The flour market - France (2023)

1.2 The global flour market

The world flour market is largely dependent on international cereal production, particularly wheat. Despite the difficult economic context, cereal production in **** reached an all-time high of **** million tonnes of cereals produced, including *** million tonnes of wheat.

World cereal and wheat production World, **** - ****, tonnes FAOSTAT

on a global scale over the ****/** campaign, France is *th largest producer behind China, India, Russia and the United States. However, France is the *st soft wheat producer in the European Union: in the ****-**** campaign, **.* Mt of soft wheat were produced in France on a usable area of *.* Mha. [***]

Flour is produced in several countries. The world's leading flour exporter is Turkey, followed byGermany and the United States, which together account for more than a quarter of global flour exports. French flour production is mainly aimed at the domestic market, making France the world's **th largest flour exporter.

World's leading flour exporters World, ****, in % of global exports Intracen

1.3 France, a major flour producer

France is considered the second-largest flour producer in Europe and the tenth-largest in the world, with *.** million tonnes of flour to be produced by ****. The flour milling sector currently comprises *** production units and directly employs some *,*** people. French flour production has nevertheless seen a slight decline since ****, notably due to the rising volume of imports and competition from other producing countries.

French flour production France, ****-****, in Mt and number of production units ANMF

1.4 In France, the milling sector is increasingly import-oriented

France's flour trade balance has been affected in recent years, particularly in ****. France has imported more flour than it has exported since ****. In ****, flour imports reached ***,*** tonnes, while exports amounted to ***,*** tonnes. Most of this trade is with the European Union, Germany being the main source of imports, particularly for bagged flour sold in supermarkets. French flours are mainly exported to Europe, followed by Asia, where French quality is sought after for products such as the traditional French baguette.

This situation reflects an imbalance in France's trade balance in the flour sector, characterized by greater dependence on imports. This imbalance could be the result of various factors, such as competition on international markets, production costs, and changes in consumer preferences.

Foreign trade balance in flour France, ****-****, in millions of euros French Customs

The main export destination remains Europe, with volumes remaining constant at **%. Next, Asia accounts for around *% of exports, while exports to Africa have fallen significantly, now accounting for just *%. The Near and Middle East also accounts for a significant share, representing around *.*% of exports. French flour exports France, ****, in % of export value French Customs In the year ****, flour imports into France amounted to ***,*** tonnes, representing *.*% of the total ...

1.5 Flour, a key product of the containment period

In addition to pasta and rice, the French also flocked to flour during the period of confinement. Indeed, the fear of running out of essential products such as bread, combined with changing habits that are prompting the French to cook more for themselves, led to an explosion in the consumption of these essential products during the confinement period from March to May ****. During this period, one-kilo bags of flour embodied the so-called "breakthrough products": eggs, toilet paper, flour and other products that ran out during the confinement. Flour sales thus rose spectacularly during the containment period: +***% of sales over this period, compared with the same period in ****. [***]

Growth in volume purchases of commodity products France, ****-****, % change France AgriMer

The graph above is a perfect illustration of this new "do-it-yourself " trend, which is gaining ground in France. The growth in sales volumes of these essential products, particularly flour, during the pre-confinement and confinement periods illustrates this rebound in demand from private individuals. However, with decontamination and the resumption of activity, it is possible to observe that sales volume growth levels have returned to normal standards; hence the challenge of sustaining demand in this sector.

2.1 Flour, an essential product with multiple uses

Flour is a fundamental ingredient with a wide range of applications. The major sectors for which flour is used include artisan bakeries and pastry shops, which account for **% of production, and the food industry, which accounts for **% of consumption.

Main flour outlets in France France, ****, in France AgriMer

2.2 Bread consumption, an important determinant of flour demand

French bread consumption is a major determinant of flour demand. Flour provides fermentable sugars used by yeast and proteins (***) essential to the elastic texture of bread dough. While bread remains an essential part of French cuisine, it should be noted that its consumption is in sharp decline. Between **** and ****, daily bread consumption in France fell significantly, from *** grams per day to around *** grams per weekday. This represents a threefold reduction in bread consumption in the space of ** years.

Average bread consumption in France France, **** - ****, in g/day Bread Observatory

The study carried out by QUALIQUANTI for FEB shows that bread continues to play a central role in the French diet. In ****,**% of French people said they always had bread at home, and **% said they couldn't live without it. Average consumption is*** grams a day on weekdays, with a preference for dinner. Bread quality is highly appreciated (***). Taste, traditional production and freshness are the main purchasing criteria. The traditional baguette is the most popular, followed by the classic baguette and cereal bread. Organic bread consumption remains marginal, but is on the rise. The anti-waste trend is gaining ground, with **% of French people freezing their bread.

2.3 Organic flour: a trend confirmed by the COVID crisis

Organic flour accounts for **% of total flour expenditure on average between **** and ****.

Organic expenditure by product, in % (***) France, ****-****, in % (***) Source: ****

Organic flour production has increased significantly, rising from **,*** tonnes to ***,*** tonnes in ****. However, this growth has levelled off in ****, due to the challenges faced by the organic sector, notably inflation and declining household purchasing power.

France, ****-****, tonnes and domestic market share ANMF

Consumption of organic and fair-trade food products has accelerated sharply as a result of the COVID crisis. In France, the health crisis is seen as proof of the need to change our food model: in April ****, **% of French people believed that the current economic crisis is "an illustration that it is necessary to change our consumption patterns (***)" [***].

2.5 Analysis of France's favorite flour brands

In ****, although Francine will have the largest market share, Alsa will remain the favorite brand of the French.

France's favorite flour brand France, ****, % of total Source: ****

In ****, flour brands are clearly more popular with women. French people's favorite flour brand by gender France, ****, in Source: OpinionWay Panel Young adults aged ** to **, who often live with their parents, show a significantly lower rate of appreciation for flour brands. Among these brands, Maizena shows the greatest difference in appreciation between **-** year-olds and the other age groups in the sample.

French people's favorite flour brand by age group France, ****, in Source: ****

3.1 A simplified structure for milling in France

3.2 Highly concentrated production

French flour production is highly concentrated. Between **** and ****, the number of mills (***) in France fell from *** to ***, representing a **% drop in French flour production units. The main reasons for this decline are the low competitiveness of French flour on international markets, and the economies of scale achieved by large-scale producers.

Population of milling sector establishments France, **** - ****, number of mills ACOSS

The French milling sector is dominated by a handful of major players. In fact, the * largest flour-producing companies accounted for more than **% of the sector's total sales in ****. French market leaders include both private players and agricultural cooperatives. Vivescia, Axéréal, Soufflet and Terrana are all major players in the flour milling market.

Main players in the milling market France, ****, in € billions Registry of the Paris Commercial Court

The decline in the number of employees in the milling sector in France from **** to **** can be analyzed on the basis of several factors. Firstly, there is the automation and increased efficiency of production processes, which reduce the need for manpower. Secondly, consumer trends may influence demand for milling products, with variations in diets and a growing preference for gluten-free or alternative grain-based foods. Thirdly, economic challenges, such as rising raw ...

3.3 Flour distribution channels

French flour is largely distributed via artisanal bakeries and patisseries, which purchase most of their flour in ** kg bags directly from mills or from specialist wholesalers.

Indeed, as can be seen from the graph below, this distribution channel accounts for almost **% of domestic production. Sales of one-kilogram sachets via supermarkets and hypermarkets account for just *.*% of French flour sales. The low share of this distribution channel explains the various flour shortages experienced by supermarkets and hypermarkets during the containment period, with the majority of flour distributed to professionals in the form of ** kg bags, unsuitable for retail sale. [***]

Flour distribution channels France, ****, as % of domestic production Les Echos

However, direct sales channels, notably e-commerce, are experiencing increasingly significant growth. This distribution channel is in vogue, as it enables a growing number of consumers concerned about the origin of their products to buy directly from small-scale producers. The organic products e-commerce site La Fourche, for example, reported exponential sales of certain product categories, notably flours and yeasts, up ***% on the announcement of a new confinement in France. [***]

4.1 A standardized flour offering

The chart shows that, in France in ****, wheat flour production will dominate the sector with **** million euros. Mixes and doughs for preparation follow at *** million euros, then milling by-products at *** million euros, and finally flours from cereals other than wheat and meslin at *** million euros.

French flour production structure France, ****, in M€ Prodcom

Several types of wheat and meslin flour are available, corresponding to a variety of uses. These different flours are characterized by the number following the T. The higher the number, the more complete the flour, i.e. rich in bran. The table below lists the different types of flour and their uses.

Types of flour Ash content (***) Use T** flour *,* Pastry T** flour *,* à *,* Bakery products T** flour *,** à *,** White flour for special breads T** flour *,** à *,** Bise or semi-complete flour for more typical special breads T*** flour * à *,** Wholemeal flour for wholemeal breads T*** flour >*,** Wholemeal flour used for bran bread

4.2 The household offer is dominated by a leader, Francine

The Francine brand dominates theone-kilogram flour offer. Francine (***) has almost **% of market share in this segment, followed by the various private label products, which have **.*% of market share by value. However, Francine, formerly France Farine, has long enjoyed a near-monopolistic position in the one-kilogram flour sachet segment. Founded in **** by * French millers, the company was for a long time the only player in this segment, until ****. Since then, the growth of new brands, Axiane, Mon Fournil and Gruau d'Or, has captured more and more market share.

Market share in value of the main flour brands France, ****, in % of market share by value LSA Conso

The new competition in this segment is essentially based on marketing strategies. Indeed, the various brands are trying to compete with the Francine brand, which enjoys a strong national reputation, by relying on strategies to move upmarket and innovate in terms of packaging. Grau d'Or, a brand of the Moulin du Grand-Est company, for example, tries to play up the local origin of its wheat.

4.3 The price of soft wheat remains the main determinant of flour prices

Wheat prices are currently highly volatile, affected by growing demand and strong competition from Russia. This volatility is particularly marked by Chinese purchases of American wheat and tenders from several countries. Although Russia is proving highly competitive, the outcome of Algerian tenders remains uncertain. In France, port activity is picking up thanks to exports to China and sub-Saharan Africa, while the domestic market remains quiet.

On the supply side, the situation is complex, with abundant supplies from Russia, upward revisions to Australian and Canadian harvests, and concerns about the French harvest due to unfavorable weather conditions. Agreste forecasts a reduction in winter wheat acreage, and FranceAgriMer reports a drop in crop quality compared to last year.

By May ****, the price of soft wheat (***) had climbed to €*** per tonne. However, by December ****, this price has dropped to €*** per tonne.

Soft wheat prices in France France, ****-****, in €/tonne Agreste

consumer prices for flour and other cereals rose sharply in **** and ****, av* nearly **% between **** and ****.

Consumer price index (***) France, ****-**** (***), index base ***: **** Source: ****

4.4 Innovation at the heart of differentiation strategies

The maturity of the flour market in France, combined with low margins, is forcing the various players to initiate differentiation strategies through innovation. Indeed, French millers need to initiate upmarket strategies to renew demand and offer higher-quality products. In addition, organic and local products have become crucial issues for French millers. Between May **** and April ****, organic flour gained *% in value and +*.*% in volume. Organic weighs **% of the category in volume and **.*% in value, but has jumped **.*% in value and **.*% in volume. [***]

At the same time,the question of sustainability in the value chain is becoming increasingly central. The origin of the wheat, the remuneration of the producer and the nutritional value of the flour have become important issues. As a result, the various operators in this segment have recently launched innovative initiatives aimed at meeting these new demands. The table below gives a few examples.

5.1 The framework for flour production in France

Flour production is regulated by national legislation, which obliges mills that crush soft wheat for human consumption to hold a quota that constitutes a right to exercise the profession and a crushing ceiling that must not be exceeded over the calendar year. This crushing capacity can be increased by acquiring or leasing milling rights detached from another quota.

In addition, since ****, the creation of new mills has been prohibited, and the acquisition of any mill must be registered with the Commission Consultative de la Meunerie.

Articles D***-** to D***-** of the French Rural Code define the regulations governing flour production in France. Here are the main points of the regulations governing flour milling:

" A mill operator is any natural or legal person who, as a principal or accessory activity, carries out operations aimed at converting soft wheat into flour.(***) Mills crushing less than *** quintals of soft wheat per year are exempt from the obligation to hold a quota, provided they are registered with France Agrimer (***) Mill operators who crush more than **T/year of wheat must hold a milling quota (***). Note: this obligation also applies to farmers who crush their own crop, or that of other farmers All ...

5.2 The 2019 Finance Law provided for the abolition of the flour tax

Existing since ****, this tax had already been called into question by the Cour des Comptes, which considered that it mobilized customs resources without justification. The Association Nationale de la Meunerie Française had also strongly criticized it, considering it a threat to the future of milling in France.

The levy was set at €**.** per tonne, and in **** represented €**.* million, or *% of French milling sales.

The **** Finance Law provided for the abolition of this tax. Indeed, since January *, ****, millers are no longer liable for the flour tax, the abolition of which - called for since the early ****s - was voted for at the end of ****. This levy of €**.** per tonne weighed unfairly on the sector's economy. It created a distortion of competition vis-à-vis the entire European milling industry, reduced the gross operating surplus of companies and constituted a tax burden reducing the competitiveness of French flour.[***]

6.1 The positioning of French milling players

• Vivescia
• Soufflet Groupe
• Axéréal
• Terrena (Coopérative)
• Minoterie Planchot
• La Minoterie coopérative de Courçon