Competitive, But Lucrative: France's Food Service Industry.

A new French army is coming--and it's carrying burgers, fries and other U.S.-style delicacies. Imagine a battalion serving 7 billion meals each year, worth almost $50 billion. A field of conquest involving 160,000 restaurants, including cafes and fast-food outlets.

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What will future growth be like? Overall estimates say 4.5 percent annually. The snack and fast-food segments will surge 13 percent as they replace school and university caterers. The hotel and restaurant segment is expected to grow by 7.5 percent.

It's true that this market is not easy to penetrate, and sales tend to fluctuate, as the strength of the U.S. dollar against the Euro has recently nibbled into U.S. exporters success in France. Some food exports, however, are still setting records despite the currency challenge.

Keys to the French Market

First, a bit of demographics will help you see where France's key markets lie. The population is aging; about 20 percent of the population is over 60. This may also be a factor in the growth of the institutional food sector, as seniors tend to need more health care--and hospital and nursing home stays.

Catering services are also growing in popularity as seniors want to spend less time cooking and more time enjoying life. They have fewer people to cook for, now that their children have left home, so catering becomes a more affordable choice.

Urbanization fuels growth in the restaurant industry as well. In the cities, where good restaurants are often next-door neighbors, people tend to dine out often.

French consumers are changing their daily eating patterns. Two trends that seem contradictory at first glance simply represent modern realities of France's labor market.

First, more women are on the job--they now make up about 40 percent of the workforce. With women at the desk instead of in the kitchen, the frequency of eating out and the use of catering services have increased.

Second, more French women may be on the run, trying to balance work and family. France has reduced the number of hours in its work week, freeing up time for leisure--and dining out.

Know the Suppliers

U.S. exporters are advancing their sales to France's commercial food service sector by working with importers, distributors, cash-and-carry stores and wholesalers.

For small and medium-sized export companies, these contacts are a must. Your partner in France will help with the paperwork relating to duties, import and sanitary certificates, labeling and other potentially complicated but necessary details.

In addition to knowing quality importers or distributors, it pays to know a little about the industries that cater to caterers--and to hotels, restaurants and other institutions.

Cash & Carry: These stores provide the food-service industry with the equivalent of a "quick stop," enabling a hotel manager to get the croissants his customers crave and quickly get back to serving. Since 1993, these outlets have realized growth rates ranging between 11 and 20 percent. They are exclusively open to businesses.

Their convenience, competitive prices and wide variety of food products make them a popular choice for the industry.

Large Wholesalers: Offering a great platform for all kinds of imported products, large wholesalers have strong standing in the hotel, restaurant and industrial food industry sector and also often provide foods to the retail sector.

Independent Wholesalers: These operations carry mostly domestic products-- and they tend to price them higher than do large wholesalers. They offer their customers an advantage in that many are specialized by product segment, and can tailor their services better than large wholesalers can.

Fast Thrills in Food

Food sales of U.S.-style, fast-food restaurants, led by McDonald's and followed by the Belgian chain Quick, are still rising. McDonald's most recent annual sales figures totalled $1.3 billion, with Quick trailing far behind with $400 million.

Perhaps because the fare is better attuned to the local palate, the growth of France's own fast-food industry outpaces that of foreign chains. The menu tends toward baguette sandwiches, quiches and salads.

Another good venue is institutional-style restaurant services that provide food at major events. While high-end French restaurants and hotels may prefer to buy domestically, the companies that feed the masses do it by buying imports wholesale.

For example, the food company Sodexho provided food during France's "World Youth Days in 1997. Compass, a British company, won the contract to feed hungry fans at the French stadium hosting soccer's World Cup in 1998.

A Traffic Light for U.S. Exporters

For a first-time exporter to France, the market can seem like a maddening matrix of rules and their exceptions. It may be easier to think of it like a traffic light. There are a few red-light foods that can't be exported, many yellow foods that face obstacles but could still be rewarding, and a few obvious winners--the green-light products.

Red Light: Traditional Meat Products

Give the red light to poultry, beef and veal. Imports of poultry and egg products from the United States have been banned in France since 1962. Similar bans currently affect U.S. beef and veal.

While this trade situation may change in the future, there are many other products that for now provide more worthwhile opportunities.

Yellow Light: Possibilities vs. Obstacles

Yellow, or caution, is for foods that can do well-but only for particular products or under special circumstances.

While most meats are a bad bet, opportunities do exist for exotics. Bison can be imported, for example, provided the slaughterhouse is certified by the European Union (EU) and the animals are raised without hormones.

The French Veterinary Service is considering similar regulations for alligator meat.

Dairy products are another area of potential, but with barriers to work around. Yogurt and fermented milk are becoming more popular among increasingly health-conscious consumers. Although U.S. exporters face high tariffs, niches exist for prepared ingredients such as sauces, grated cheese and individually packaged desserts.

Fruits and vegetables are another zone for cautious optimism. While the EU supplies many of France's fruit and vegetable imports, there is a growing demand for exotic produce--which could be a boon to parts of the United States with tropical or semi-tropical growing climates.

Yet another yellow-light category is alcoholic beverages. Although wine consumption has dropped during the last decade, the French have a growing interest in "exotic" wines--an opportunity for U.S. vineyards.

Beer, which accounts for 16 percent of total beverage sales, is also a potential winner.

The Go-for-it Greens

Green light products--the ones with the most potential--are nonalcoholic beverages and seafood.

Non-alcoholic beverages, positioned as healthful drinks, may soon skyrocket in this market. They fit well into the overall health-consciousness trends. Total domestic sales in France increased by 70-percent between 1996 and 1998.

At first, seafood does not seem like a green-light product. After all, the major players are members of the EU, which supplies about 40 percent of France's seafood imports. But the United States is a presence in France's seafood market, and may be an even bigger one in the future. Ready-to-eat fish fillets, salmon, cod and shrimp are best sellers; demand is also growing for lobster, scallops, fresh-packed fish and canned salmon.

Making Your French Connection

So how can a U.S. exporter make it in France's retail market? Watch for U.S. products that have a natural niche with consumers there; they are not the foods you might expect.

With a growing senior population, more French consumers are health-conscious-especially older men. Women of all ages are also interested in healthy products.

Younger consumers also offer opportunity. U.S. foods, with their current emphasis on ethnic cuisine, have appeal for the young, who especially like Tex-Mex, North African, Chinese and Indian foods. They do, however, prefer mild over spicy recipes.

A French Customer Is a Busy Customer

In March, when the French newspaper Le Figaro asked its readership about food, the replies thundered with Gallic clarity, "Je suis presse, vite alors!"

Translation: "I'm busy-quickly, please!"

The image of slow, elaborate food preparation, so long associated with French haute cuisine, conflicts with the realities of modern life. Respondents said they wanted easy-to-cook foods.

With more men and women working full-time and busier than ever, food has slipped on the list of French consumers priorities.

Time spent eating per day was reduced, as was meal preparation, which was compressed into 30 minutes from an hour.

This reduced time explains the new popularity of frozen foods. Per capita consumption currently amounts to 30 kilograms.

Another example of the power of convenience: the growing demand for fruit juices, at the expense of fresh fruit and juice squeezers. Sales of ready-to-eat salads packed in plastic bags and containers are also booming.

Flavors the French Will Savor

The survey also asked French consumers about their taste in foods: Sweet flavors are more popular than strong ones. This was especially true for people under 35, who grew up more accustomed to chocolate bars and cookies than their parents. This age group prefers mild flavors, perhaps a throwback to spreadable cheeses and other products they enjoyed as children.

And, while these younger consumers tend to like ethnic foods, they want them with a softer touch, This generation tends to eat less spicy, salted or peppered foods than older adults.

The author is an agricultural specialist with FAS at the American Embassy in Paris.