Multinationals and investments in the Dutch food, drinks and tobacco industry

The Netherlands is home to numerous multinationals, some of which occupy top positions on several continents with their products. The top eight Dutch food corporations had global sales of nearly 85 billion EUR in 2008.

Unilever and the Swiss corporation Nestlé are the world’s most important manufacturers of food. In 2008, Unilever had global sales of over 40 billion EUR, with more than half from food and beverages. The multinational had 174,000 employees in a hundred countries, including 30,000 in Western Europe, 42,000 in North and South America, and over 100,000 in Asia and Africa combined.

Heineken, with a consolidated beer volume for 2008 of 126 million hectolitres, and 125 breweries in more than 70 countries, is the biggest brewer in Europe and one of the biggest in the world. Heineken holds the top position in many of the countries in which it operates. In the Netherlands, Heineken has a market share of 50%.

The VION Food Group has production and sales operations world wide.

Main divisions are Food and Ingredients. The Food Division comprises fresh pork, beef, lamb, and chicken, along with convenience food derived from these meats. The Ingredients Division comprises animal-based ingredients. VION has a market share in Europe of 5% for beef products and 9% for pork products.

Royal FrieslandCampina, with its 21,000 employees and 2008 sales of 9.5

Nutreco’s sales make it one of the top three animal feed producers in the world, with a share of 1.3% in a fragmented market. The company has over 9000 employees in 30 countries and sells its products in 80.

CSM is active in bakery ingredients, bakery products, lactic acid, and lactic acid derivatives. CSM leads the world market for the latter products. For bakery ingredients and products, CSM occupies the top market position in Europe and the second position in the U.S.

The increasing integration of the Dutch food, drinks and tobacco industry into international markets raises the question of how strong the bond of these markets is with the Netherlands. The breakdown into domestic and third country suppliers suggests that production facilities in third countries could easily be transferred to other regions if this would yield competitive advantage. However, it is not that simple. Businesses using domestic raw materials may have reason to expand or move their production processes, for example to eastern Europe. On the other hand, the port facilities, areas of consumption and other historic support activities developed in north-western Europe may bind the industry to the Netherlands.

The analysis of foreign direct investment in the chart below shows the central role played by the Netherlands.

Added value (factor costs,

€ thousand million

Employment (1,000 man-years)

Food, drinks and tobacco industry (a) 2001 2007 2001 2007

Food, drinks and tobacco industry (a) ^{9.8 12.1 123 107}

based on domestic raw materials ^{3.2 4.4 50 42}

based on raw materials from abroad ^{6.6 7.7 73 65}

Supply and primary production (b) ^{19.7 22.8 390 368}

Primary production ^{7.6 8.0 184 169}

Distribution(c) ^{7.3 8.8 129 134}

Horticulturalists, Agricultural services, forestry (d) ^{3.7 4.0 75 64}

Agri-complex (a+b+c+d) ^{40.5 47.9 717 672}

Share of national total ^{10.2% 9.6% 10.8% 9.9%}

Source: Nederlandse Bank. These figures may vary from data published earlier due to revisions by national accounts and methodological changes. Bron: Agricultural Economics Research Institute

Analysis of

foreign direct investment

Foreign investment in the Dutch food, drinks and tobacco industry.

Direct investment from foreign companies in the Dutch food, drinks and tobacco industry amounted to more than EUR 33.6 thousand million in 2006 and EUR 45.5 thousand million in 2007, representing a growth of 34%

between 2006 and 2007. Most of this investment was made to get a share in the running of Dutch food, drinks and tobacco businesses and came mainly from the US (LEB 2008). US investment in 2006 was EU 22.1 thousand million compared to EU 23.3 thousand million in 2005. In 2007 half of foreign investment, amounting to EUR 22.8 thousand million, came from US businesses.

In 2006, the UK with almost EUR 3.2 thousand million was the most important investor within the EU, followed by France with EUR 1.6 thousand million (LEB 2008). In 2007 France was the largest investor with EUR 13.8 million. This investment was made almost entirely by the dairy conglome-rate Groupe Danone, which in 2007 took over Koninklijke Numico for more

FOOD, BEVERAGES, AND TOBACCO 2000 2002 2006

Number of businesses 5070 169,000 50.018

Number of employees 4825 163,000 52.796

Net turmover (in billions of EUR) 4520 152,300 56.792

TOTAL SECTOR 2000 2002 2006

Number of businesses 45,290 966,600 229.188

Number of employees 46,305 925,600 223.425

Net turmover (in billions of EUR) 46,605 846,800 280.922

Source: CBS

The industry in The Netherlands, 2000-2006

59

than EUR 12 thousand million (LEB 2009).

Investment abroad by the Dutch food, drinks and tobacco industry

Dutch business investment in the food, drinks and tobacco industry abroad amounted to EUR 31.6 thousand million in 2007, against EUR 17 thousand million in 1997. More than half of this investment, 54%, was in the EU.

Belgium and the UK were the most important, followed by Germany, France, Italy and Spain. Outside the EU, Dutch businesses invested mainly in the US, Central and South America and Switzerland. In 2006 Dutch businesses invested more than EUR 6.7 thousand million in the US. It is mostly the large Dutch multinationals that have developed large interests and generate a large part of their turnover there (LEB 2008; 2009).

According to a 2006 OECD study into trends in foreign direct investment in OECD countries, the Netherlands is in fourth place behind the US, the UK and France, followed by Canada, Belgium and Germany. For direct investment in

MULTINATIONALS Global sales

(in billions of EUR)

Dutch sales (in millions of EUR)

Number of employees

Product group

Unilever 40.5 (not available) 174,000 Food and

beverage products

Heineken 14.3 (not available) 56,200 Beverages

VION Food Group 9.6 (not available) 35,000 Meat,

ingredients, etc.

FrieslandCampina 9.5 2798 20,600 Dairy products

Nutreco 4.9 833 9200 Animal feed, fish

food, meat

CSM 2.6 154 8400 Bakery

ingredients and lactic acid

Cosun 1.7 (not available) 4300 Food and

ingredients

Wessanen 1.7 169 5800 Natural foods

and snacks

Top Dutch food corporations, 2008

foreign countries the Netherlands is in the top five alongside the US, Japan, the UK and France.