Large food businesses are active globally and performing well, while smaller producers and wholesalers generally face tough competition and low margins.
- The Danish agro-industrial sector accounts for nearly 25% of Danish commodity exports, with more than two thirds of Danish food production destined for export. In recent years China has joined Germany and the UK as Denmark’s most important export markets, and the industry’s sales increases in 2013 and 2014 have been mainly driven by demand from emerging markets.
- However, sector value added growth contracted in 2015 (down 0.3%) and is expected to level off in 2016 and 2017, due to fierce domestic and international competition and low sales prices.
- In general, large Danish food businesses are active globally and performing well, while smaller players supply the domestic market and/or export to close markets like Germany, UK, Sweden and Eastern Europe. Small food producers and wholesalers generally face tough competition and low profit margins.
- On average, payments in the food sector take 30 days - 60 days. The payment experience over the past two years has been good. Compared with other industries, we have received few credit insurance claims in the food sector and we expect this positive trend to continue in 2017.
- For the time being, our underwriting approach remains positive across all subsectors. However, as profit margins are generally low, especially smaller players are susceptible to sudden market shocks. Therefore we are closely monitoring the consequences of the Brexit decision on food businesses dependent on exports to the UK.