Stepping up on Italian food

CONSIDERATIONS 2011-2012: stagnant domestic market, exports + 10% per annum. What is required is an intelligent approach to tackling an evermore extensive market (covering China, India and Latin America) to support the competitiveness of the sector. Here is a summary of the topics discussed at the 8th Forum of Young Entrepreneurs under Federalimentare (16th and 17th September, Fasano, AB).

The forecasts drawn up by the Centro Studi Federalimentare on the food sector covering next year speak of a slight increase in food production (+0.8% per year), a stable domestic consumption (+0.1%) an upswing in exports (10% per annum in value). But, as Filippo Ferrua, president of Confindustria pointed out in her introduction to the works of the Forum, «exports may not be enough to compensate for the stagnation of domestic markets. And the increase in VAT will threaten the recovery of consumption in the short term».
Annalisa Sassi, president of Federalimentare’s Young Entrepreneurs, also notes that «to win the challenge of competitivity, we have to tackle evermore extensive new markets, primarily China, India and Latin America. The presence of more mature and aware consumers will also call for a reformulation of organizational structure and a rethink of the Italian food industry’s leading products».

Actual facts and reflections - Exports are up (+10% the annual rate expected between 2011 and 2012), but slightly down on the +11% registered in the first half of 2011, though countered by growth close to zero (+0.1%) in terms of domestic consumption. The outlook for next year for Italy’s food industry delineates a recovery too sluggish to meet the needs of an industry trying to reassert its classic role of controlling inflation.
This is the picture that emerges scrolling through the estimates for 2011-2012 drawn up by the Federalimentare Study Centre, where the new challenges for the competitiveness of the Italian food industry stand out, called as it is to face up to new emerging markets and models of consumption very different from the past.

«This year - according to President Ferrua - the Italian food industry will not be able to reinforce the modest recovery it experienced in 2010. Rather, it risks a further weakening. The increase of VAT to 21% on food will hit Italian families, forcing them to a further outlay of over 600 million, and threatens to undermine any prospect of recovery in consumption, with a strong impact on the activities of the agrifood chain, from agriculture to industry up to distribution. It is likely that the trend in food production for 2011 will not exceed the rate of +1% as a final balance. Exports, that put in a +11% in value in the first half of the year, will continue to flourish, but this will not suffice to compensate for the drop on the domestic market».

To avoid pessimism and victimizations - adds Annalisa Sassi - we questioned the organizational models, about where we went wrong and where we could do better. There is only one answer: at this point in time, all we can do is export our product(s), our company, our food model. But to remain competitive in emerging markets the Italian food industry must rethink the characteristics of the product and make it more consistent with the expectations of the global consumer. The disappearance of ICE - the Italian Institute for Foreign Trade - brings additional uncertainties at an extremely delicate moment, where promotional efforts on distant markets that offer the best prospects for expansion would need to be reinforced, markets though that Italian companies, especially the medium-to-small ones, find hard to reach and to tackle».
Production weak and consumption stuck on the starting blocks: new impetus needed from exports - Going into the details of the Federalimentare Study Centre’s estimates, in the light of a strong and continuing stagnation of the domestic market, only partially offset by growth in foreign markets, Italian food industry production in 2011-2012 should show a very slight average growth rate of +0.8% per year, a rate lower than that for the decade 2000-2010, where growth stood at +1.2% a year.
On the subject of turnover: if the pressure on commodity prices and the long-standing stagnation of domestic consumption continues to prevail in the coming years, the balance of trade will once again hinge on our ability to export our products. Federalimentare expects that, at the end of 2012, there will be an increase in the total turnover of 1.2% per annum, corresponding to a final value for 2012 of around 130 billion euro. As for domestic consumption, at best one can hope for a marginal growth of 0.1% per annum, which would lead, over the next year, to an overall growth prospect of 0.3%.
But it is from the estimates on exports that one has the most important considerations: in the decade 2000-2010, seen against gradual slowdown in growth in domestic consumption, exports did much to boost the growth of the industry.
According to the forecasts of the Federalimentare Study Centre, next year the pace of the trend in exports will slow down, though it will still stay positive, showing an annual average increase in volumes of +8%; exports seen in terms of value will put in an average annual rate of +10%.
105 billion euro (+0.3% over 4 years): this is what Italian food&beverage is estimated to be worth in 2011 - as revealed by a Accenture study for 2011, drawn up on Euromonitor data, the recession has reduced the expected growth in global food market by more than one third, with Western Europe and the United States registering the most limited growth rates. In the period 2006-08, in fact, the food companies in the world witnessed a combined annual growth rate of 10.9%, for a total value in 2008 that touched on 2.840 billion dollars. The estimates for 2011 in turn fix the value of the global food&beverage industry at 3,064 billion U.S. dollars, at the end of a difficult four years that have seen the industry grow by only 2.6% a year.
In this context, Italy finds itself in a critical position, slightly below the average growth in Western Europe. In 2006-08 the value of the Italian food industry grew by +2.8%, going from 99 to 104 billion euro, and in the subsequent four years in turn growth was +3%, for a final value of 127 billion euro in 2011.
Significant, in particular, the slowdown in packaged food, where the pre-crisis growth rate registered (figures for 2006-2008) an encouraging +4.1%. For this sector, forecasts for the market up to 2012 indicate that the current growthrates of around +1.1% will be kept up, to an estimated value a little above 80 billion euro. In detail, for the dairy sector will experience recovery at a slower pace (+0.5%), due to consumers switching to lower priced food products, while chocolate is the only segment in the confectionary and icecream sector withstanding the crisis.
The markets to be targeted - The question of growth abroad will be, in the coming years, one of the hot topics for the Italian food&beverage industry. And the question becomes central in this moment in history where the rules of the game are changing: The main market will transcend national boundaries and become "European". A macro-economic trend is already underway that by 2020 will see China as the largest economy in the world in terms of purchasing power, with India in third-, the U.S. in second and Japan in fourth place. A study made by NCAER on the evolution of the middle class in India between 2005 and 2025 shows the potential of this new outlet to be presided over: in 20 years the families of the Indian middle class will have increased by 84%, while families earning more than 10 thousand dollars will grow by as much as 1,290%. Average consumption in this emerging market is estimated to grow by 424%.
The global consumer: fragmented, aware and "single portion" -
The macro-economic trends are re-profiling the typical consumer that the Italian food industry will have to win over says Saatchi & Saatchi; and it will have to do so aboveall shifting its gaze East and towards South America, markets that will require a new flow of goods. Italian food and beverage will have to deal with a global but also a "fragmented" consumer, looking for a product as “tailored” as possible, aware and demanding in their choices, seeking quality, health aspects, sustainability, safety and traceability. But also seeking practicality, as evidenced by the boom in single portions: a sign of changing times and an individual consumption that is increasingly present alongside the traditional "kitchen and pantry" model, something which the food industry will have to track carefully if it is not to succumb.

The tools and skills & knowhow - Global Challenges of this kind can only be addressed by appropriate means, which the Italian food industry as a whole has for a long time possessed, as states Annalisa Sassi: «We have developed manufacturing facilities and diagnostics so advanced as to allow our industry to ensure safety and quality to the Italians in as many as 66 billion meals a year, whose ingredients feature in more than 20 thousand references, all available at reasonable prices. It is not only the democratic nature and accessibility to food a particularly significant factor in favor of the action of the food industry over the centuries, but also the information, expertise, diversity and the uniqueness of our wealth of knowledge that makes Italian food so great and so precious the world over».                              

Beverages in Italy

Below is a summary of the characteristics and changes of the two areas “alcoholic beverages” and “non-alcoholic beverages”, from a packaging perspective.
Plinio Iascone
Packaging has proven to be a strategic factor for the beverage sector: in addition to protecting the product and making its handling possible, it also represents an important marketing tool.
The makeup of packaging for all beverages (alcoholic + non-alcoholic) consists in the following:
- glass bottles (returnable + disposable) 30.4%;
- PET bottles 57.9%;
- polylaminate cellulosic containers 4%;
- cans 2.7%;
- other (bag in box, draught, cheerpack, etc...) 5%.
Alcoholic beverages
In the area of alcoholic beverages, the glass bottle dominates all sectors, although it coexists with other packaging types, particularly polylaminate cellulosic containers and cans, which are characterized by promising market shares. Moreover, glass proves to be the only solution for spirits and vermouth.
For beer there are diverse solutions: in addition to the glass bottle, which also predominates this beverage type, there are aluminium cans and kegs for serving from the draught. In recent years, imported beers have also been distributed in 5 liter steel mini-kegs and 50 cl aluminium bottles. In the wine sector, the glass bottle and the polylaminate cellulosic container have shares of 72% and 10%, respectively: the former thanks to its place among high end wines, the second holds promising shares in cooking wine.
In recent years, the bag in box has progressively increased its presence in ranges with capacity of 5 to 15 liters.

Non-alcoholic beverages
In terms of packaging, the non-alcoholic beverage area is highly varied.
The PET bottle is prevalent in absolute terms and tends toward growth in the mineral water and carbonated drinks sectors.
The glass bottle continues to play an important role for mineral water, particularly in the “returnable” area, in which the use of bottles tailored to the necessities of the filling customers is spreading.
In the carbonated drinks sector, the most widely used packaging type after the PET bottle is the aluminium or tin plate can (the former predominates).
In fruit juices, the most used solution is the polylaminate cellulosic container, followed by the PET bottle, which shows tendential growth.
The PET bottle predominates in the area of non-carbonated drinks (tea, fruit-based mixes and energy drinks), although the aluminium can and plastic cups with aluminium easy peel top hold promising positions; followed by containers made from flexible polylaminate.    

Data and facts of the sector
According to Prometeia's projections, the growth prospects for production in 2011 in the beverage area as a whole (alcoholic and non-alcoholic beverages) is for about 2%. Particularly for alcoholic beverages, this growth should be driven mainly by exports.
But let's look at the history of this market area.
After the shrinkage in production during the two-year period of 2008-2009, alcoholic beverages ended 2010 with a production (products put on the market packaged) of approximately 4%; the growth was driven mainly be foreign demand.
In particular, 2010 saw exports grow by 16.4% and substantial stability for domestic demand, which in any case remains 6% lower than the period before the crisis, 2007.
In 2010, domestic demand showed the following trends in terms of production in the various supply chains: wine +0.4%; beer -1%; spirits +1.9%; vermouth +5%.
The growth dynamic of exports can be broken down thusly: wine +9%; beer +78%; spirits +14%; vermouth +3%.
Non-alcoholic beverages closed 2010 with a total production of 16.8 billion liters, a decrease from 2009. Production remains inferior by about 2% to the period before the crisis, 2007.
The biggest sector in terms of shares is that of mineral water, which represents 71.4% of total production, followed by carbonated soft drinks with a share of 17.5%; next come fruit juices, non-carbonated beverages (tea, energy  and sports drinks), mixes and syrups.
Production continues to be conditioned essentially by domestic demand, which, overall, covers approximately 90% of production.
In quantitative terms, the only significant export volumes are those for mineral water.
The biggest drop in production concerns that of mineral water: -1.2% in 2010 and -3.2% compared with 2007, the last year of sustained growth.
The drops in mineral water were caused essentially by a negative growth trend in domestic consumption, but also by a more widespread use of water from reservoirs and the growth of water treatment devices at home and also in some restaurants.

Plinio Iascone
Istituto Italiano Imballaggio

The food industry in Italy

UPDATES Market structure, consumption and packaging trends for food products (excluding beverages and fresh market garden produce).
Plinio Iascone

Since the crisis of 2008-09, the food industry as a whole, food and beverage, has been one of the few manufacturing sectors to recover the losses incurred, reporting a very slight improvement. According to ISTAT production indices relating to industrial production, the food industry recorded in 2010 a 2% recovery compared with 2009 and growth of 0.4% compared with 2007, the year before the crisis began.

… more dialogue in the supply chain

Safe and easy to dispose of, optimized, economical and printed just in time. That’s what good packaging for food products means, according to Barilla’s packaging manager, who explains the group’s packaging design policies to the machinery manufacturers represented by Acimga and requests…

From 2007 to 2010, changes to Barilla product packaging increased by 13%, but in some countries they reached peaks of +30-40%. «In absolute terms - estimates Michele Amigoni, the concern’s Group Supply Chain, Packaging Design & Standards Director - there are approximately 2,000 redesigns or reprintings per year, including 1,000 in Italy alone, while in France during the last three years the number of changes grew from 80 to 300, and the phenomenon shows no signs of slowing down.

The spirit of tradition

Aidepi supports Ipack-Ima 2012: the reasons behind the choice, in favour of a super high value business segment.

December last Paolo Barilla - vicepresident of the industrial group of the same name - was elected president of AIDEPI (Italian Confectionery and Pasta Industry Association). This is a body that, under Confindustria, unites the two pre-existing sector associations, or that is the Italian Confectionery Industry Association and the Italian Industrial Pastamakers’ Union, that represent some 130 companies with 36 thousand employed.

How to pack… fresh produce

Sector figures and packaging used in the Italian fresh produce sector. Plinio Iascone

It is estimated that the Italian fresh produce sector is made up of approximately 460 thousand vegetable-, 340 thousand in fruit and 150 thousand in citrus fruit producing enterprises, spanning more than one and a half million hectares and employing about 2 million.
Since 1990, the amount of farmland has decreased at an average annual rate of about 10%, but, at the same time, yields per hectare have increased.
The sector is most clearly affected by significant production peaks and troughs due to weather conditions.

Winning back the consumer

Italians love wine but domestic consumption is down. The reasons for a phenomenon to be countered, the moves that need to be made, according to a recent Vinitaly-Confcommercio survey.

In times of crisis leveraging on price is not the best solution: it is the high-end products that are guaranteeing companies the best profitability, and hence also the necessary financial stability. This is documented by the study “But do the Italians still love the wine? A breakdown of domestic consumption”, commissioned by Vinitaly (E.A. Fiere di Verona) and Confcommercio and presented at the opening of international exhibition of wines and spirits (Verona 7th to 11th April 2011).

Report on the state of packaging (2)

Four-monthly packaging chain observatory. Situation at the end of May 2011.
By Roccandrea Iascone

Here is a cross-section of the state of manufacturing industry sectors where packaging consumption is the most intense, divided into two main areas "food and beverage" and "non food". Following this, the relative growth of the packaging sector. The growth pictures of the manufacturing sectors are derived from sectorial analyses drawn up by Prometeia.

Materials evermore Natural

According to data released by European Bioplastics*, in a few years the global production of "bioplastics" is expected to double, rising from 700,000 tons in 2010 to 1.7 million tons set for 2015. And already in 2011 the threshold of one million will be superseded.

Meat: what the consumers want

The trend of the meat market and the impact on packaging, the “New Meat Horizons “ by Sealed Air Cryovac.

«In the global meat market the most significant change is the appearance of a new class of consumers in growing economies (typically, Brazil, China and Indonesia), where millions of residents have now reached the critical income level of 3,000-5,000 dollars per year, leading to a boom in consumption». This was Stated by David Nelson, Global Strategist of Rabobank, during his talk given in the last meeting of Sealed Air Cryovac. The event, held last April at the multinational’s Paris Packforum, with the participation of 110 manufacturers and retailers of 71 companies from 21 different countries, aimed to update the dynamics of supply and demand in the specific sector of meat, and the responses of technology in terms of packaging.

Health packaging

TRENDS AND FIGURES A summary of sector activities and a breakdown of the different forms of pharmaceutical packaging used in Italy. Plinio Iascone

According to the analysis carried out by Prometeia, after a slowdown in the growth trend, in 2010 the performance of the pharmaceutical industry in Italy has picked up again, thus confirming its anticyclical nature.
As a whole (comprising consumer products, OTC and hospital products) the sector shows a turnover of approximately 26,000 million euros (Prometeia). Its growth has been mainly driven by exports, up in turnover by 7.7%; Italian domestic demand has limited its growth to around 2%. Imports have marked a +1.3% and total turnover has shown a growth of 2.7% at constant prices.
Regarding Italian domestic demand, the good performance, even during the 2008/2009 recession, derives from a +3.4% of pharmaceutical products charged to the Italian health system (SSN), but can also be put down to an aging population and growing attention to prevention and the quality of life.

The Black Box Project

CREATE TO COMMUNICATE Iggesund launches a creative challenge while involving three international design studios, inviting them to think "inside the box". The responses of the designers were fully up to the mark, and the projects gave an original interpretation of the many qualities of the Invercote* papers, the subject of a publicity campaign. Representing Italy, Brunazzi&Associati took on the task of giving form to that exquisitely Italian taste and spirit. By Elena Zordan

What happens when designers are invited to take an unconventional approach to design and they are asked to develop innovative ideas, perhaps starting from a simple cubic box black? The experiment was made by Iggesund, the high quality paper and board manufacturer that, involving a selected number of professionals, indicated a starting point that was "different" in terms of the development of the creative process.

Beauty packaging

COSMETICS AND PERFUMES According to annual assessments by Istituto Italiano Imballaggio, production of cosmetics and perfumes in 2010 amounted to 3,233 million packagings (+3.3% compared to 2009), not only recovering the drop during the previous year, but even surpassing 2008 levels. Plinio Iascone

According to market analyses conducted by Unipro for 2010, the Italian cosmetics/perfumes market registered a positive production dynamic, sustained essentially by the significant recovery of exports and the resilience of consumption.
As for domestic demand, the channels of pharmacies and herbal medicine sellers showed the best performance; the progress of professional channels was mostly stable, while the growth of department stores experienced a progressive slowdown.

Good at “Quality Design”

THE NOMINATIONS  Space to the 25 candidates of the Packaging Oscar 2011 selected on the basis of graphic, communicative and structural coherence, in a word Quality Design. Spotlight too on excellence in Environment, Communication and Technology.

The 2011 edition of the competition that designates “the packaging of the year” has been organized by the Istituto Italiano Imballaggio in cooperation with the Design Faculty of the Milan Polytechnic (and, once again with the support of BASF, official sponsor).
It comes as no surprise hence that Quality Design constitutes the “super category” by which the prizes are awarded.

Back to growth

More purchasing power for low-income families, the comeback of employment for women, liberalization and modernization of the distribution network throughout Italy. A study by Indicod-Ecr, broadscale consumption’s proposals for fostering recovery.

Consumption in Italy has grown very slowly for years, and in 2009, for the first time, it experienced a contraction (-2.2%), recovering only slightly in 2010. According to Indicod-Ecr (the Italian association which unites 35 thousand broadscale consumption manufacturers and distributors), the phenomenon is due to four fundamental causes.

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