CBI Product Factsheet:

Chillies in the EU
‘Practical market insights into your product’

This CBI Product Factsheet provides you with patterns and

trends in the EU market for chillies, offering concrete
suggestions to exporters in developing countries (DCs) on how
to respond to and benefit from these developments.

Product definition

Chillies refer to the chilli pepper (also chile or chili

pepper), which is the fruit of plants from the genus
Capsicum, members of the nightshade family,
Solanaceae. The chilli pepper originated in the
Americas. Chillies are available whole, as flakes, as
ground powder, preserved in oil, or made into hot
sauces.

The statistical data in this document is based on

Combined Nomenclature (CN) codes. The CN uses Harmonised System (HS)
codes to classify products. The HS codes included in this study concern only
chillies and allspice that are neither crushed nor ground (i.e. whole). Crushed
and ground chillies are excluded, as they are included in a HS code for all other
capsicums, including sweet pepper. An analysis including this code would
therefore not provide a clear insight into the development of the market for
chillies. Allspice represents only a small part of imported volumes.

HS Code
09042030 - code used
until 2012
09042190 – codes used
from 2012 onwards
Description
Dried fruits of Genus capsicum or pimenta, neither
crushed nor ground (excl. sweet peppers)
Dried fruits of Genus capsicum or pimenta, neither
crushed nor ground (excl. sweet peppers)

Production specification

Product quality
Product quality is a key issue for buyers in the EU and includes food safety as
well as product quality. The European Spice Association (ESA) has published the
Quality Minima Document, which is leading for the national spice associations
affiliated with the ESA and therefore for most key players in the EU. It specifies
the legal EU requirements as well as the terms of delivery between buyer and
seller that are not laid down in legislation. It contains the chemical and physical
parameters that determine the minimum quality requirements for chillies:
 Ash: maximum 10%
 Acid Insoluble Ash: maximum 1.6%
 Moisture: maximum 11%

Chillies are graded in accordance with the relevant national standard of the
country of production. In addition, ISO standard 972-1997 provides some
general guidelines on the grading, handling and packing of chillies. Moisture

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CBI Product Factsheet: Chillies in the EU

content and colour greatly affect price. To gain a premium for high quality
products, dried chillies need to be graded. Chillies are mainly graded by colour
and size – the brighter the red colour the better.

Please be aware that buyers, especially those in Northwest Europe (particularly

the UK, Netherlands, Germany and Denmark) that supply large retailers and/or
processors may have higher quality standards (see under section ‘Non-
legislative requirements’). Addressing quality issues is a great way to add value
and open up markets and should be explored before other methods of adding
value. It is also important to realise that requirements can differ per country,
per segment and even per buyer. Therefore, ask your buyer about their specific
quality requirements.

Product labelling
Legal requirements for consumer labelling are laid down in EU Regulations (see
under section ‘Legal requirements’). Incorrect labelling is a major source of
frustration for European buyers. Therefore, pay extra attention to labelling your
product. For bulk products, the
following items are common:
 the name of the product
 details of the manufacturer
(name and address)
 batch number
 date of manufacture
 grade of the product
 producing country
 harvest date (month-year)
 net weight
 any information that exporting and importing country might ask: bar,
producer and/or packer code, any extra information that can be used to
trace the product back to its origin.

Packaging
Chillies are packed in jute or polypropylene bags (ground
chillies in particular). Polythene cannot be used, as the
flavour components diffuse through it. The packaging
must not be a source of contamination, should be food
grade and must protect the product quality during
transportation and storage.

Legislative requirements

Please be aware that your product will have to comply with EU legislation the
moment it enters the EU. Compliance is therefore a must. Consequently, only
consider exporting to the EU when you are able to comply.

Considerations for action

Non-product-specific legislation: there is a
large amount of legislation that applies to all
(food) products that are imported into the EU.
These general requirements include various food
and packaging laws.
Food safety and hygiene is a particularly
important issue in the EU. Buyers will want you
to comply with the increasingly stringent food
safety requirements. Food safety issues include
microbiological (bacteria, moulds), physical
 See the following documentation:
o General: Liability for defective products
o Food: General food law, Food control and
Food contact materials
o Packaging: Packaging and packaging
waste and Wood packaging materials for
transport
 Refer to the Quality Minima Document for
legal requirements and non-legal
requirements. To find out about the
requirement, please consult the following CBI
documentation: Contaminants in food,
Maximum Residue Levels (MRLs) of pesticides

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CBI Product Factsheet: Chillies in the EU
(plastic residues, metal, dirt), and chemical
contaminations. Levels of toxic (chemical)
substances are controlled with maximum residue
levels. Chillies can be contaminated with
mycotoxins (aflatoxin, ochratoxin and others).
Specific requirements for chillies regarding the
maximum level of aflatoxins are laid down in
Regulation (EC) No. 1881/2006 (see Annex
2.1.9.). In 2007, the EU temporarily banned the
import of chillies from Pakistan due to high
aflatoxin levels. From 1 January 2015,
Regulation (EU) No 594/2012 is scheduled to
further reduce the maximum allowed level of
ochratoxin A. Complying with this new legislation
will be hard for suppliers and is therefore
expected to have a significant impact on the
trade in chillies. In addition, adhering to the
requirements of HACCP (Hazard Analysis and
Critical Control Points) is a crucial market access
requirement for many buyers of spices and
herbs.
Food additives: spices and herbs, especially  It is important to know what additives are
those that are ground, can contain substances to
enhance flavour or colour. Although these may
be approved by the food authority in the country
of origin, some of them may not be approved in
the EU. This is a serious problem, as most spices
and herbs rejected by customs authorities or  Do not add any substances that you have not
buyers have undeclared, unauthorised or too
high levels of extraneous materials.
Irradiation of food: irradiation of spices &
aromatic herbs is allowed. It is a safe way to kill
organisms and affects the taste of spices and
herbs less than steam sterilisation. However,
consumers generally prefer non-irradiated
products. Therefore, this method is not widely
used.
Consumer labelling: pre-packed spices & herbs 
must adhere to strict EU labelling requirements.
In addition to the general requirements, this also
concerns nutrition and allergens. If nutrition or 
health claims are made these have to be
approved in advance by the European Food
Safety Agency (EFSA).
Food supplements: chillies are sometimes used 
as dietary supplement as it suppresses appetite
and helps to burn calories. It is also used for the
production of oil resin for food and
pharmaceutical products. These constitute
interesting markets, but specific requirements
apply which are not fully harmonised within the
European Union.
Feed: chillies are increasingly used in animal  Refer to the section on animal nutrition on
feed to improve health and digestion. As this is
still a relatively new market, it can provide
interesting opportunities. Be aware that the legal
requirements in this market differ from those of
the food industry.
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in food and the Microbiological contamination
of food.
 Aflatoxins in chillies are often the result of
sun drying in open fields and poor storage
conditions. Discuss better drying and storage
practices with your suppliers. Refer to the
guidelines on Good Agricultural Practices for
spices (IOSTA) and Good Manufacturing
Practices for spices (IPC) for more
information.
 Many buyers in the EU will expect a test
report on microbiological contamination.
Providing this service will make it easier to
find buyers in the EU.
 See the CBI document Hygiene of food
(HACCP)
 Exporters should take into consideration that
border control in the EU is strict and has
gotten stricter with the implementation of
Regulation (EC) No. 669/2009. It specifies
chillies as a high-risk product and food safety
controls have increased.
allowed in the EU. See the CBI document
European buyer requirements: natural
colours, flavours and thickeners and EU
legislation: Additives, enzymes and
flavourings in food.
agreed upon with your buyer.
 See the CBI document Irradiation of food.
 The Pakistan Journal of Nutrition has
published a study on effects of irradiation on
dried chillies.
 If you irradiate your chillies, you must inform
your buyers. Irradiated products will have to
be labelled as such.
For more information, refer to the CBI
document on Food labelling and Nutrition and
health claims on food.
When providing high quality chillies, good
professional packaging is a must.
Refer to the CBI’s document on Food
supplements or Vegetable oils and fats for
more information on the specific
requirements in this market.
the EU website for more information about
the legal requirements.
 CBI Product Factsheet: Chillies in the EU

Non-legislative requirements

Sustainability Considerations for action

Sustainable business requires the conciliation of  See the CBI’s documentation Sustainability
the ‘three pillars’: environmental, social equity in Spices and Herbs, Organic production and
and economic demands. labelling and
Occupational health and safety in the spices
Certification The practical elaboration of sustainability in the and herbs sector.
chillies chain is also becoming increasingly  See the CBI policy on International
important. A few years ago, organic certified Corporate Social Responsibility to get an
chillies were introduced to the EU market. At the overview of CBI’s interpretation of CSR.
moment, organic, Fair Trade and Rainforest  Sustainability-related product certification
Alliance (RA) certified chillies are available on should only be considered in relation to the
the EU market. Organic products focus on land final consumer and throughout the entire
use and inputs. Fair Trade focuses specifically on supply chain e.g. in contact with the
improving the living conditions of farmers in relevant trader/ producer or retailer.
DCs, and RA is a mainstream sustainability  Sustainability-related certification is an
scheme with a specific focus on the important tool to show your approach
environment. towards sustainability. Depending on your
Sustainable certified chillies are sold in retail buyers (CSR strategy) and your own focus
shops. Sustainable chillies will only be used in (e.g. social and/or environmental issues);
the food processing industry if the end product there are different standards and labels
being manufactured has a similar certification. available. Also consider double or triple
The potential benefits of operating sustainably certification to become even more flexible
include increased yields, improved quality, on a market that is expected to grow. Find
higher prices and better relations with buyer and out what targets have been communicated
Industry codes suppliers. in relation to sustainable certified spices:
see SSI and individual company websites.
In business organisations, sustainability is
generally translated into a Corporate Social
Responsibility (CSR) policy. Companies often
have their own CSR policies, codes of conduct,
or projects that deal with social and
environmental issues. Besides the individual
company, codes there are overall company
codes that the industry uses to guarantee and
communicate their social compliance. BSCI and
Sector
SA 8000 are the most common.
initiatives
In 2010, the Sustainable Spice Initiative (SSI)
was founded backed by a consortium of leading
players in the EU spices market – Nedspice,
Euroma, Intertaste, Verstegen, Unispices, Cassia
Co-op, and McCormick, together with a number
of civil society organisations. SSI is also a major
driver behind RA certification projects in several
producing countries (e.g. Indonesia, Vietnam).
Food management and traceability: due the  Go to the CBI document on Food Safety
growing attention for food safety, food Management Systems or Traceability of food
management systems play a crucial role. There to find out more about the different
is a large number of different systems, each with systems.
their own scope and relevancy. IFC, BRC and
ISO 22000 are the most widely used food
management systems in the EU and are based
on HACCP-principles.

Quality: having your organisation ISO 9001-
certified can be a good way to convince your
buyers you are taking quality seriously. Not all
buyers will care about you being ISO 9001-
certified as long as you adhere to the minimum
quality requirements of the ESA.
 Check with your buyers to see whether they
attach value to ISO 9001.
 To learn more about this topic, refer to the
CBI’s document on ISO 9001.

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CBI Product Factsheet: Chillies in the EU

Trade and Macro-Economic Statistics

Please note that the statistics refer to the volume unless stated otherwise.

Imports
This section uses various definitions for imports. The term total imports includes all imports
including intra-EU trade (trade within the EU). As intra-EU trade is common in the EU, there
is a significant difference between total imports and other definitions of imports. Extra-EU
imports concerns only the imports from outside the EU, divided into (1)’imports from
developing countries’ and (2) ‘imports from the rest of the world’. Imports from DCs are
called ‘direct imports’.

Figure 1: EU27 imports of chillies , 2008-2012, in 1,000 Figure 2: EU27 imports of chillies by country,
tonnes 2012,% of volume

45 1%
40 1% Spain
5%
35 2% 1% Germany
In 1,000 tonnes

30 3%
UK
25 4%
20 Netherlands
4%
15 Poland
10
Hungary
5
0 79% Belgium
2008 2009 2010 2011 2012
France
Year Other
EU27 Rest of the world Developing countries

Source: Eurostat, 2013 Source: Eurostat, 2013

Most important developments Considerations for action

 Chillies are mainly produced in DCs. They
find their way to the EU market, where they
are re-exported to other EU countries. This
shows up in the statistics as EU27 imports.
Direct imports are those imports that come
directly from DCs.
 In 2012, total imports of chillies amounted  Although tempting, price speculation is
to 39 thousand tonnes worth € 78 million. generally a short-term strategy. As a
The volume of imports grew by an average producer of chillies, it is better to invest in
of 3.6% per year between 2008 and 2012. your product and long-term business
The value of imports however increased by relationships.
8.2%.
 Figure 1 shows imports of chillies have
fluctuated strongly throughout the years.
Significant fluctuations can be noticed in
most key importing countries (e.g. Spain,
Germany, and Netherlands). At the height of
the economic crisis, the imports of chillies
also reached their peak. The economic crisis
and economic developments in general do
not seem to have a significant impact on
total imports.
 The above development shows two things:  Be aware of the changing market
(1) the demand and imports have an environment. Price is leading and taste is
inelastic demand (demand does not drop interchangeable for a large part of the
when prices rise) (2) the demand and market, especially in the segments for
therefore imports are relatively recession processed products.

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CBI Product Factsheet: Chillies in the EU

resistant. This is true for many spices as

they are usually only a minor ingredient in a
final food product and they contribute little
to the total cost.
 EU imports are mainly driven by Spain. It
has a large domestic market for chillies but
is also a large processor and trader of
chillies within the EU.
 According to an article in the Daily Mail, UK
consumers nowadays eat dishes that are
400 times spicier (i.e. hotter) than those
they ate in the 60s (Daily Mail, 2010). This
is also true for other parts of the EU.
Reasons include: the promotion of the use of
chillies in general and the growing popularity
of exotic food and specific sauces with
chillies as a major ingredient. It is possible
that this will continue to drive European
consumption, especially in Eastern Europe
where spicy food is gaining popularity.

Imports from developing countries

Figure 3: Main suppliers of chillies 2008-2012, in 1,000 tonnes

20

18

16
Asia
14
Africa
In 1,000 tonnes

12
Latin America
10
Other
8

0
2008 2009 2010 2011 2012
Year

Source: Eurostat, 2013

Most important developments Considerations for action

1
 In 2012, direct imports from DCs amounted 
to 35 thousand tonnes (90% of total EU
imports) worth € 64 million (83%). Other
extra-EU countries account for less than
0.5% of imports.
 Between 2008 and 2012 the volume (+2.8%
per year) and value (+7.4% per year) of
direct imports from DCs developed in a
 It is best to focus on countries where the
similar manner to total imports. The market
share of DCs has therefore not increased in
Every country offers different opportunities.
Therefore, be aware of the trade relations
between your country and your target
market. Create an account for databases
such as Eurostat and ITC to find out what is
happening in the EU market. Eurostat
provides data on a monthly basis with a
delay of only 3 months.
share of DCs is large or growing. Other
countries will likely keep buying through

1
For a list of the developing countries, see the DAC list of the OECD

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CBI Product Factsheet: Chillies in the EU

recent years. other EU countries.

 Basic processing (e.g. grinding and
crushing) is increasingly done at source. An
important issue with regard to processing is
controlling the hotness of the spice. In order
to do this, processors need a varied and
large supply from several sources.
 The main suppliers are listed in Figure 3. It
is clear that there have been significant
fluctuations over the years. The two main
regions, Asia (mainly China) and Latin
America (mainly Peru), are in heavy
competition. The market share of Latin
America has dropped from 53% in 2008 to
44% in 2012. Asian countries increased their
market from 36% to 42%.
 African countries are major suppliers of
African bird eye chillies (ABE) in particular.
The exports from Africa have been
consistently low (around 3% market share).
The reason for this is the fact that European
importers experienced supply problems with
ABE and therefore switched to other
varieties. There is some reluctance to move
back to the ABE variant unless they are
specifically requested to do so by buyers
(Source: Fintrac, 2011). However, the
significant increase in Uganda’s exports
(+84% growth per year in volume) shows
that there is hope for African countries to
(re-)gain a market share.
 Within the EU, there is a major difference
between what countries are being sourced
from. For example, Spain sources 49% of its
imports from Asia while the Netherlands
source almost 80% from Latin America. In
addition, the UK sources 13% from African
countries and Poland 0%.
 Take into consideration the limitations
regarding value addition through further
processing. If you want to explore this
market, look to increase your economy of
scale by working together with other
suppliers and/or processing other spices.
You could also work together with a
company that offers crushing and grinding
services.
 Refer to the publication Drying Chillies to
find suppliers of processing equipment.
 Adulteration (i.e. mixing with extraneous
material) and using lower quality product
when not agreed upon are two practices that
EU suppliers often fear when dealing with
suppliers of ground product from DCs. Make
sure that you only use these practices when
specifically agreed upon and that it is in
accordance with EU law.
 It is more costly to clean contaminated
crushed and ground chillies than whole
chillies. Your buyer will charge you if your
product does not comply with the
requirements.
 African suppliers will have to reassure
European buyers that supply problems will
not be an issue. This includes having a
logistical service and controlling your supply
chain.

Exports
Figure 4: EU27 exports of chillies, 2008-2012, in 1,000 tonnes
5,0
4,5
4,0
In 1,000 tonnes

3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0
2008 2009 2010 2011 2012

Year

Developing countries Rest of the world EU27

Source: Eurostat, 2013

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CBI Product Factsheet: Chillies in the EU

Most important developments Considerations for action

 In 2012, total exports of chillies amounted
to 4.5 thousand tonnes worth € 17 million.
The volume of exports grew annually by an
average of 13% between 2008 and 2012.
The value of exports, however, increased by
16%. In 2012, exports increased by more
than 300%. This is mainly due to the
increase of exports outside the EU. The
reason behind this development is not
known2.
 Most of the exported chillies are (re-
)exported to other EU countries (63% of the
exported volume). Spain (34% of total
exported volume) and the Netherlands
(24%) are responsible for the main part of
exports.
 Compared to imports (34 thousand tonnes)
only a small part is (re-)exported (4.5
thousand tonnes). This is because chillies
are used in a wide variety of products (e.g.
condiments, mixes, processed meats,
snacks) and do not show up in export
statistics.
 Get a good picture of the trade flows for
chillies. It can be crucial for your country
strategy. It may be more effective to focus
on a region than a specific country. Refer to
CBI’s Product Factsheets for more
information.
 Although difficult, try exploring opportunities
to supply the countries that are directly
supplied by other EU countries.
 Chillies can be used for a large number of
products and different types of chillies are
interchangeable. Therefore, have a good
idea of what your products can be used for.
This will help you target buyers.

Production

Most important developments Considerations for action

 The production of chillies also takes places in  Explore opportunities to work together with
the EU, mainly in Spain. There is no data on EU processors. This could be a good way to
how large Spanish production is. Spain does attract capital destined for investments in
not have a habit of eating very hot food. It processing facilities. Find Spanish processors
therefore produces mainly for export on the website of the Spanish Association of
markets. Processors and Packers of Spices and
 Spain is a major processor of both local and Seasonings (AEC).
imported chillies. Processors are major  Attain more qualitative information besides
buyers of unprocessed chillies and are the statistics to fine-tune your export
therefore interesting to target. They process strategy to the EU.
mainly for the domestic and other EU
markets. For suppliers of processed chillies
EU processors can also be a source of
competition as they are active in the same
market. Spain therefore seems to be the
most important market for processed
chillies.
 There is a trend towards more vertical
cooperation, as processing and heat
treatment is increasingly done at source. EU
processors are further specialising in
blending and the development of new
tastes, or going up the supply chain to
cooperate with their suppliers. In both
scenarios, cooperation between EU
processors and their suppliers is increasing.

2
Please note that the product code used for the statistical analysis is an aggregated
product code. Changes in trade figures can also be (partially) caused by changes within the
aggregated product group instead of by the market.

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CBI Product Factsheet: Chillies in the EU

Apparent consumption3
It is important to note that the apparent consumption figure below only considers whole
chillies. Because the majority of dried chillies are further processed into powder and other
processed products such as sauces, apparent consumption mainly indicates industrial
demand. It does not mean that consumers in these regions actually consume whole chillies.

Figure 5: Apparent consumption of chillies of EU27 countries 4, 2008-2012, in

1,000 tonnes
40

35

30
Northern EU
In 1,000 tonnes

25
Eastern EU
20
Western EU
15

10 Southern EU

0
2008 2009 2010 2011 2012
Year

Source: Eurostat, 2012

Most important developments Considerations for action

 In 2012, apparent consumption (from here
on referred to as ‘consumption’) of chillies in
the EU countries accounted for 35 thousand
tonnes, worth € 61 million.
 As was the case for imports, the level of  Although attractive, price speculation is
consumption has fluctuated strongly generally a short-term strategy. As a
throughout the years. However, despite the producer of chillies, it is better to invest in
economic crisis, the level of imports has your product and in long-term business
generally gone up: the volume of relationships.
consumption increased by 2.7% per year
between 2008 and 2012. The value of
consumption increased by 6.5%.
 A direct result of the economic crisis is the
fact that demand is shifting to home cooking
(sold through retail channels) at the
expense of restaurant visits.
 Spain is by far the largest consumer of  For chillies that have been processed
whole chillies and accounts for 84% of EU further, it is an idea to consider exporting to
consumption. Spain does not have a habit of other countries (e.g. Western European
eating very hot food. It does have a countries).
tradition of using paprika and, to a certain
extent, ground chillies in sausages. A large
part of the consumption is industrial demand
for the processing industry. Spain therefore
seems to be the most important market for
processed chillies.
 In 2013, the combined GDP of all countries  Check the economic member state forecast

3
Apparent consumption is calculated as follows: EU production plus imports minus exports.
The EU does not produce chillies on a large scale, and because production figures are
missing, they were not used in the calculation. The EU does add value through the
processing of chillies (e.g. sterilising, grinding) however figures are also missing. The value
of consumption is therefore higher than indicated.
4
The following division has been used: Western Europe (Austria, Belgium, France,
Germany, Ireland, Luxembourg, the Netherlands, the United Kingdom), Northern Europe
(Denmark, Finland, Sweden), Southern Europe (Cyprus, Greece, Italy, Malta, Portugal,
Spain), Eastern Europe (Bulgaria, Estonia, the Czech Republic, Hungary, Latvia, Lithuania,
Poland, Romania, Slovakia, Slovenia).

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CBI Product Factsheet: Chillies in the EU

in the EU is expected to drop by 0.1%. In by the European Commission to see which

2014, it is expected to start growing again, countries provide an attractive economic
initially by 1.4% (Source: European climate over the coming years.
Commission, spring 2013). Despite the fact
economic developments do not seem to
have a significant direct effect on the chilli
market, it is encouraging to note that
market conditions are not expected to
deteriorate further.
 By 2020, the demand in the EU for food and
drink products is expected to stabilise in the
Western EU countries. Growth is expected in
the Eastern EU countries (Source: Deloitte,
2012). Based on this prediction and the
assumption that EU consumers in large
consuming countries are eating spicier
dishes, the demand for chillies is expected
to grow faster than the overall food and
drink industry. Growth is principally
expected in regions where eating spicy food
is starting to become more popular (e.g.
Eastern Europe).

Market Trends
Considerations for action
Social market drivers
 Home cooking trend: Due to the  Refer to the CBI’s document Trendmapping
economical crisis, a large group of for more information on trends in the
households are focusing on price and spices & herbs market.
cooking at home. Home-cooking
consumers are increasingly focusing on
fresh products, at the same time wanting
to spend less time on preparing food and
thus increasing the demand for ready
prepared mixes and pastes that will reduce
the preparation time. Both dried and fresh
chillies are used to prepare sauces and
pastes.
 Healthy lifestyles: an important segment  Find out more about the health benefits of
of the EU market is turning towards chillies.
healthier food. Chillies are considered to be
a spice with health benefits.
 Seasonal influence: the use of chillies
can be strongly influenced by weather
conditions. For example, chillies are often
used as a spice for barbeque meat.
 Internationalisation: chillies are used a
lot in Asian and Mexican cuisine. In the EU
is a large South Asian community that uses
chillies in its cuisine. This community (most
notably in Western EU) is still growing
steadily, also in other regions. Therefore,
demand in these segments is likely to
increase in the long run.

Technological market drivers

 Steam sterilisation is the most effective
way to combat microbiological
contamination and is increasingly required
by EU buyers, even though it does affect
the organoleptic qualities of the spice.
Investment in sterilisation equipment can
 Investment in new technology is not
always necessary. Small improvements in
processing (e.g. drying) can already lead to
a significant increase in quality. Valuable
sources are the guidelines on Good
Agricultural Practices for spices (IOSTA)

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CBI Product Factsheet: Chillies in the EU
be very costly (up to€ 1 million). Small
operators with limited access to capital will
likely have to find an alternative solution.
Economic market drivers
 Price levels up: according to Eurostat,
prices have risen annually by 4.5% over
the past few years. The main reasons for
this are the increased demand from
emerging nations (e.g. China, India), a
decrease in arable land and rising wages in
source countries. Price increases do not
have a significant effect on demand,
however.
Environmental market drivers
 Sustainability on the rise: besides
quality and price, there is a growing
interest for organic chillies and condiments,
especially in the UK, Netherlands, Germany
and France. EU buyers expect sustainable
products to be of high quality. India
produces large volumes of organic chillies
for the EU market. The use of pesticides is
an important issue in the chilli market
(especially in India), as chillies are affected
by several pest virus diseases. In addition,
the fair treatment of smallholders is an
important issue in the supply chain. The
Dutch Sustainable Spice Initiative (SSI),
together with the Rainforest Alliance, is
currently developing a standard for chillies
and will set up projects in India, Indonesia,
Vietnam, India and Madagascar.
Political market drivers
 Stricter ochratoxin A legislation: From
1 January 2015, Regulation (EU) No
594/2012 will be in place, allowing only
chillies with ochratoxin A (OTA) limits of 15
µg/kg instead of the current 30 µg/kg limit.
OTA is a group of mycotoxins that is found
in fungus. The expectation is that after the
implementation date many suppliers (e.g.
China, Peru) will not be able to comply. It
is therefore a major issue. The problem is
that the development of OTA is hard to
prevent as it is mainly related to climate
conditions. The EU is the only market that
has this strict legislation. This means that
many suppliers will be forced to find other
markets if it is implemented. This may
create a price difference between chillies
that contain 15 µg/kg or less and those
with higher levels. The presence of OTA
depends partly on the cultivation area and
also on the time of harvest. The EU
industry is still lobbying to keep levels at
30 µg/kg. Therefore, there is a chance the
legislation will not be implemented,
although this is not guaranteed.
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and Good Manufacturing Practices for
spices (IPC).
 If investing in steam sterilisation is not
possible, look for local sterilisation
companies that are able to provide this
service for you.
 Price developments and your competitive
position can be anticipated to a certain
extent. Look for crop reports online or visit
events where these will be shared by
sector exports. The monthly crop report
published by McCormick can be valuable.
 Only consider entering the sustainable
market when you are able to provide a
high quality product.
 Help smallholders help you by training
them in Good Agricultural Practices (GAP)
and Good Manufacturing Practices (GMP) in
chilli cultivation and also providing training
in contract farming. Refer to the website
GAP Spices (IOSTA) and GMP spices (IPC)
for more information. Fostering a healthy
ecological system (agro-ecosystem) is an
effective way to prevent pests and diseases
in chillies.
 Contact the SSI for more information. They
may also be able to help finance
sustainable projects.
 Determine whether you can supply chillies
that will comply with future OTA limits. If
this is not possible, consider focusing on
other markets.
 Good drying is especially important to
reduce of the risk of the development of
OTA.
 Make sure your storage site is in good
condition. Also make sure that during
transport, chillies are either dried or there
is sufficient ventilation in place. For
information on the safe storage and
transport of chillies, refer to the website of
the Transport Information Service.
 Keep a close eye on the OTA legislation.
For more information, visit the EU website
on food contaminants/OTA.
CBI Product Factsheet: Chillies in the EU
Market channels and segments
Figure 6: visual representation of the market channels for chillies
Developing countries
Trader /
Importer
Producers/
farmers
Agent/
Broker
Exporters
Analysis and interpretation
 The market channels are similar to the
general spice & herb market channels. The
key difference, however, is that the
importer needs to be able to select and
process the spice in order to realise an
ingredient with a controlled hotness. Most
of the chillies in the EU go to the
processing industry (mainly the meat
industry, snacks producers, and spice
blenders). About 20% goes directly to the
retail sector. A small amount goes directly
to the restaurants.
 Ethnic stores form a separate retail
channel, offering a wide variety of typical
products from foreign nationalities and
ethnic groups. Buyers in these trade
channels also import large retail packs of
chillies, and often food safety and quality
requirements do not go further than legal
requirements.
 More mainstream European supermarkets
now carry many varieties and a choice of
peppers from around the world as
consumer preferences are expanding.
 The supply chain is becoming increasingly
transparent because of stricter food safety
requirements, increased demand for
sustainable sourcing and availability of
online information. Suppliers in countries of
origin nowadays have a better insight into
their target markets and can find out real-
time prices that are published online. This
has led to increased speculation in recent
years. In addition, speculators are also
increasingly active in the spice and herb
market encouraged by high prices and poor
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European market Industries
Industrial
sector
Food
service
Grinder / sector
Processor / Packer
Retail
sector
Considerations for action
 Refer to the CBI’s document Market
Channels and Segments for more
information.
 These trade channels can be an interesting
alternative for the large retail chains. There
are often close links between the ethnic
communities in the EU and those in the
source countries. In addition, for suppliers
that already sell retail packed goods on
their domestic market it might be possible
to supply the retail market in the EU as
well. In other EU trade channels, this is
significantly harder. Databases such as
Asian (Netherlands and Belgium) or African
retailers and wholesalers (World) are
available. Also search the Internet for other
databases or individual companies.
 Contact your European buyer to find out
whether it prefers a specific type of chillies.
 Keep up to date on prices. Spices Board
India publishes weekly and monthly prices
for chillies (Indian as well as international
prices) for free. Public Ledger publishes
monthly price analyses but this is a paid
service.
CBI Product Factsheet: Chillies in the EU

returns on the financial markets, leading to

the purchase of large quantities with the
intent of pushing up the price.
 Another important development is the fact  If you are not able to supply at least one
that EU buyers are moving closer to the full container, then supplying the EU
source to secure and control supply. This market is not advised. Some buyers may
can be an opportunity as well as a risk for consider the possibility of buying a
suppliers in source countries. container with a variety of spices or herbs,
 An important current trend is the fact that however.
European buyers are reducing stock levels
and are starting to work on a just-in-time
basis (i.e. smaller orders). This is an extra
service that can be a particular challenge
to exporters in DCs. For example, it will be
harder to fill a container when considering
the minimum order size for shipping to the
EU.

Market Competiveness

Figure 7: Competitive forces for the chillies sector (perspective of the exporters
from DCs

Buyer power
5

2
Supplier power Degree of rivalry
1

Substitutes New entrants

Source: based on Porter’s Five Forces model, own analysis

Analysis and interpretation Considerations for action

 Buyer power: chillies are bought by large
and smaller traders, processors and packers.
They often depend on large retail chains and
food processors that are highly organised
and consolidated, with the ability to dictate
prices and determine food safety and quality
requirements. On the other hand, demand
from other markets (especially Asian)
countries is picking up and buyer
requirements for chillies are expected to get
stricter. Other markets are therefore
becoming more attractive for suppliers.
Although this will decrease the EU’s buyer
power, it is expected remain a powerful
force in the chilli trade.
 Degree of rivalry: the degree of rivalry is
high due to the large number of suppliers
and product varieties that are able to
replace each other. As there are different
preferences for chilli varieties in each EU
 Refer to the CBI’s document Market
Competitiveness for more information.
 The European market remains interesting
due to the demand for high-end products.
However, explore your opportunities in other
markets as well.
 Instead of competing on price try to
differentiate in product characteristics:
colour, varieties, level of hotness.
 Gain an insight into the long-term
developments in your country compared to
countries you are competing against. Use
Prodstat to get production data for chillies.
Use other sources such as Eurostat and ITC

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CBI Product Factsheet: Chillies in the EU

country, your competitors and the degree of to track the development of the trade
competition can vary per country. The between the EU and your own and other
market for ground and processed chillies is producing countries.
dominated by EU processors.
 New entrants: Due to its strict regulations,
the EU market can only be entered by
suppliers that are able to adhere to the
highest quality and food safety
requirements. In addition, there are some
large suppliers of chillies that provide fierce
competition. However, there are countries
that are currently increasing their market
share on the EU market, such as Tunisia and
Malaysia.
 Substitutes: there is no synthetic  Buyers seem willing to consider other chillies
substitute for chillies. Dried chillies can be if they can source a reliable supply of high-
substituted by fresh ones. Trends towards quality, safe chillies.
cooking with more fresh ingredients can
increase the threat of substitution. The
threat of substitution also depends on
whether the chillies you supply can be
substituted by other dried varieties. An
important reason for a buyer to switch
chillies is the price or the threat of problems
with the supply.
 Supplier power: supplier power is  To improve your relation with your suppliers,
generally low, as chillies are generally grown work with reliable collectors, preferably ones
by small farmers in many parts of the world. that integrate sustainable practices (e.g. fair
prices).
 Educate growers in terms of efficiency and
agronomics to improve your supply
continuity. This is also a hot sustainability
issue in the food sector and it is appreciated
by European buyers.

Useful sources

 European Spice Association - http://www.esa-spices.org – provides

information on its national spice association members.
 Practical Action - http://practicalaction.org/drying-chillies-2 - provides
information for processors in developing countries for a large number of
spices including chillies.
 Spices Board - http://www.indianspices.com/php/international_weekly.php
- publishes weekly and monthly prices for chillies (Indian as well as
international prices) for free.
 Transport Information Service - http://www.tis-
gdv.de/tis_e/ware/gewuerze/chillies/chillies.htm- lists guidelines for the
storage and transport of chillies.
 Food Ingredients Europe - http://www.foodingredientsglobal.com –
important trade fair for the food ingredient sector in Europe.
 Anuga - http://www.anuga.com/en/anuga/home/index.php - largest
German food trade fair.
 SIAL - http://www.sialparis.com – large French food fair.

This survey was compiled for CBI by CREM B.V.

in collaboration with CBI sector expert Freek Jan Koekoek

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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