GERMANY GO TO MARKET REPORT:

GO TO MARKET REPORT: GERMANY THE U.S. DEPARTMENT OF AGRICULTURE S FOREIGN AGRICULTURE SERVICE (FAS) PROVIDED FUNDING FOR THESE REPORTS THROUGH THE ORGANIC TRADE ASSOCIATION S ORGANIC EXPORT PROGRAM Organic Trade Association (OTA) does not discriminate on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation or marital/family status. Persons with disabilities, who require alternative means for communication of program information, should contact OTA.

GO TO MARKET REPORT: GERMANY TABLE OF CONTENTS: 1 COMMON TERMS & ACRONYMS 1 OVERVIEW 2 COMMONLY IMPORTED PRODUCTS 4 ORGANIC CONSUMPTION HABITS 6 MARKET CONDITIONS BY SECTOR 9 FINDING POTENTIAL PARTNERS 11 ENDNOTES 12 REFERENCES COMMON TERMS AND ACRONYMS EU European Union FAS USDA s Foreign Agricultural Service DISCOUNTER Self-service retail stores with a limited selection of products displayed simply, with an emphasis on keeping costs and prices low. Some strategies discounters may use include offering only products with high turn-over and selling private label products. HYPERMARKET Large self-service retail stores (5000 square meters/53,820 square feet or more) which offers not only products typically found in a supermarket, but also items such as electronics, home furnishings, clothing or other non-food products. SUPERMARKET Retail stores with at least 400 square meters (about 4300 square feet) which generally sell a wide range of food, beverage, and personal care products. USDA United States Department of Agriculture OVERVIEW With food imports valued at $59.6 billion in 2013, 1 Germany is heavily dependent on imported food. Within the European Union, the Netherlands provides about a quarter of Germany s food imports, followed by Italy (11 percent) and France (10 percent). Among non-eu countries, Switzerland and Turkey are the two leading food importers, followed by the United States. In general, Germany s population is one of the oldest in the world and continues to age. The largest market for organic products in Europe, Germany spent over $9.6 billion (7.91 billion euros) on organic products in 2014. Although sales of organic products in Germany rose 7.2 percent from 2013 to 2014, the amount of organically managed land rose only by 2.5 percent. 2 GO TO MARKET REPORT: GERMANY 1

COMMONLY IMPORTED PRODUCTS Non-organic: A net importer of all major food product categories 3 Germany purchased approximate $1 billion of consumer-oriented agricultural products from the United States in 2014, led by: Tree nuts Processed fruits Wine and beer Prepared food Beef. Organic: Despite being Europe s largest producer of organic foods (6 percent of agricultural farmland in Germany is used for organic farming), Germany imports a wide range of organic products. In 2013/2014, Germany imported: 4 85 percent of its organic fruits and vegetables: 39 percent of organic potatoes 45 percent of organic carrots (the best-selling organic vegetable) 47 percent of organic onions 49 percent of organic apples 77 percent of organic cucumbers 78 percent of organic zucchini 87 percent of organic tomatoes, 95 percent of organic peppers. 21 percent of organic milk 18 percent of organic yogurt 51 percent of organic butter 30 percent of organic milk alternatives 8 percent of organic eggs 24 percent of organic pork 17 percent of organic cereals 24 percent of organic wheat 51 percent of organic corn 94 percent of organic soybeans and cake. US Organic Exports: Exports of select organic products from the United States to Germany are fluctuating, with roasted coffee and fresh grapes leading the way in 2014. GO TO MARKET REPORT: GERMANY 2

SELECT U.S. ORGANIC EXPORTS TO GERMANY, 2012 2014 Values in thousands of dollars, quantities in metric tons* % change 2012 2013 2014 based on quantity ORGANIC PRODUCT Value Qty Value Qty Value Qty 2012 13 2013 14 Coffee, roasted, not decaf 23 51.8 56 160.6 71 258.2 26 61 Grapes, fresh 0 0 0 0 45 19.6 Strawberries, fresh 0 0 94 41.6 26 11.2-72 -73 Lemons, fresh or dried 0 0 0 0 16 15.3 Tomato sauces, 8 1.4 0 0 15 17.4 excluding tomato ketchup Cabbage, fresh or chilled 7 10.4 0 0 0 0 Broccoli, fresh or chilled 0 0 331 103.4 0 0 Carrots, fresh or chilled 38 39.7 0 0 0 0 Oranges, fresh or dried 8 1.7 0 0 0 0 Totals of organic products 83 55.8 481 153.2 172 76.6-64 -50 with distinct export codes (Excluding coffee) (Excluding coffee) 1. Data Source: U.S. Census Bureau Trade Data 2. Because not every agricultural product has an export code that indicates organic status, these figures are only a selection of U.S. organic exports to Germany. Only certain organic products have separate export codes. 3. Total Organics-Selected: This total represents the sum of all available organic codes in a given year. When comparing this statistic between years, note that the total can be affected by codes that have been added or subtracted. *All quantities except coffee are in metric tons; roasted coffee is measured in 'green bean equivalent' (GBE) GO TO MARKET REPORT: GERMANY 3

ORGANIC CONSUMPTION HABITS Food marketing trends include: Demand for convenience Sustainability Health Luxury Private label Innovative food products Functional foods Fair trade Beauty foods Free from foods, such as gluten free and lactose free The aging population is boosting demand for health and wellness and functional foods. Interest in vegan and vegetarian products is ongoing, as is media coverage of animal welfare on all types of farms. In recent years, there has also been a trend in consumer preference toward smaller grocery formats, including convenience stores, small grocery retailers and independents. German shoppers generally expect high quality and low prices, resulting in thin margins at retail. Private label products represent about 40 percent of the market, and most supermarkets and discounter chains have been successful with their own organic private label brands. 5 CHARACTERISTICS OF ORGANIC PRODUCT USERS According to a May 2013 survey representative of the population and commissioned by the Federal Ministry of Food, Agriculture and Consumer Protection, 22 percent of Germans say they frequently or exclusively buy organic food, and 52 percent purchase occasionally. Meanwhile, 26 percent say they never purchase organic food. Those under age 30 were more likely than in 2012 to report they often buy organic, up 9 percentage points to 23 percent. 6 Conversely, those aged 50-59 were less likely to say they purchased organic regularly, with only 19 percent saying they would in 2013, down from 26 percent in 2013. 7 The top reasons why organic buyers choose organic changed slightly: for the first time, support for regional businesses (87%) was the top reason, followed by animal welfare (85%) and pollution (83%), which fell 6 percentage points. In a separate question focusing on what was most important when buying organic foods, organic products users said: Avoiding pesticide residues (52%) Freshness and quality (50%) Compliance with social standards, fair/reliable income for producers (44%) Positive contribution to environmental protection (41%) Natural taste (38%) Personal awareness of the producer (34%) A trademark of the organic agriculture associations (18%) GO TO MARKET REPORT: GERMANY 4

Organic buyers in Eastern Germany stand out in two areas: Environmental concerns are playing an increasing role in Eastern Germany, up 8 percentage points since the previous survey in 2012, and concerns about place of origin and regionality tend to be higher. For information about organic products, 60 percent of Germans rely on other organic product users and 52 percent mention curiosity about new items in their usual supermarket. The third most common answer was individual initiative or a physician s recommendation. Meanwhile, 39 percent learn about organic foods from newspapers and magazines, and just 16 percent mention information on the Internet. 8 Shoppers are more likely to look to health food specialty stores for information (41%) than to turn to supermarkets, discounters, or drugstores (29%). A preference for food grown regionally is strong, with 92 percent of respondents preferring them. Products that are both organic and regional are the preference of 77 percent. The older the respondents were, the greater the desire for regional organic products. 9 At least one 2013 study in Germany of 641 consumers showed that shoppers who indicate organic production of food is important to them prefer regional products, and the preference was stronger than for ecological products. 10 The 211 study respondents who indicated the ecological production of food was important tended to be female, older, not particularly price-conscious, and did not feel that organic and regional foods were too expensive. More than other respondents, they buy regional foods more frequently in organic supermarkets, health food stores, at farmers' markets and directly from the producer. 11 GO TO MARKET REPORT: GERMANY 5

MARKET CONDITIONS BY SECTOR Retail: Key characteristics of the German retail sector are, in general, consolidation, market saturation, strong competition and low prices. Discounters dominate the market. Most of the food retail sales leaders have chains under multiple banners, often with various types of retail formats such as large hypermarkets, discount and small neighborhood stores, or perhaps beverage and/or delicatessen outlets. Top five market leaders of the food retail sector overall, with about 73 percent 12 of the total market, are: Edeka Rewe Schwarz Metro Aldi The organic food retail sector, meanwhile is not as consolidated, concentrated or saturated. There were approximately 2370 organic food speciality stores in 2014, with a net gain of 49 over 2013. 13 TOP ORGANIC RETAILERS, based on number of stores (as of November 2014) RETAILERS retail outlets Denn s Bio 114 Alnatura 80 BioCompany 33 Basic 25 Data Source: www.statista.com OPENINGS AND CLOSINGS OF RETAILERS SPECIALIZING IN ORGANIC PRODUCTS 2013 2014 Farm Stores 7 openings 8 closings Openings Closings 0-99 square meters (10 1666 sq. ft.) 12 openings 25 closings 100-399 square meters (1076 4295 sq. ft.) 32 openings 16 closings 400 square meters and over (over 4305 sq. ft.) 48 openings 2 closings Not specified 2 openings 1 closing 0 10 20 30 40 50 Data Source: Federation of the Organic Food Industry (BÖLW)) GO TO MARKET REPORT: GERMANY 6

Furthermore, when store size is taken into account, about 300,000 square meters (approximately 3.2 million square feet) more were dedicated for organic retail. 14 Organic specialty retailers saw a 9 percent increase in turnover in 2014, when those shops garnered 33 percent of organic sales. Market share of organic products sold via discounters and other channels was down in 2014, while market share in full-line supermarkets and drug stores was up. 15 ORGANIC SALES BY CHANNEL 2014 Food retailers including drug stores 53% 33% Organic food retailers including farm shops 14% Other (bakeries, butchers, fruit and vegetable shops, weekly markets, subscription services, gas stations, etc.) Data Source: German Organic Market Grows to 7.91 Billion Euros. Organic-Market.info From January-November 2014, the organic product categories with the fastest-growing sales were non-dairy alternatives, soy yogurt and soy beverages. Organic dairy continued to be a revenue driver, particularly after dairy prices faced enforced increases in November 2013. 16 Compared to 2013 sales and based on sales volume, sales of poultry, eggs and flour were among the leading organic products. Organic food categories with significant growth include potatoes, milk, meat and meat products, and fruits and vegetables. 17 Germany Trade and Invest, Germany s trade and investment agency, has identified organic beverages, organic beer, organic wine and organic spirits as categories that offer growth opportunities. 18 Other potential growth categories they mention include organic meat and sausage, including poultry sausage, meat produced according to halal requirements, clean label meat products, convenience foods, dairy products, confectionery, and non-alcoholic beverages. Retail Distribution Chain: Few German retailers import products directly from other countries, except for items that they purchase in large quantities. Most buy from central buyers/distributors. Wholesalers might specialize in certain types of products or products from a particular country. Large retailers purchasing departments may also be divided by retail format and, sometimes, by region of the country. The USDA Foreign Agricultural Service Foreign Buyers list, available on request from the FAS office in Germany (see Finding Potential Partners, p.9) as well as participating in trade shows can help with locating potential business partners. Hotel, Restaurant, and Institution: The country s trade and investment agency mentions the nascent demand for organic food for commercial catering as a market driver. GO TO MARKET REPORT: GERMANY 7

Food ingredients: Private label products have been a staple at German discounters, and now German shoppers can find high quality, premium private label products that serve as alternatives to established brands. Examples of organic private label products include: LABEL: RETAILER: Naturkind Kaiser s/tengelmann REWE Bio REWE Group Penny Penny (REWE Group discount stores) B!O REWE Group Edeka Bio Edeka Natur Pur Spar Other: Natural and organic cosmetics, valued at approximately $1.2 billion ( 1.009 billion), are 7.8 percent of the cosmetics market 19 in Germany in 2014, up 10 percent 20 from 2013 s $1.1 billion ( 920 million). 21 The major retailers offer their own certified natural cosmetics brands, and drugstores have 40 percent of the natural cosmetics market. 22 Meanwhile, sales of natural and organic cosmetics boomed in the one-year period form October 2013 to September 2014, rising 14 percent in that time frame. 23 GO TO MARKET REPORT: GERMANY 8

FINDING POTENTIAL PARTNERS In Germany: USDA Foreign Agricultural Service Office of Agricultural Affairs US Embassy, Berlin Phone: (011-49-30) 8305-1150 E-mail: agberlin@fas.usda.gov Web: http://www.usda-mideurope.com/index.php/fas-mid-europe-region For a list of Foreign Buyers in Germany, contact USDA s Foreign Agricultural Service at: AgBerlin@fas.usda.gov. Additional services for US exporters can be accessed via: http://www.fas.usda.gov/regions/germany Organic-market.info Offers a list of organic businesses searchable by country http://organic-market.info/manufacturers-6.html?ap=&category_id=0&country_id=1 In the United States The Organic Trade Association: www.ota.com Find information on regulations and market conditions in the Global Organic Trade Guide: http://www.globalorganictrade.com List your products in the US Organic Products Export Directory: http://www.usorganicproducts.com Connect with buyers and learn about promotions by contacting Monique Marez mmarez@ota.com Find Regional Assistance with one of these organizations: Midwest: http://www.foodexport.org/ West: http://www.wusata.org/ Northeast: http://www.foodexport.org/ South: http://www.susta.org/ United States Department of Agriculture Foreign Agriculture Service offers a Trade Lead System to connect US exporters with interested international buyers. http://www.fas.usda.gov/trade-lead-system For an overview of German business practices and suggestions for successfully exporting US goods to Germany, see the Doing Business in Germany report. http://www.buyusainfo.net/docs/x_9776929.pdf Useful export information sources: Export preparation checklist: http://www.export.gov/begin/assessment.asp Basic Guide to Exporting: http://export.gov/basicguide/ Export information from USDA: http://www.usda.gov/wps/portal/usda/usdahome?navid=exporting_goods GO TO MARKET REPORT: GERMANY 9

TRADE SHOWS The Organic Trade Association regularly sponsors reverse trade missions, which bring international buyers to the United States, and other international business opportunities, including pavilions at major international trade shows such as BioFach. See details at http://ota.com/resources/global-market-opportunities/trade-promotion. For a list of international trade shows in the United States that are reimbursable as part of the USDA s Market Access Program, see http://www.fas.usda.gov/programs/resources/reimbursable-international-trade-shows-united-states. For trade shows around that world that feature organic products, see http://globalorganictrade.com/trade_shows.php Trade events in Germany that may be of interest to US organic product exporters include (listed in alphabetical order): Anuga Billed as the world s leading food fair for the retail trade, food service and catering market. Held every other year in odd-numbered years. http://www.anuga.com/anuga/the-fair/anuga-trade-shows/anuga-organic/index.php BioFach and Vivaness Expect visitors from around the world at this two-in-one trade show focused on organic products and natural cosmetics. http://www.biofach.de/en/ certifiedfood CertifiedFood is an international, worldwide and exclusively business-to-business supplier fair with specialist congress for the professionals from the food industry. http://www.certifiedfood.de/en/ Fruit Logistica Trade show for the fresh produce industry. http://www.fruitlogistica.de/en/ Natural & Organic Cosmetics Conference Growth strategies of the future and future oriented scenarios have beeen the focus of speeches and presentations at the Natural & Organic Cosmetics Conference, which also includes tabletop exhibits. http://www.naturkosmetik-branchenkongress.de/de/startseite-naturkosmetik-branchenkongress.html OF NOTE Germany is part of the European Union, which has an organic equivalency agreement with the United States. See the Global Organic Trade Guide, http://globalorganictrade.com/countries.php?idx=56. GO TO MARKET REPORT: GERMANY 10

ENDNOTES 1. Rehder, Leif Eric and Devon Bandy. Germany Retail Foods 2014. United States Department of Agriculture Global Agriculture Information Network, August 25, 2014. http://gain.fas.usda.gov/recent%20gain%20publications/retail%20foods_berlin_germany_8-25-2014.pdf. 2. The Organic Year 2014: Markets, Trade Fairs, Politics and Trends. Organic-Market.info, December 22, 2014. http://organic-market.info/news-in-brief-and reportsarticle/the_organic_year_2014_markets_trade_fairspolitics_and_trends.html. 3. Rehder, Leif Eric and Devon Bandy. Germany Retail Foods 2014. 4. Schaack, Diana. Organic market in Germany 2014. The European Market for Organic Food (BioFach Conference panel), February 16, 2015. http://orgprints.org/28229/7/schaack-2015-02-12-organicmarketgermany.pdf 5. Lindel, Daniel. Industry Overview The Food and Beverage Industry in Germany. Germany Trade and Invest. September 2014. http://www.gtai.de/gtai/content/en/invest/_shareddocs/downloads/gtai/industry-overviews/industry-overview-food-beverage-industry-en.pdf 6. Ökobarometer 2013, August 19, 2013. http://www.bmel.de/shareddocs/downloads/ernaehrung/oekobarometer_2013.html. 7. Ibid. 8. Ibid. 9. Ibid. 10. Schaack, Diana and Hans-Josef Brzukalla, Corinna Feldmann, Ulrich Hamm, Adrian Krebs, Jürn Sanders, Jenny Teufel, Joyce Moewius, Peter Röhrig. The Organic Industry in 2015. Federation of the Organic Food Industry (BÖLW), February 2015. http://www.boelw.de/uploads/media/boelw_zdf_2015_web.pdf 11. Ibid. 12. Rehder, Leif Eric and Devon Bandy. Germany Retail Foods 2014. 13. Schaack, Diana et al. The Organic Industry in 2015. 14. Ibid. 15. Ibid. 16. Ibid. 17. Lindel, Daniel. Industry Overview The Food and Beverage Industry in Germany. 18. Ibid. 19. Heinze, Karin. Germany: Natural and Organic Cosmetics Exceeding the Billion Mark. Organic-Market.info, March 10, 2015. http://organic-market.info/news-in-brief-and-reports-article/germany-natural-and-organic-cosmetics-exceeding-the-billion-mark.html. 20. Ibid. 21. The Organic Year 2014: Markets, Trade Fairs, Politics and Trends. Organic-Market.info, December 22, 2014. http://organic-market.info/news-in-brief-and-reports-article/the_organic_year_2014_markets_trade_fairspolitics_and_trends.html. 22. Heinze, Karin. Germany: Natural and Organic Cosmetics Exceeding the Billion Mark. 23. The Organic Year 2014: Markets, Trade Fairs, Politics and Trends. Organic-Market.info. GO TO MARKET REPORT: GERMANY 11

REFERENCES Bio-Umsatz wächst und damit die Chancen für Ökolandbau und Bio-Produktion ( Organic sales growth and with it the opportunities for organic farming and organic production ). Federation of the Organic Food Industry (BÖLW), February 10, 2015. http://www.boelw.de/pm+m5e0beb895d5.html Food Retail Properties in Germany 2014. TLG Immobilien GmbH, June 2014. http://www.tlg.eu/fileadmin/user_upload/tlg_food_retail_properties_in_germany_2014_web.pdf Heinze, Karin. German Enterprise Alnatura Increases Turnover by 16%. Organic-Market.info, February 10, 2015. http://organic-market.info/news-in-brief-and-reports-article/german-enterprise-alnatura-increases-turnover-by-16.html. Heinze, Karin. Germany: Natural and Organic Cosmetics Exceeding the Billion Mark. Organic-Market.info, March 10, 2015. http://organic-market.info/news-in-brief-and-reports-article/germany-natural-and-organic-cosmetics-exceeding-the-billion-mark.html. Heinze, Karin. German Organic Market Grows to 7.91 Billion Euros. Organic-Market.info, February 20, 2015. http://organic-market.info/news-in-brief-and-reports-article/german-organic-market-grows-to-7-91billion-euros.html. Illert, Sonja. Cultivation and marketing of organic vegetables in Germany. Federation for Environment and Nature Conservation Germany (BUND), March 12, 2015. http://www.bund-mecklenburg-vorpommern.de/fileadmin/bundgruppen/bcmslvmeckpomm/bund_gruppe_rostock/tm1_illert.pdf Lindel, Daniel. Industry Overview The Food and Beverage Industry in Germany. Germany Trade and Invest. September 2014. http://www.gtai.de/gtai/content/en/invest/_shareddocs/downloads/gtai/industry-overviews/industry-overview-food-beverage-industry-en.pdf Number of stores of major organic food retailers in Germany as of November 2014. http://www.statista.com/statistics/378536/number-of-stores-organic-food-retailers-germany/ Ökobarometer 2013, August 19, 2013. http://www.bmel.de/shareddocs/downloads/ernaehrung/oekobarometer_2013.html. The Organic Year 2014: Markets, Trade Fairs, Politics and Trends. Organic-Market.info, December 22, 2014. http://organic-market.info/news-in-brief-and-reports-article/the_organic_year_2014_markets_trade_fairspolitics_and_trends.html. Rehder, Leif Eric. Germany Organic Food Retail. United States Department of Agriculture Global Agriculture Information Network, January 6, 2015. http://gain.fas.usda.gov/recent%20gain%20publications/organic%20food%20retail%20_berlin_germany_1-6-2015.pdf. Rehder, Leif Eric and Devon Bandy. Germany Retail Foods 2014. United States Department of Agriculture Global Agriculture Information Network, August 25, 2014. http://gain.fas.usda.gov/recent%20gain%20publications/retail%20foods_berlin_germany_8-25-2014.pdf. Rehder, Leif Eric and Anthony Le. Germany Organic Food Retail. United States Department of Agriculture Global Agriculture Information Network, January 31, 2014. http://gain.fas.usda.gov/recent%20gain%20publications/organic%20food%20retail_berlin_germany_1-31-2014.pdf. Schaack, Diana. Organic market in Germany 2014. The European Market for Organic Food (BioFach Conference panel), February 16, 2015. http://orgprints.org/28229/7/schaack-2015-02-12-organicmarketgermany.pdf Schaack, Diana and Hans-Josef Brzukalla, Corinna Feldmann, Ulrich Hamm, Adrian Krebs, Jürn Sanders, Jenny Teufel, Joyce Moewius, Peter Röhrig. The Organic Industry in 2015. Federation of the Organic Food Industry (BÖLW), February 2015. http://www.boelw.de/uploads/media/boelw_zdf_2015_web.pdf ACKNOWLEDGEMENT Go To Market Report: Germany 2015 prepared by Wolf, DiMatteo + Associates (www.organicspecialists.com) for Organic Trade Association. GO TO MARKET REPORT: GERMANY 12