The future of Slovakia’s food industry is close to home

The food industry is one of the largest business sectors in Slovakia, accounting for 15% of total industrial output. Thanks to lower labour costs and a geographic position that allows for strategic export, once the country allowed privatisation, foreign direct investment fowed in.

Companies such as Nestlé and Heineken were eager to use Slovak factories to produce goods for their global brands. The biggest industries within food production are dairy (18%), meat (17%), brewing (8%), poultry (8%) and confectionery and baking production (7%). Meat and poultry processing together account for a combined value of €801m.

Competition
While EU support has pushed agribusiness in the right direction, to get Slovak food products on the shelves, more work needs to be done. Over the past 10 years, for Slovakian home grown and produced food, competition has increased – not just from Europe but from the rest of the world.

Today, meat from South America and garlic from China can be seen on the supermarket shelves. The latter is particularly telling: 30 years ago, locally grown garlic – a staple ingredient for traditional homecooked garlic soup – was almost all that was available.

Although the country’s agriculture industry can produce high-quality goods, increased exports of raw, primary produce and imports of fnalised food products mean that only 55% of domestically produced goods are being processed in Slovakia. Even though a food industry thrives in the country, currently, Slovak agribusinesses can’t produce the volume needed to support supply chains.

“Agri business and food production companies together need to be more efective in keeping margins to make them more competitive and win back market share,” says Martin Hubinsky, country segment manager, agriculture and food industry at VUB. “We like to see companies with an integrated production line – all the way from the growing of the inputs of the product, to the making of the product, through to having a sales network to deliver the product to the fnal customer. Perfection is when our client delivers all of this in one project.”

Changing tastes
Slovakia has followed the global trend in consumer tastes towards sustainable, healthy food, and since its entry to the European Union in 2004, domestic organic farming is on the up. Locally grown, organic food is the consumer priority, and Slovak consumers are becoming increasingly concerned about the carbon footprint of their food.

“Customers are asking for quality products without the intervention of chemicals – and this is driving growth,” says Hubinsky. “They are also hoping to have it delivered to their door, sometimes straight from the farm. Sales networks see this as a competitive advantage. They are trying to ofer it and customers are asking for it.”

To harness this opportunity, Slovak food companies need to make organic products cost competitive. €75m of EU funding is earmarked for the food industry between 2023 and 2027, but private investment will need to drive the main of the momentum to change.

Plant-based future
Although meat and dairy are today the lifeblood of Slovak food production, this could soon change. In 2019, more than a third of Slovak households (35.4%) bought the plant alternatives to meat and sausages at least once. More than a ffth (21.5%) bought them once or twice, and 14.8% of respondents went for three or more purchases.

Slovak companies are already seizing the opportunity in this growing market, but, again, to compete with global brands they have to join up with agribusiness. Crops are beginning to refect new product demand. Some 38.9% of households bought plant alternatives to milk and yoghurt in 2019. In 2020, soya bean production in the country saw a 15% rise to 55,000 hectares of land producing beans.

The EU’s incoming Farm to Fork strategy, which comes into efect from 2023 onwards, promises to invest in better farming practices that will eventually lead to Slovak fruit and vegetables claiming back a market share. It’s up to the food industry to make the most of the harvest