Italy Food and Drink Report Q4 2010
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Italy Food and Drink Report Q4 2010 Overview
A strong food culture means that Italy has one of the highest levels of per capita spending on food and drink in the world. However, over the last ten years consumption has been adversely affected by relatively low economic growth and unfavourable demographics, with an ageing population and low birth rate. The country is now emerging from a deep recession but these issues are expected to continue hampering consumption growth over the next five years and Italy's consumption forecasts are therefore among the lowest in the Western Europe region.
Headline Industry Data
2010 per capita food consumption = 0.3%; forecast to 2014 = 5.5%
2010 alcoholic drink sales = 1.0%; forecast to 2014 = 16.2%
2010 soft drink sales = 0.8% ; forecast to 2014 = 15.4%
2010 mass grocery retail sales = 1.1%; forecast to 2014 = 19.6%
Key Industry Trends & Developments
Lavazza Signs Deal with Green Mountain - In August 2010, Italy-based coffee producer Luigi Lavazza agreed to purchase a 7% stake in US-based Green Mountain Coffee Roasters for US0mn. As part of the deal the firms have agreed a tie-up that will see the companies co-operate in the production of singleserve coffee machines and capsules. Green Mountain plans to use the investment for expansion and to boost financial flexibility and the deal is likely to put the two in a strong position to take on Nestlé, the global market leader in the fast growing single-serve coffee segment.
Private Labels Gaining Market Share - Italian consumers have been slower than their counterparts in other European countries to embrace private label food and drink products and brand name goods still dominate the sector. However, there are now signs that the combination of rising food prices and stagnant economic growth may be encouraging more Italian consumers to move away from branded products, providing a boost to producers of private labels.
Key Risk to Outlook
Double Dip - The principle risk to our forecasts is the prospect of a further slowdown in economic growth. The government has secured parliamentary approval for a EUR25bn fiscal austerity package designed to get Italy's public finances back on to a more secure footing, but we think there is a chance that this could exacerbate already weak domestic demand and could risk sending the economy back into recession.
External Weakness - Demand across the eurozone is still fairly subdued and with fiscal consolidation programmes being proposed across the bloc, export orders could slump significantly over the medium term, which, given that the export sector is a key engine for growth, could impede Italy's economic recovery.
