still up and running. Now, its sights are set on leaving a footprint beyond the capital.
Orange Grove, an initiative launched by the Netherlands Embassy in 2013, is also a platform promoting entrepreneurship and knowledge-sharing regarding agri-food, tourism, health, social entrepreneurship, and services-software solutions. Since its launch, it has helped 181 start-ups, more than half of which are still up and running. Orange Grove also organised two acceleration programmes: one in health-tech and the other in agri-food.
“For the agri-food acceleration programme, Orange Grove joined forces with the U.S. Embassy in Athens, as part of a collaboration between the U.S. and the Netherlands for the organisation of the Global Entrepreneurship Summit,” says the Netherlands Ambassador to Greece, Stella Ronner-Grubačić.
“During the three-month program, the participating start-ups received intensive 1:1 support and training from some of the best validation and start-up growth experts in the Netherlands, Orange Grove, and mentors from large corporations. The start-ups worked on customer development, branding, positioning, growth hacking, go-to-market strategies, and much more,” adds Ronner-Grubačić.
Furthermore, the Stavros Niarchos Foundation is helping pay for courses teaching farmers how to boost the quality of their products. As part of its New Agriculture for a New Generation programme, the foundation held a boot camp in July, within the framework of competition, calling on participants to find ways that technology can help the agri-food sector move ahead.
“The strength that has repeatedly been shown by the agri-food business in Greece, in combination with technology, highlights the sector’s limitless prospects,” says Eva Polyzogopoulou, Co-Deputy Chief Programs Officer at the Stavros Niarchos Foundation.
In the past two decades, global demand for food and beverage items increased by a massive 160%, boosting international export activity by 201%. Despite this, Greek producers have been slow to secure a fair share of the market.
Why? A lack of a national strategy, together with limited technological sophistication in agriculture, led to a heavy reliance on EU subsidies, which in turn kept a lid on the level and type of production. At the same time, fragmentation and introversion, along with a lack of a focused promotional and branding strategy for Greek products, significantly limited export capacity.
An Alpha Bank report says the “lack of a consistent strategy” in agriculture and inadequate packaging and branding is holding the sector back, which in turn is weighing on its competitiveness, as is the highly fragmented nature of the business.
Data from PricewaterhouseCoopers (PwC) shows that the majority (90%) of Greece’s food production businesses are small family-owned units with less than 10 employees. Small- and medium-sized companies with 10 to 50 employees account for 19% of the industry’s turnover.
The potential, though, is enormous.
“The enhancement of competitiveness and productivity of the agricultural sector is a core priority of our strategic plan,” says Agricultural Development and Food Minister, Makis Voridis. Voridis explains that by supporting collective forms of production, the ministry aims to increase the economic and physical size of small agricultural holdings.
He adds that land reforms, a revised tax law, funding for the modernisation of farms and the reduction of production costs, as well as the provision of advisory services and know-how will bring local ventures up to par.
Vivartia moves to boost global presence, building on a leading position in the dynamic Greek food and dairy products sector, says Chairman of MIG and Vivartia Group, Panagiotis Throuvalas.
National Bank of Greece (NBG) estimates that through branding and extra value added, the agri-food sector can inject the Greek economy with some €12.2 billion per year, or 6.9% of GDP. And if the tourism and food industries join forces with clearly set out goals, the figure can increase sharply.
“Now is the right time to develop healthy structures and well-designed strategies to exploit fully the competitive advantage of Greek food products,” says NBG.
At the same time, Voridis says investing in actions that will substantially contribute to the transformation of the primary sector and to the establishment of a new agricultural entrepreneurship culture are at the top of the ministry’s agenda.
The aim, he says, is to promote “agricultural advisory services, training and education, cooperation and networking, encourage innovation, farmers’ access to reliable knowledge, broadband infrastructure, cooperation, and more collective organisation and management.”
Greece currently produces more than 100 protected designation of origin (PDO) speciality foods, according to data from Enterprise Greece.
Apart from being a sign of quality, the PDO label is used as part of an EU scheme to indicate where a product has come from and where its production takes place – part of an initiative aimed at retaining populations in rural areas and rewarding attempts to boost the quality of products.
Among Greece’s list of PDO products are a number of high-value niche products such as the Chios Masticha, Kalamata olives, honey, avgotaracho (striped grey mullet fish roe), and Kozani saffron.
In fact, Greece recently scored a significant victory on this front in a key global market. After talks that lasted some 20 years, the European Union and South American bloc Mercosur (Argentina, Brazil, Paraguay, and Uruguay) reached an agreement on free trade that includes the protection of European products.
In a wide-ranging deal, it allows for the PDO label to be slapped onto Greek products, such as feta cheese, being sold in Mercosur markets.
Another 20 products will be marked as being of Greek origin in these large South American countries. These products include ouzo, tsipouro, and kefalograviera cheese.
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The sector is going through some painful but necessary changes.
Greek fish farms, the world’s second-leading source for farmed sea bream and sea bass, have long been a source of pride among Greeks for their leading global position, but have since fallen on tough times. Challenging international market conditions have exposed weaknesses in Greek fish farms that are now in a consolidation phase.
The price of fish has been dropping, while the plummeting Turkish lira means that peers in the neighbouring country have become increasingly competitive. In addition to this, Greek fish farmers have struggled with high debt levels.
The wave of consolidation has seen fish farmers Nireus and Selonda hook up with peer Andromeda Group, in a transaction including the participation of Mubadala Investment Company and AMERRA Capital Management LLC. The merger, which suffered from delays, was approved by the European Commission in October 2019, clearing the way for a strong rebound in the sector.
“By bringing together the complementary strengths of Nireus, Selonda, and Andromeda, we will be able to define new performance standards for Mediterranean aquaculture. Combining the great talents of these three businesses will allow us to seek to create value and drive innovation, for the benefit of customers, employees, and the seafood market as a whole,” said Thor Talseth, Chairman of the Andromeda Group.
The merged entity is expected to control approximately 37% of the EU’s output.
Besides its fair climate overall, Greece has another added advantage – the diversity of its geographical micro-climates, which foster a wide range of products.
These benefits go beyond the food sector and are particularly important when it comes to the agri-industry. The country’s tobacco market has also helped draw one of the biggest investments seen in the country.
In 2017, Philip Morris International Inc. entered the Greek market by investing approximately €300 million to convert the Papastratos cigarette factory into a manufacturing plant for tobacco sticks used with its smoke-free IQOS product.
The investment created 400 new jobs at Papastratos. In April 2019, the company announced that it created another 160 jobs in Greece as part of a plan to boost sales and information to adult smokers over the company's IQOS product.
The IQOS product is expected to be ultimately exported to 30 countries worldwide. Greece’s food industry and farmers are going global in what looks to be just the start.
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