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The Food and Drink Industry

The food and drink industry is the single largest manufacturing sector in the EU in terms of turnover, value- addition and employment. However, labour productivity in the EU food and drink industry is considerably lower than in most other industry sectors. As a result of the relatively high proportion of part-time employment and a comparatively low percentage of higher-level skills, the personnel cost per employee in the food and drink industry is below the figures registered for other sectors. Moreover, the European food and drink industry is a fragmented industry. SMEs and microenterprises comprise 99.1% of European food and drink businesses; these companies generate 48.1% of food and drink turnover and employ 61.6% of the sectoral workforce. In contrast, multinational companies account for just 0.9% of all food and drink enterprises in Europe but provide 51.6% of the turnover, 53.5% of the added value and contribute 38.4% of the employment.

The European food industry is in the lower part of the innovation performance ranking, which is based on 12 innovation indicators; indicators where the food industry shows relatively good performance are the share of firms that receive public subsidies to innovate, the share of firms innovating in-house and the share of firms that use trademarks to protect innovation.

The EU is a net exporter of food and drink products with a positive trade balance of €3.7 billion in 2006 which increased by 12% compared to the previous year. However, imports from emerging countries increased clearly over the last 6 years while, on the export side, the performance of EU food and drink products is mixed. Moreover, over recent years, the EU food and drink industries' sales have been growing at around 3% per annum, while other food production markets are undergoing considerable expansion. This is particularly the case in Asia, where the Chinese food processing industry recorded a double-digit growth rate. As a result, the European share of the global food and drink market has declined from 25% to 21% over the last decade.

R&D investment is largely concentrated worldwide in the pharmaceuticals, biotechnology, technology hardware and automobile sectors. The food and drink sector ranks 14th in the industrial sectors by aggregate R&D from the world global top 1400 companies with only 1% of the total R&D investment (against a total of 54% for the abovementioned sectors). Through R&D activities in the food and drink industry, innovative, healthier, more nutritious and safer food products can be achieved.