Belgium - The Future of Foodservice to 2021

22/09/2017 - 14:25
Belgium is the 25th largest economy in the world, with a nominal GDP of over USD$ 460 billion, growing by approximately 1.6% in 2016. Government debt is high, at roughly 106% of GDP, with a budget deficit of 2.7% of GDP. In 2016, unemployment was reasonably high at 8.0%, and inflation stood at 1.8%.

The country is divided into three regions, Flanders, Wallonia and Brussels. Although Wallonia was once the most prosperous region, having reaped the benefits of industrialization, Flanders now accounts for just under 60% of Belgium's GDP, houses most of the country’s industries, and has the lowest rates of unemployment, by a considerable margin.

Belgium’s geographical location and developed transport infrastructure enable it to facilitate a large amount of trade. Its main industries are machinery production, metallurgy, chemical processing, foodstuffs and beverages.

Profit sector summary

The Belgian foodservice profit sector generated a total revenue of over EUR 16.5 billion (USD$ 18.2 billion) in 2016. The value of the sector increased at a CAGR of 3.2% from 2014-2016, and growth is forecast to accelerate marginally to a CAGR of 3.4% during 2016-2021.

Growth across all profit sector channels is, and is forecast to continue being, primarily attributed to rising transaction numbers, rather than outlet number expansion, as the historic cities approach saturation and desirable locations become increasingly sparse.

The paradigm shift towards convenience driven purchases is becoming increasingly pervasive worldwide, and Belgium is no exception; growth in revenue generated from takeaway transactions is forecast to be stronger than that of dine-in transactions in all channels.

Quick service restaurants summary

The QSR channel in Belgium represents a relatively small market share compared to those found in other countries. In 2016, its total sales value was approximately EUR 1.3 billion, and it accounted for 8.0% of the total revenue generated in the foodservice profit sector. The channel’s sales value increased at a CAGR of 3.0% between 2014- 2016, and is forecast a marginally accelerated CAGR of 3.2% during 2016-2021.

Although just 31.0% of QSR outlets are owned by chain operators, they generate 56.4% of the channel revenue. Panos is the largest QSR operator by a substantial margin, representing 18.4% of the channel’s value.

American fast food dominates the channel’s cuisine. However, surveys indicate that consumers have a considerably greater interest in exploring more exotic flavors, with American cuisine being one of the least popular when consumers were asked which cuisines they would like to eat more often.

A trend towards greater health consciousness is growing worldwide, and Belgium is no exception. In an effort to compete with the FSR and coffee and tea shop channels, an increasing number of chain QSR operators are ‘premiumizing’ their menu offerings. This is evident not just in the higher quality of food served, maximizing the nutritional value of each dish, but also in an increasing number of organic ingredients being used in dishes. Surveys highlighted large portions of consumers that claimed to find difficulty in eating healthily when out. This indicates there are growth opportunities to be found in offering ‘healthy indulgent’ options, a foodservice trend which has achieved great success in mature foodservice markets such as the US and UK.

Full service restaurants summary

At a market valuation of just under EUR 6.0 billion in 2016, the FSR channel is the largest foodservice channel by sales value, accounting for 36.1% of the overall revenue generated within the profit sector. Between 2014 and 2016, FSR experienced the joint- fastest value growth across the profit sector, with sales value increasing at a CAGR of 3.4%. It is forecast an accelerated CAGR of 3.8% during 2016-2021, which would make it the fastest growing channel.

The FSR channel is highly fragmented. Just 4.1% of outlets are owned by chain operators, but they over-trade relative to this, generating 11.7% of the channel’s sales value. Over the next five years, revenue growth of chain operators is forecast to be markedly stronger than that of independents.

The FSR channel will be the greatest beneficiary of the paradigm shift towards takeaway transactions, with revenue generated by takeaway transactions forecasted a CAGR of 5.3% during 2016-2021. The advent of UberEATS and rival delivery services will mean that consumers no longer need to compromise between convenience and the quality of their meal. However, for the foreseeable future, dine-in transactions will remain the primary source of revenue in the channel, given that approximately 89.9% of channel’s revenue was generated by such transactions in 2016. Surveys indicate that consumers are becoming increasingly interested in more experiential meal occasions when eating out.

In future years, the FSR channel will face intensifying competition from the QSR and coffee and tea shop channels, as they both expand their menus and ‘premiumize’ their offerings.

Pubs, clubs, and bars summary

In 2016, the pub, club and bar channel was the second most valuable foodservice profit sector channel; it generated a revenue of over EUR 3.7 billion, representing 22.6% of the total market sales value. During 2014-2016, the channel increased in value at a CAGR of 3.4%, the joint-fastest rate, and sales value growth is forecast to continue at this rate over 2016-2021.

The channel’s growth is and will continue to be driven primarily by a rising number of transactions, rather than outlet expansion. With a CAGR of just 0.3% during 2014- 2016, the number of pub, club and bar outlets increased at the slowest rate of all channels in the foodservice profit sector, and this sluggish outlet growth rate is forecast to continue over the next five years.

While alcohol consumption among Belgian consumers has been steadily decreasing since the start of the millennium, tourism has been steadily increasing, with the exception of 2016 as a result of terrorism. The greatest driver of growth within the channel has been tourists sampling the country’s world renowned beers. As a consequence, the greatest growth has been concentrated in tourism hot spots.

The pub, club and bar channel is heavily fragmented, with chain operators representing just 3.7% of the number of outlets. However, as with FSR and QSR, chains over-trade relative to share of outlets, accounting for 5.4% of the pub, club and bar sales value in 2016.

A quarter of surveyed consumers claimed visits to the channel were part of their daily routine, which is notably higher than in other countries. As with other foodservice channels, an increasing number of consumers are seeking beers made with organic and natural ingredients.

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