Within the intricate tapestry of German mechanical engineering, the food processing and packaging machinery sector emerges as a vibrant thread, contributing 6 percent to the nation’s total production value. This means that the fifth-largest mechanical engineering sector exceeded the 16 billion euro mark for the first time, setting a new record hereby.
Within the German mechanical engineering industry, the companies in this sector account for 6 percent of the total production value and employ more than 62,000 people in Germany. With an average export turnover of 86 percent and a global trade share of 22 percent, the food processing and packaging machinery sector is one of the strongest export industries.
Significant demand stimulus for packaging machines
Packaging machines account for around half of the production value. In 2023, companies increased their production by 10 percent to just under 8 billion euros. The beverage packaging machinery sector grew in particular, increasing by 18 percent to 2.8 billion euros. The production of so-called other packaging machines rose by 6 percent to 5.2 billion euros. A large part of the turnover was based on orders from 2022, as incoming orders remained rather subdued in 2023. One of the reasons for this was the discussion in respect to the new EU packaging regulation, which led to uncertainty and restraint among customer industries. ‘The adoption of the packaging regulation in April 2024 is not only considered as positive due to some critical points, but it creates standardized conditions for the EU mechanical engineering industry and more planning security for investors,’ says Beatrix Fraese, economic expert and deputy managing director of the VDMA Food Processing and Packaging Machinery Association.
Inconsistent developments in the food machinery industry
Whether stagnation, growth or decline – everything was possible in the heterogeneous food machinery industry in 2023.
German manufacturers of process technology for meat and protein processing form the largest sub-sector within the food machinery industry and are therefore the world leaders. Production has grown rapidly in recent years without any setbacks in the coronavirus years. In 2022, growth of 8 percent to 1.3 billion euros was achieved, and this high level was also maintained in 2023. Likewise, the manufacturers of bakery machinery achieved the record figure of 688 million euros in 2023, exactly the same as in 2022.
The highly specialised confectionery machinery industry was severely affected by declining sales during the coronavirus years and as a result of the war in Ukraine. The industry is above-average export-oriented with some companies exporting well over 90 percent of their machines, who however experienced that deliveries to major markets fell significantly. This was exacerbated by a temporary reluctance to invest on the part of global multinationals, which represent an important customer group for confectionery machine manufacturers. Both developments had a corresponding impact on machine production.
In 2023, the production increased significantly again by 23 percent to 354 million euros. Thermal processing systems with an estimated value of 120 million euros were also added. A further recovery can be expected due to catch-up effects.
In contrast to this, the production of beverage production machinery fell by 6 percent to 535 million euros in 2023, falling short of the record figure of 570 million euros set in 2022. In this sub-sector, the focus is on brewing machines. Due to the global measures taken during the coronavirus pandemic and the associated decline in consumption, production fell by 11 percent to 451 million euros in 2020. In the two subsequent years, production increased again by a total of 32 percent. The decline in 2023 is therefore also due to the high reference value of the previous year.
Industry prospects in challenging times
The general outlook for manufacturers of food processing and packaging machinery is good, as they are generally benefiting from rising global demand for food, beverages and pharmaceutical products. Following the strong export growth of 9 percent in 2023, foreign deliveries of food processing and packaging machinery also increased by 5 percent in the first quarter of 2024.
In the first four months of 2024, however, incoming orders in the food processing machinery and packaging machinery sectors were still 6 percent below the previous year’s level on a price-adjusted basis. The developments in the two sub-sectors differ significantly: the order intake for packaging machinery increased by 16 percent in real terms in the first four months compared to the weak same period of the previous year. In contrast, orders for food machinery fell by 12 percent in real terms in the same period, also influenced by base effects. ‘We can expect to see an overall positive trend in incoming orders in the coming months, as it is likely that it will come to catch-up effects for packaging machinery in particular,’ believes Beatrix Fraese.
According to the VDMA economic survey from April 2024, the current demand situation from the markets is rated as good to very good by over 40 percent of companies in the sector. Over 50 percent of manufacturers of food processing and packaging machinery are satisfied with the demand situation. All in all, most companies are positive about the outlook for 2024. In view of the persistently difficult frame conditions and of the high level achieved individually in the previous year, the majority of companies expects a moderate growth for 2024.
VDMA Association Food Processing and Packaging Machinery
The Food Processing and Packaging Machinery Association is one of the largest of a total of 38 business
sectors in the VDMA and represents a very heterogeneous industry: its approximately 330 member
companies are manufacturers of bakery machines, meat processing machines, beverage production
machines, dairy technology, confectionery machines, machines and systems for the processing of plant-
based raw materials, packaging machines and machines and systems for the manufacturing of
pharmaceutical and cosmetic products. The predominantly medium-sized companies account for over 80
percent of the sector’s turnover.
Photo courtesy: Optima packaging group GmbH
