Should the EU Milling Industry Consolidate, Specialise… or Both?

The EU milling-industry landscape has changed significantly in the last decade. Surviving industry players and new market participants are now ready to start capturing opportunities driven by changes in bakery outlets and consumer behaviour. We think that consolidation, specialisation, or a combination of both, will be key strategies at the EU and national level.

Picture of a bread and different type of grains

Report summary

The EU milling sector is showing signs of change across the continent. The industry is less fragmented than ten years ago; the market share of EU millers shows the emergence of new, or remodelled, large industry participants; and the number of mills is constantly decreasing, as it has done during the last five decades. 

However, the EU flour-milling sector—the third-largest in the world after China and India—still shows big differences in structure between the different EU countries. “Rabobank expects accelerated consolidation in the EU milling industry,” according to Vito Martielli, Analyst – Grains & Oilseeds. “We see several strategic options for improving margin profitability and market position for EU millers and non-EU companies who want to enter the EU market.”

Options include:

- Operational excellence in the domestic market. Industry participants who are able to adopt business models which combine industrial efficiency, excellent raw-material sourcing, and an ability to adapt to changes in local demand will achieve better margin profitability. 

- Pan-EU consolidation in flour milling. A pan-EU strategy is a viable option for some of the competitors in the milling sector. The economies of scale at the EU level can offer opportunities of capturing some of the market growth in industrial bakery and modern retail. 

- Specialisation in niche milling sub-segments. Durum wheat, rice, corn, and oat milling are niche segments which show higher profitability than standard wheat-flour milling. They report interesting market growth and offer an opportunity to diversify into adjacent businesses.