Strategies for setting up a food production business in Europe.

Based on a cluster analysis of key indicators in the European food production industry since 2000, as well as indicators developed by our company's analysts, we have identified key groups of countries according to business entry strategies into these markets.

The country groups and exit scenarios within the cluster are listed below. Using these, your business can achieve greater results.

Cluster 1: Market leaders with moderate competition:

Germany, France, Italy and Spain.

These are leading European economies with growth rates slightly below the median, and with moderate competition among companies in the food production sector. Consumers in this group have high demands regarding product quality, environmental friendliness, and sustainability. The market has a developed infrastructure and strict regulations governing production and distribution processes.

One option is niche specialization, which involves entering the market with premium, organic, functional or ethnic products that meet the growing demand for specialized food solutions. Examples include plant-based meat as an alternative to traditional meat products, farm cheeses with unique taste characteristics and gluten-free products for consumers with special dietary needs. This strategy enables you to occupy a clearly defined market niche, avoiding direct competition with large manufacturers while satisfying growing consumer demand for products with special properties.

Localization of production: strategic placement of production facilities in countries with significantly lower operating costs (e.g. countries in the fourth cluster, such as Bulgaria, Latvia and Lithuania). This allows you to optimize the cost of finished products significantly and increase competitiveness when exporting to the economically developed countries of the first cluster. This mechanism reduces production costs and provides access to local resources and labour while maintaining the high-quality standards necessary for competing successfully in premium markets.

Partnership with retail: strategic integration into the existing supply chains of large European retailers (e.g. Lidl, Carrefour and Aldi), which already have extensive distribution systems, wide customer bases and logistics infrastructures. This mechanism also provides an opportunity to leverage the chains' marketing capabilities and expertise in working with consumers in target markets.

If you are entering a highly competitive market for the first time with a new range of products, your business will inevitably need to comply with a number of international and European quality and sustainability standards. These include EU Organic certification, which guarantees the organic origin of products; Fair Trade certification, which confirms ethical production conditions and fair wages; and ISO 22000 certification, which ensures food safety at all stages of the production chain. These certificates are not just a formal requirement; they also provide a significant competitive advantage when working with demanding consumers.

Cluster 2: Growing markets with high levels of competition:

Poland, the Czech Republic and Romania.

These are markets with medium volumes (€5–10 billion) and growth rates above the European average, but with a large number of companies in the food production sector. Consumers in these markets are highly price-sensitive and simultaneously demonstrate a trend towards natural products. The infrastructure is well developed, with a network of supermarkets such as Lidl and Kaufland.

For businesses planning to enter the European market, it is worth focusing on consumption levels that are average in Europe but growing above average rates. Poland leads Europe in terms of consumption growth.

Product localization is an important factor in successfully entering European markets, as it involves adapting products to local tastes. For instance, semi-finished meat products and traditional sausages are in demand in Poland, whereas a wide range of fermented milk products is popular in Romania. Given the cultural and gastronomic characteristics of the regions, localizing the product range enables businesses to quickly gain consumer trust and increase sales.

Price aggression (entering through the budget segment). One popular format is launching private label products for large retailers, such as Biedronka in Poland. Additionally, holding promotions in the first months, such as '2 for the price of 1' or a 30% discount on the first order, stimulates primary demand, accelerates product recognition, and contributes to forming a consumer habit. This approach is especially effective for new categories that require testing and 'entry into the buyer's basket'.

Distribution through local networks. Partnering with large discounters (e.g. Lidl, Kaufland) ensures mass shelf presence and coverage of a wide audience focused on price and quality. Additionally, cooperating with delivery aggregators such as Glovo, Bolt Food, and other local platforms allows you to enter the fast-growing online sales segment, which is especially relevant in the context of growing demand for convenient, fast solutions.

Marketing through digital and influencer channels is one of the most effective ways of quickly reaching the target audience in countries in the second cluster. Promoting products through local food bloggers on TikTok and Instagram allows you to build trust and demonstrate the product in a real consumer context, for example, through recipes, unboxings and reviews.

Cluster 3: Local markets with low competition:

Denmark, Sweden, Norway and Finland.

These are small markets (with a value of less than €5 billion) with high incomes and medium growth rates. There is a low level of competition due to the presence of several large market players that control a significant portion of the food production sector. Due to low population density and the complexity of logistics, infrastructure is less developed than in countries from the previous groups.

A focus on sustainability and organic products is a key trend in Europe, strengthening competitive advantages and increasing consumer loyalty.

EU Organic certification opens up access to buyers who prioritize eco-friendliness and clean ingredients, and it is a prerequisite for entering many European retail chains. The Nordic Swan Ecolabel (Scandinavia) increases brand trust by confirming compliance with strict environmental standards throughout the product's life cycle (from raw material production to packaging disposal).

Packaging made of biodegradable materials reduces the carbon footprint and helps meet the growing retail requirement for sustainable development. Innovative packaging solutions, such as seaweed packaging in Sweden, are becoming increasingly popular. Such packaging makes products more attractive to consumers and, in some countries, provides an opportunity to participate in EU grant programmes that support 'green' initiatives.

Direct sales via digital platforms allow you to build an independent distribution channel, control your margins and collect customer data to personalize your offer.

Launching D2C (direct-to-consumer) by creating your website with an online store and connecting to local marketplaces (e.g. Mathem in Sweden and Kolonial.no in Norway) gives you quick access to an audience that is already ready to shop for groceries online. This is particularly effective for niche and organic brands, enabling you to trial your product range and receive direct feedback to adapt your products to local preferences.

Subscribe to a weekly delivery of organic produce. The subscription model for farm vegetables and organic products (e.g. in Ireland) enables you to forecast sales volumes, reduce food waste and generate a stable cash flow. It also strengthens customer loyalty and increases customer lifetime value (LTV), while helping to promote the concept of sustainability, which is in demand among those who choose local, environmentally friendly products.

Cluster 4: Stagnant markets with high levels of competition

Greece, Portugal, Bulgaria, Latvia and Lithuania.,

These are markets with small turnover in the food production sector, low growth rates, high levels of competition, and a population with low purchasing power. Outside large cities, infrastructure is practically undeveloped, and the delivery of many products is unsystematic or completely absent.

Focusing on traditional products with protected status allows you to enter the premium segment and capitalize on consumers' trust in the quality and origin of products.

Produce Greek feta (PDO) and Portuguese olive oil (DOP), for example. Products with protected geographical indications (PDO or DOP) are in demand in both the EU and export markets due to their strict quality standards and origin controls. Producing under such status makes it possible to obtain a higher margin and protects against price competition from the mass market.

Using authentic recipes as a competitive advantage: preserving traditional production methods, local ingredients, and artisan approaches strengthens the brand and enables differentiation in categories where consumers value the history and authenticity of the product, such as cheese, butter, meat products, and wine. This increases customer loyalty and provides an opportunity to promote products at gastronomic festivals and exhibitions.

Cost optimization through localization helps reduce costs, increase operational flexibility, and simplify logistics when entering European markets.

Purchasing raw materials from local farmers, especially in Bulgaria and Lithuania, reduces transportation costs, strengthens ties with local communities, and enables products to be positioned as 'local', a factor that is valued by retailers and consumers. In Bulgaria and Lithuania, high-quality dairy and agricultural products are available at competitive prices, allowing for a significant reduction in costs without compromising quality.

Using seasonal labour during the tourist season (Greece, Portugal)
In countries with pronounced seasonality, such as Greece and Portugal, it is possible to optimize production and logistics processes by attracting seasonal workers during peak months. This reduces the fixed costs of the wage fund. This is particularly relevant for processing fruit, vegetables and seafood during the tourist season, when labour availability and demand for products increase.

Export orientation allows you to leverage the strong "European quality" brand to access foreign markets with high margins.

Positioning as an 'authentic European product' for EU markets helps you to stand out from competitors, especially in the organic, artisan and traditional food categories. This increases trust among consumers and retailers, enabling you to set higher prices and access the premium segment.

Entry through ethnic stores in Germany and France is a convenient way to test products, adapt packaging and receive feedback from consumers with minimal cost. This route is often used to export products from Eastern Europe, the Mediterranean and the Balkans, where there is demand for authentic products among diaspora communities and lovers of national cuisine.

Limited marketing investment helps small and medium-sized brands to promote themselves effectively without large budgets, using local channels and organic demand.

Partnering with local tour operators to promote your products to tourists is another effective strategy. Tourists often look for authentic products while travelling, so these partnerships allow you to offer tastings and visits to farms or workshops where local products are produced. This helps to promote the brand organically and create 'ambassadors' among tourists, who can order products online after their trip.

Participation in gastronomic festivals, such as Lisbon Fish & Flavours in Portugal, attracts both local audiences and tourists. These festivals provide an opportunity to showcase products, organize tastings, and conclude direct B2B contracts with restaurants and retailers. Participation in festivals is cheaper than traditional advertising campaigns, and enables you to receive immediate feedback while testing new products and recipes.