Production of food processing and packaging machinery decreased in 2020 for the first time after the financial crisis

Since the financial and economic crisis, there has only ever been an upwards trend for food processing and packaging machinery. In 2020, the 10-year growth phase in tis mechanical engineering sector came to a temporary end with a decrease of 9 percent to 13.9 billion euros.

“The drop in production doesn’t come as a surprise, as 2019 was an exceptionally strong year for our industry. Even without the Corona pandemic, we would have probably only just exceeded this high level,” explains Richard Clemens, Managing Director of the VDMA Food Processing and Packaging Machinery Association.

In the packaging machinery sector, production dropped by a total of 8 percent to 6.7 billion euros. In food processing machinery, the change rates varied in the individual subsectors. Production of meat processing machinery slightly increased to over 1.2 billion euros. The demand also remained stable for bakery machinery. Both subsectors reported a good domestic business, which overcompensated the decrease in exports.

Production of confectionery machinery dropped by 18 percent below the very high level of the previous year. There was also a double-digit drop in the production of beverage machinery. “These two sectors are very active in non-European countries and are among those suffering from the Corona pandemic. In addition, the customers of these industries include many multinationals that have simply frozen their investment projects,” says Clemens, explaining the different developments.

Corona- pandemic weakens export business

Exports of food processing and packaging machinery dropped by a total of 8 percent to 8.5 billion euros in 2020. The decline varied greatly from one sub-sector to another. Manufacturers of packaging machinery, meat processing machinery and bakery machinery recorded downturns of 5 to 6 percent. Confectionery machinery was down by 24 percent, and brewery machinery saw a 38 percent drop in exports. However, the reference values of the previous year were also exceptionally high in these two sectors. The severe impact on the brewery machinery sector is also directly related to the limited or complete standstill of business activity in the hotel and catering industry as a result of the Corona crisis.

From a regional point of view, foreign shipments of food processing and packaging machinery decreased in almost all economic regions in 2020, except of North America. In particular, deliveries from Germany to the USA increased by 8 percent to over 1.2 billion euros. Positive impetus also came from important individual markets, such as Russia, Mexico and China.

However, deliveries to the EU-27 as the most important sales region dropped by 15 percent. Exports to Asia also decreased by a significant double-digit percentage.

Outlook

According to current estimations, a return to the 2019 level is not very likely for 2021. “We do expect production to grow this year, but it is unlikely to be in double digits,” says Clemens. The general outlook for the industry is positive, according to the trade association’s managing director, as the sector’s companies are well positioned internationally and continue to benefit from a rising global demand for processed and packaged food, beverages, cosmetics and pharmaceuticals.

The VDMA represents around 3,300 German and European mechanical and plant engineering companies. The industry stands for innovation, export orientation, small and medium-sized enterprises and employs around four million people in Europe, more than one million of them in Germany only.