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Italy Food and Drink Report Q1 2010
Business Monitor International, Jan 2010, Pages: 70
Italy Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Italy's food and drink industry.
The Italian food-processing industry remains highly fragmented and in the last few years the sector has been characterised by growing consolidation and an increasing number of joint ventures. Indeed, in September 2009, bakery company Bauli acquired two historic Italian brands, Motta and Alemagna, from Swiss giant Nestlé. The latter had owned the brands for more than a decade. With the acquisition, Bauli becomes the leading global manufacturer of the classic Italian cake panettone. At the end of the quarter, there were unconfirmed reports that Nestlé is looking to sell off its Italian frozen food business, Findus Italy, in a deal worth up to EUR800mn (US$1.2bn).
Also during the quarter, Spanish olive oil producer SOS Cuetara announced its intention not to list its Italian operations on the local share market. The decision was attributed to ongoing market volatility in the country, with the company stating that it will sell a minority stake only when its turnover reaches EUR1bn (US$1.45bn) and the market is stable. In terms of future opportunities for the sector, organic food could provide a stimulus. During H109, purchases of packaged organic foods for domestic consumption in Italy registered a 7.4% y-o-y growth despite the ongoing economic slowdown, according to a survey of Italian families by agricultural think tank Istituto de Servizi Per Il Mercato Agricolo Alimentare (ISMEA) and market research firm Nielsen. ISMEA said that the appetite for healthier but pricier products defied the adverse impact of the economic downturn. As higher profit margins can be charged on organic produce, organic farming could be an option for smaller Italian farms as competition in the market increases. This has created opportunities for the country’s food producers and retailers, with organic products often generating substantially higher margins than their non-organic equivalent.
Another major growth opportunity could lie in rice. Rice production in Italy, Europe’s largest producer, is set to surge over the coming years, boosted by higher-than-average prices and favourable growing conditions. The country produces over half of Europe’s entire rice harvest, with around one-quarter consumed domestically. The high availability of water in many of the growing regions underpins strong production and the authors expect forthcoming harvests to post robust year-on-year (y-o-y) growth as the European market begins to recover from recession. We predict reasonably modest 5.19% and 4% y-o-y growth in 2009 and 2010, respectively, before accelerating thereafter.
With the forecast volume of rice produced in Italy set to be over five times the level of domestic consumption by 2013, attention to trends on the export market will be key to the fortunes of the sector. With regards to this, the UK, France and Germany are high potential countries, where cosmopolitan populations are consuming more and more foreign foods. Italian consumers have traditionally preferred short-grained japonica rice varieties – the type used in risotto – and, consequently, the vast majority of the rice growing area in Italy has been devoted to this type. However, as exports have become more important to the industry, farmers are increasingly experimenting with long-grained varieties, which are more popular in Northern Europe.
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