Food industry recovers, but costs remain high

After five hectic years, the Dutch food industry seems to be finding a bit more calm. Consumers are getting used to higher prices, and as purchasing power improves, sales volumes are slowly picking up again. Yet profit margins remain under pressure. The costs of raw materials, labour, and energy stay high, keeping the squeeze on profitability.

Growing price gap between brands and private labels

Rabobank expects total supermarket turnover to grow by nearly 3 percent in 2026. That increase is driven by modest volume growth and price rises. It’s a welcome development for supermarkets, which have seen their margins shrink in recent years due to higher purchasing and wage costs.

The price gap between branded products and private labels has widened to almost 40 percent. According to Rabobank, this opens the door for a new price point: products that are slightly cheaper than A-brands but clearly positioned above regular private labels. Innovative private-label suppliers and B-brand producers could benefit from this trend.

Raw material markets remain volatile

So far, 2025 has been favourable for the food manufacturing industry in terms of turnover. Higher raw material prices for dairy, meat, and coffee have boosted results. In the second half of the year, however, these price trends appear to be levelling off, which could slow growth. For 2026, Rabobank expects the food processing industry to continue benefiting from recovering supermarket demand.

The cocoa market remains unpredictable. Prices are still more than three times higher than in 2021. Despite a recent decline, Rabobank sees little room for lower consumer prices. Producers are therefore exploring alternative growing regions, cultivation methods, and cocoa substitutes.

The potato market is also shifting rapidly. The export value of frozen potato products rose from 7.7 to 13.2 billion dollars between 2019 and 2024. China and India have moved from being net importers to net exporters. The Netherlands still accounts for about half of global seed potato exports, but further expansion is hampered by extreme weather conditions and regulations on crop protection and water quality.

Water gaining strategic importance

Water is an essential part of the production process in the food industry. It’s used as an ingredient, for washing, cooling, preparation, and heating. But its availability is under growing pressure. The demand for drinking water keeps rising, while ground and surface water are becoming scarcer. “Installing a water meter and buying water-efficient machines alone is not enough,” Rabobank notes. “Companies need to take an integrated look at where and how they use water.”

The National Action Plan for Drinking Water Savings requires companies to reduce their business water consumption by 20 percent by 2035 compared to 2016–2019. Rabobank points out that there is still much to gain by better understanding the links between water and energy use, and by exploring opportunities for circular water management.

Rabobank.nl