There seems to be no end to the growing demand for French fries worldwide. With at least 5% annual growth in demand for pre-fried frozen chips, the demand seems even greater than processors can handle.
The major players in the global French fries market are the United States, the European Union and Canada. These countries have all invested a lot of money to continue to meet the growing demand for fries. Over the past 5 years, more than €1 billion in investments have been made in processing capacity worldwide.
However, this growth forecast does not appear to be coming true for the 2018/2019 season. In all major processing areas, the figures show that there has been a clear slowdown in growth. The Americans even report a slight decline in sales of pre-baked products over the past 12 months (-0,1%). On the other hand, the prices of the fries sold were higher, which meant that the total value of exports was still higher.
trade war
One cause of the contraction in the United States is the trade war caused by American President Donald Trump. This is mainly reflected in the decrease towards Mexico, the most important sales market of the United States. The prices have also increased chip prices partly caused a drop in demand.
Canada seems to have emerged most unscathed from the battle. This country benefited from the trade war, but Canada still did not manage to show the same growth as last year. The country even had to import potatoes from the United States to keep the processors running. This means that the price of fries in the country has risen by more than 10% compared to 1 year ago. Mexico and Japan were the most important growth markets for Canada.
Tight raw materials market
The European Union is also suffering from the leveling off growth in the global sales market for fries. Dutch chip exports at the beginning of the year were more than 10% lower than last year. Belgium is the only country that shows some growth in sales, but that growth was not nearly as strong as in previous years.
This is mainly due to the fact that Europe is struggling with a tight raw materials market. In addition, chip prices are considerably higher than in previous years. The latter is unfortunate, because Trump's trade war is a golden opportunity for the European Union to steal part of the American market. The price of chips was also set too high, which resulted in a drop in demand.
The countries that currently benefit from the above development are: Argentina, New Zealand and Turkey. These countries are showing very strong growth in the export of pre-baked products.