A Little More of Everything
Switzerland's food industry is wide-ranging and globally successful. Its most important export product, however, is neither cheese nor chocolate.
Cheese with big holes and mouth-watering chocolate are the traditional stereotypes associated with Switzerland. But are they really just stereotypes? Not entirely. Food production in Switzerland is one of the most important industries in the country. The industry employs 70,000 workers in more than 4000 production facilities. If you add agriculture and the food retail industry, that means that more than a quarter of a million people in Switzerland take care of our nutrition needs on a daily basis.
When talking about the Swiss food industry, global company Nestlé is often the first thing people think of. Of course, for chocolate connoisseurs, the name of Swiss master chocolatier Lindt&Sprüngli might spring to mind first. These international companies are, without doubt, important representatives of local industry. Nestlé has about 10,000 employees in Switzerland. However, more than half of the employees in this industry work for small and medium-sized companies (SMEs).
SMEs Leading the Pack
Based on the number of employees, the baked goods and pasta sector – heavily shaped by SMEs – is at the top of the list of the most important sectors in the food industry. Almost a third of all workers in the food industry work in this sector; of these, over 75 percent work in SMEs. Meat processors are a close second on the list, followed by the producers of dairy products, soft drinks, chocolate, coffee and tea, sugar and sweets, fruit and vegetable products as well as other foodstuffs. Large corporations as well as SMEs are present in all sectors. These range from the village bakery and the butcher shop around the corner, to the major production facilities operated by Migros and Coop, to the baked goods and meat producers. The international company Emmi is just as much a part of the milk processing sector as alpine cheese producer Urnerboden; niche producers such as Max Felchlin AG as much a part of the chocolate production sector as global manufacturer Lindt&Sprüngli.
However, this coexistence of large and small operations is not always a harmonious one. The bakery sector, for example, has been undergoing a prolonged structural change. Industrial facilities operated by major wholesalers are pushing commercial bakeries into ever more niche markets. However, small local bakeries that develop innovative recipes and offer unique baked goods can often hold their ground and even grow. Many consumers are prepared to pay a higher price for craftsmanship quality, originality and regionality. The best example of this is the country's small local breweries, which have been enjoying an ongoing boom for many years.
Producers Under Pressure
But naturally, not all consumers are willing to pay higher prices. Swiss food products are generally unable to keep up with the prices from foreign competitors – quality aside. Switzerland is an expensive place to do business. Wages are very high; commodities such as milk or meat are expensive due to high customs duties, which are politically motivated to protect the local agrarian economy. Since the Swiss National Bank (SNB) lifted its cap on the fixed Euro/Swiss franc exchange rate on January 15, 2015, this is truer than ever. After the last major revaluation of the Swiss franc in 2010 and 2011, shopping tourism increased dramatically. In 2012, Swiss consumers spent about 1.3 billion Swiss francs on food products purchased across the border. Experts believe that consumer tourism will rise again considerably in 2015. This places major pressure on local food producers.
This growing price pressure is having a dampening effect on already sluggish sales trends in the industry. The Swiss food industry focuses quite heavily on its local market, so only about 10 to 20 percent of its sales come from exports. However, the local market has been saturated for years. Though companies can boost their sales by observing important consumer trends such as regionality, convenience, organic or functional food, and offering innovative products on the local market, these segments often grow at the expense of traditional products.
Swiss Exports are on the Increase
Many companies therefore rely on exports. 8.3 billion Swiss francs worth of food products were exported in 2014 – more than ever before. Food exports have doubled in the last ten years, while the overall export of Swiss goods grew only by one-third. In looking more closely at the numbers, it is evident that 75 percent of export growth for food products comes from coffee and soft drinks, mainly products from Nespresso and Red Bull (mostly bottled in Widnau SG). Thanks to the global coffee capsule boom and the fact that every Nespresso capsule sold worldwide is produced in Switzerland, coffee has become the main export product in the Swiss food industry. Since 2010, the Swiss have exported more coffee than the traditional exports of chocolate and cheese put together.