RnR Market Research Italy Food and Drink Report Q4 2012

The prognosis for Italian consumers remains relatively grim, as we forecast that private consumption will contract by 2.3% in 2012, significantly worse than the 1.6% contraction in 2009. Further, we expect private consumption to fall by a further 0.1% in 2013 as Italian households are hit by austerity measures. In March, households paid the increased regional surtax on personal income and, in mid-June, they were hit by a new property tax. A proposed VAT increase in October was put off, only to be replaced by EUR26bn in spending cuts that will hit social transfers. Unemployment will also continue to weigh on consumption, and overall Italian household purchasing power is being eroded. We also have revised our real GDP forecast for Italy down from -2.1% to -2.3% in 2012 and from 0.1% to 0.0% in 2013 as the result of new austerity measures implemented by the government.

Headline Industry Data (local currency)

• 2012 per capita food consumption = -0.2%; forecast to 2016 = +4.3%
• 2012 alcoholic drink value sales = +2.9%; forecast to 2016 = +13.3%
• 2012 soft drink value sales = -1.8% ; forecast to 2016 = +5.2%
• 2012 mass grocery retail sales = -0.2%; forecast to 2016 = +5.2%

Key Industry Trends And Developments in Italy Food and Drink Report Q4 2012

Barilla Announcements Fit Branded Focus: In summer 2012 Italian food group Barilla announced that former Unilever executive Claudio Colzani is to be the company’s new CEO. The move came shortly after Barilla revealed it was looking to offload its German bakery business Lieken. Taken together, these moves provide a signal of the firm’s underlying strategy, with a focus on its core consumer brands likely to take centre stage. Barilla is the world’s largest pasta producer and therefore looks particularly threatened by the growth in private labels, with pasta proving to be a sector for which the advantages of branded products are harder to convey. However, with strong brands and a focus on its premium positioning alongside innovation, we believe Barilla is likely to be able to keep this threat at bay over the longer term.

Campari Acquires LdM and Enters Rum Sector: In September 2012, Italian drinks giant Campari made the third largest acquisition in its history with the purchase of a majority stake in Lascelles deMercado & Co, parent company of the Appleton Estate and Wray & Nephew rum brands. The move marks Campari’s entry into the rum sector. Campari has agreed to buy 81.4% of the company from CL Financial, with a view to purchasing the company outright for US$414.8mn. The addition of the Italy Food & Drink Report Q4 2012

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Key Risks To Outlook
Our outlook is conditional on developments both in the eurozone crisis and in Italian politics. Our core view for the eurozone to ‘muddle through’ is premised on robust German demand allowing the eurozone economy to rebalance gradually. Also although the substantial fiscal adjustment implemented over the last 18 months has put Italy on a sustainable fiscal trajectory, allowing credit conditions across the economy to ease gradually in 2013, the country’s large public debt load leaves it vulnerable to crises of confidence.

Report Details:

 

Published: Oct 2012

No of Pages: 96

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