Inflation slows growth of the Spanish food and beverage industry

In 2022, the food and beverage industry suffered a standstill in its growth rate. This was due to the inflation that Spain as well as the rest of the associated markets experienced. The increase in production costs due to the sharp rise in the cost of energy, transportation and raw materials, among other factors, have limited the positive trajectory of the sector.

Last year, inflation had taken its toll on the pockets of Spanish households, causing a significant reduction in demand for seafood products. This was reflected in the Anfaco-Cecopesca data, where it was reported that the volume of canned food production decreased by 7.6%, but its value increased by 5.7% to total more than 1.74 billion euros.

According to the latest study conducted by FIAB, the Spanish food and beverage industry has seen its growth limited due to inflation. The Economic Report for 2022 was endorsed by the Ministry of Agriculture, Fisheries and Food (MAPA) as part of its main conclusions.

On the other hand, Fernando Miranda, Secretary General of Agriculture and Food, spoke of the importance of the food industry in promoting development in rural areas. “The food industry is an important engine for the development and structuring of rural areas, mainly through the creation of quality employment, thus contributing significantly to boosting the economic, social and environmental sustainability of the territories.”said the person in charge. The Secretary General also valued the food industry’s commitment to internationalization and the opening of new markets, especially those of third countries, which provide not only growth in activity, but also risk diversification.

Miranda also stressed the importance of having the best knowledge to make the right strategic decisions and to understand the impact of the food industry on the economy. In this sense, the ministry has maintained a collaboration agreement with FIAB that helps its development, including the presentation of a report that provides relevant data on the magnitude of the sector’s effect on society as a whole.

Mauricio García de Quevedo, who is the general director of FIAB, mentioned that “during 2022 we suffered a terrible economic crisis. This was due to the invasion of Ukraine and the high levels of inflation we experienced as a result. Many companies in the industry have reduced their margins in order not to pass that cost on to the customer.”

The representative of FIAB (Federation of Food and Beverage Industries) warned about the desperate context in which the food sector is facing after the pandemic. For this reason, he called for the creation of legislation in line with the needs of the sector, as well as the urgent resolution of the calls of the agri-food PERTE to help with resources to small and medium-sized companies to improve their competitiveness through innovative investments.

Last year saw a rebound in actual production numbers within the industry despite the situation in the food and beverage sectors. This is reflected in the 1.5% average over 2022, which is lower than the 4.5% average for the period from 2015 to 2019.
On the other hand, during the last months of 2021, a considerable increase in manufacturing costs was observed, which has been maintained at 18.6% at the end of 2022. This trend led to a decrease in the sector’s production and limited competitiveness to meet consumer demand without generating imbalances.
As a result of high inflation and the mechanisms adopted to contain it (especially higher interest rates), households have been forced to curb their spending and change their consumption behavior. This has led to a significant decrease in the volume of consumption of around 66,294 million euros (-1.1%). It has also had an impact on the average expenditure per person per family, which remained at €1,427 at the end of 2021, a decrease of -1.8% compared to the previous year.
Despite all this, the food and beverage industry remains the most powerful in Spain. This is evidenced by the high Gross Value Added (29,786 million euros) increasing by 13.9%. Excluding prices, the rate is 4.1%. Thus, it contributes 19.3% to the Spanish economy and 2.5% to national production as a whole.
Due to a large number of companies that have maintained their dynamics in the sector, the number of companies has remained stable at 30,159. Despite the small decline compared to the 2021 financial year (-0.3%), there is not much difference as there are only 101 fewer companies.

Despite economic adversities, SMEs continue to be the main pillar within the industry, representing almost 96% of the business fabric. The year 2022 was a strong proof by showing that 78.8% of the total activity was generated by small companies with less than 10 workers, which reaffirms the relevance of these companies for the sector.

Food and beverage appears to be a point of stability in terms of employment. The figures confirm that there is progress in this sector, with the number of Social Security affiliates increasing by 3.2%, equivalent to 454,800 direct jobs. Moreover, growth outpaced that of the manufacturing industry, which stood at 2.4%.
Finally, exports of food, beverages and tobacco, which accounted for 18.5% of the total, fell by 3.5% year-on-year to April, to 5,417.3 million euros, according to data published by the Ministry of Industry, Trade and Tourism. This decrease was due to lower sales in the oils and fats subsectors, particularly to Italy and, to a lesser extent, to the United States, Portugal and China; and fishery products, mainly to Italy and, to a lesser extent, to Japan, Germany and the United States.

As for imports, they increased by 4.5% to €4,125.4 million, resulting in a final balance of €1,291.9 million, compared to €1,672.4 million in April 2022.