First, the good news: the type of food products Greece excels in are enjoyed throughout the world, and are particularly popular in fast-growing Asian economies. The bad news: Greece isn’t making them.
The debt-strapped European nation holds only a 28% share in the global market for the crumbly feta cheese it made famous, while only 30% of the Greek-style yogurt sold in the US originates in the country. As Greece begins the long road to boosting industrial production and exports, against a backdrop of sweeping cuts to employment and services and the continuing risk of a default on its vast debt, its food industry is being watched closely.
“Local conditions, such as weather and soil, contribute to the production of very flavorsome products that are of high demand in international markets,” says Peggy Velliotou, a Partner at KPMG in Greece who believes the local food industry has considerable potential.
A recent report predicted food manufacturing and agriculture could support 970,000 jobs and generate around US$42bn annually by 2020, accounting for the majority of the country’s potential economic renaissance. Velliotou points to several Greek companies with strong growth trajectories, including internationally focused conglomerate Vivartia, yogurt-maker Fage and spaghetti company Melissa Kikizas. She says entrepreneurs are developing wine, beans and even snails (a French delicacy) for export.
Yogurt is a particularly strong bet, and offers local companies the chance to expand their horizons. Products marketed as Greek yogurt are increasingly popular with health-conscious US consumers, and Fage and rival Chobani have built US facilities to capitalize on the trend. But if Greek food is waking from its slumber, it still has a long way to go.
Even when the country does export successfully, such as in olive oil, it often does so in bulk, allowing others to capture much of the value. Meanwhile, domestic demand has collapsed and suppliers and distributors face cash flow problems that leave the whole supply chain unbalanced.
The economic climate doesn’t make business easy. The Greek economy has shrunk more than 18% since 2008, according to Standard Chartered Bank in London. Unemployment climbed to 23.1% in May and the rate of jobless young people under 25 is roughly 55%. The nation’s Prime Minister, Antonis Samaras, must negotiate with EU leaders on the timeline for making economic reforms and terms of repaying billions in bailout loans, while trying to stimulate the economy.
Multinationals are understandably jittery. Earlier this year, Carrefour sold its 50% stake in roughly 300 Greek supermarkets to its local partner, the Marinopoulos family, for a nominal US$1, claiming a loss of US$270m. The family plans to invest heavily in rebranded stores across Greece and the wider Balkan region, but Carrefour’s withdrawal is just the latest in a series of blows for the local economic situation.
On the island of Chios, four miles from the Turkish coast, they’re hoping a return to traditional values could help the country rebound. Chios is the exclusive producer of mastic resin, used in foods, soaps, gums, medicines and liquor. Production is increasing at least 10% a year and currently stands at 150 tons; Dr. Ilias Smyrnioudis, a manager at the Chios Gum Mastiha Growers Association, says Greeks are moving back to the island from Athens to cultivate mastic trees.
The association is funding medical research to show how mastic improves digestion and dental health. It has a part-share in MastihaShop retail stores in New York, Saudi Arabia and France. It’s the sort of ambitious project Greece needs if it is to return to health – but it will need many more.