France trumps UK in foreign investment food stakes

By staff reporter

- Last updated on GMT

Related tags European union Europe France

France held the top spot last year over the UK for foreign
investments into the food sector, according to a new Ernst &
Young report.

The study confirms that France is becoming increasingly attractive as a location for the food sector. An global study by KPMG earlier this year ranked Potiers in France as the cheapest place in Europe from which to process food, followed by Mulhouse. Potiers ranked as the third cheapest location worldwide, while Mulhouse ranked fourth. Montpellier, France was ranked as the fifth cheapest place in Europe for setting up a food or beverage plant.

The Ernst & Young study, released last week, showed that France attracted foreign direct investment for 26 food-related projects, followed by the UK with 18 projects, Poland with 11, Russia with 10 and Belgium with eight. A total of 133 food projects received foreign direct investment in the top ten destinations for such funding in Europe, according to the Ernst & Young report.

The food sector ranked eight among the top ten destinations as a recipient of such funding in 2005, behind such sectors as software, which held the top spot with 363 projects, business services and electronics.

"What is apparent throughout is the continued importance of Western Europe as a location for investment,"​ Ernst & Young stated.

Despite the continued increase in the performance of lower cost European locations, France and the UK lead in each sector and it is only within the automotive sector that Eastern and Central European locations threaten to become the most important location."

One country does not fit all for foreign direct investment, the firm noted in its analysis. To undertake a successful investment a company will also require a number of services and conditions, including a ready supply of appropriated skilled workers, business infrastructure and an effective supply chain. As a result, certain sectors tend to favour certain locations, the firm noted.

Overall Europe experienced a record year for inward investment in 2005, with the UK cling on to first place as the most favoured destination for all industry sectors, according to the report. Such funding was directed at a total of 3,066 projects - a five per cent increase over 2004.

The UK received 18.2 per cent, representing 559 projects, of foreign direct investment in Europe in 2005, only marginally ahead of France, its main rival. France received 17.5 per cent of the funding, with Germany a distant third at six per cent.

The Netherlands is the best place in Europe for food and drink processors to locate manufacturing plants, according to a cost comparison study by KPMG.

The firm's "Competitive Alternatives" study is a guide for comparing business costs in North America, Europe and Asia Pacific. When comparing costs worldwide, Singapore comes out on top among industralised countries as the cheapest business location for food processors, followed by the Netherlands, France, the UK, Canada, Italy, the US, Germany and Japan.

The study measures the combined impact of 27 significant business cost components that are most likely to vary by location. The study covers 17 industry operations in the nine industrialized countries. The basis for comparison is the after-tax cost of startup and operations, over 10 years.

In the ranking among European cities, Potiers in France comes out on top as the cheapest place from which to process food, followed by Mulhouse. Potiers ranked as the third cheapest location worldwide, while Mulhouse ranked fourth.

In Europe, Mulhouse is followed by Brabant Stad, the Netherlands, Montpellier in France, Amsterdam, Lincoln the UK, East Netherlands, Barnsley (UK), Naples (Italy), Leicester (UK), Derby (UK), Livorno (Italy), Florence (Italy), Chernnitz (Germany), and Darmstadt (Germany).

The most expensive place worldwide is in Hamamatsu, Japan.

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