The research indicates the western and southern European markets are becoming increasingly saturated, while central and eastern Europe are emerging as new growth opportunities.
Price pressure, theincreasing demand for convenience foods and consolidation of the market are the hottest trends in European retailing, IGD stated.
As economic stagnation and low price inflation sets in, western Europe's share of the total grocery market will fall to 45 per cent from the current 53 per cent whilst eastern Europe and theBalkans will increase from to 23 per cent from 14 per cent, IGD stated.
Germany currently has the largest food and grocery market, worth €202bn in 2004 but by the end of the decade France will claim the crown in Europe.
France has the greatest concentration of hypermarkets.
Growth in the non-food market will drive France's grocery market to become the largest in Europe.
The growth will occur even though thecountry is also experiencing low price inflation in the non-food sector.
The grocery category includes alcohol, medicine, clothes and other household products.
Meanwhile year-on-year market growth in Germany is limited, primarily due to economic stagnation and the increasing focus on price, which has been driven by discount retailers.
IGD predicts that asGermany's tough economic climate bites, the country will fall from the first to the fourth place by 2020, with a market worth €245bn.
By 2020, Russia will take over from France by becoming the largest food and grocery market in Europe.
The Russia market will be worth €375bn by that time, rising from the current €134bn (see theseparate story on the Russian market in today's edition of FoodProductionDaily.com).
France's market will rise to €278bn by 2020 from the current €196bn.
The UK will hold firm in third place with a market worth €264bn, rising from €176bn.
On average, food and groceries accounted for 59 cents of every euro spent in retail shops across Europe.
The French spend the most on food and groceries, with the average person spending €3,272 per year, or 67 cent in every euro spent in the shops.
The British are the next highest spenders, shellingout €2,972 a year each or 49 cents per euro, followed by the Italians with €2,810 or 50 cent per euro.
Germans are the fourth largest spenders on food and groceries when calculated by person.
The details are contained in IGD's new report, European Grocery Retailing 2005.
European Grocery Market Sizes 2004 and 2020 (€bn) Rank Market 2004 2020 1 Russia 132.84 374.95 2 France 196.33 277.61 3 United Kingdom 176.67 263.81 4 Germany 201.88 244.62 5 Italy 161.43 202.37 Source: IGD Research and estimates