The EU German Furniture Market

The Furniture and Engineered Wood Product markets in the European Union are large and growing

The European Union Furniture Market

In 2017, the GDP at market prices of the European Union (EU, 28 countries) was valued at CAD $23.9 trillion with an average of CAD $46.6 thousand per capita 1. At the end of 2017, the EU 28 furniture marketplace is estimated to have reached CAD $428 billion in turnover, making it the biggest furniture consumer region in the world.

The German Furniture & Wood Product Market

Estimated at about CAD $52 billion in turnover in 2017, Germany remains the largest single marketplace and distribution hub for furniture and wood products within the Eurozone. Usually seen as an export leader, no other country in the Eurozone imports more furniture and wood products than Germany. Furniture imports reached an all‐time high of CAD $19 billion in 2017, an increase of 43% compared to 2008. Also in 2017, wood product imports reached an all‐time high of CAD $4.2 billion, an increase of 38% compared to 2008. Today, about 2/3 of all furniture sold in Germany domestically come from foreign product manufacturers.

The domestic German furniture sector is divided into five (5) major product groups:

A) Living, Dining, Bedroom furniture (including seating and small furniture): CAD $ 7.3 billion
B) Office and Retail Furniture: CAD $ 4.6 billion
C) Kitchen Furniture: CAD $ 4.2 billion
D) Mattresses: CAD $ 1.1 billion
E) Upholstery: CAD $1.0 billion

The two (2) most desired product groups by turnover in the German domestic wood product sector were:

F) Prefabricated Components for Construction: CAD $7.7 billion
G) Veneer sheets, plywood, fibreboard, other boards, panels: CAD $4.8 billion

Calculated in Canadian Dollar and compared to 2010 price levels, import prices (CIF) of furniture increased by 25% and wood products by 23%. Wholesale prices in Germany for selected furniture and engineered wood products increased by up to 43%.

Activity in the German housing construction sector remained the main driver for demand development. In the me frame 2008 to 2017, the number of issued building permits for residential and non‐residential buildings per year (including construction work on existing buildings.) grew to 348,000, an increase of 99% compared to 2008. In the same period, average gross monthly earnings of German FTEs increased to CAD $6,000, an increase of 18% compared to 2008. Powered by low domestic interest rates, consumer spending of about 41 million German households resulted in CAD $65 billion in total household consumption expenditures for furniture, home furnishings, lights and carpets (UK: CAD $39 billion, Italy: CAD $34 billion, France: CAD $25 billion, Netherlands: CAD $10 billion).

Modern work‐life concepts continue to have an impact on the diverse furniture markets. For one, the growing share of home offices in European metropolises demands greater flexibility and functionality of furniture systems. Study rooms of learning‐oriented kids, teenagers and students are equipped with cutting‐edge, modular furnishings to generate a better learning atmosphere. More and more buyers seek quality designs at premium prices and to achieve greater individualism or simply distinction in lifestyle. On the other hand, an increasing number of single households are looking for basic kitchen, living and bedroom furniture configurations. Furniture from sustainable sources remain a major trend and sell at up to 40% price premiums, as consumers continue to shop for furniture free of pollutants, and made of natural or recycled materials.

Drivers for sustainable market growth

The coalition agreement of the newly formed German federal government (Chapter 9. ‘Initiative for the creation of housing, February 2018’) aims to create 1.5 million new apartments and homes in Germany within a 4 year window of this legislative period. Over CAD $6 billion in federal subsidies and investment incentives will be spent to support more family owner‐occupied housing and construction of new public housing. These federal subsidies and incentives are scheduled to be co‐financed by the thirteen provincial states and three city states of Germany. Families with one child and up to a total household income of CAD $141,000 per year (+ CAD $23,500 for each additional child) will be eligible.

New policy tools have been created, including the ‘construction‐related child allowance’ on top of an increased child allowance, ‘special depreciation for the private sector’ for people living in metropolises, or ‘simplified access to loan guarantees’ for home construction. More funding will also be available for the construction of energy efficient, internet connected all‐day schools, daycare centres, science buildings and universities. There will also be funding available for the creation or modernization of senior care facilities, including the preservation of existing pension payments and pension guarantees until 2025.

To further support the housing and construction sector, reductions and simplification of housing and construction regulations, tax codes, and updates on the German constitutional law are being considered.

Opportunities for Canadian Export‐Oriented Producers for Furniture and Wood Products

In the past decade, furniture and wood product imports have increased significantly, with the German marketplace holding the largest volume in turnover and extending its importance as being a hub for furniture and wood product import, processing and distribution within Europe. In addition to higher import and wholesale price levels and volumes, the Canadian European Free Trade Agreement (CETA, active as of September 2017) now offers preferential access to Canadian Manufacturers and Exporters. Therefore, there are great opportunities for Canadian export‐oriented companies to position Canadian furniture and wood products for sales and distribution in the Eurozone.

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Sources:
1) Eurostat: http://ec.europa.eu/eurostat/data/database, CAD/EUR: 0.641
2) The Eurostat regional yearbook 2017 edition: https://bookshop.europa.eu/en/home
3) The Federal Statiscal Office Germany
4) The Deutsche Bank
5) Greentech Avenue Analytics: analytics@greentechavenue.com

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