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
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
© Business Monitor International Ltd Page 8
Appleton, Wray & Nephew and Coruba rum brands will help the company further build its presence in
key North American markets.
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.

Italy Food and Drink Report Q4 2012

BMI Industry View........................................................................................................................................... 7
SWOT Analysis ............................................................................................................................................... 9
Italy Food Industry SWOT .................................................................................................................................................................................... 9
Italy Drink Industry SWOT ................................................................................................................................................................................. 10
Italy Mass Grocery Retail Industry SWOT.......................................................................................................................................................... 11
Business Environment................................................................................................................................. 12
BMI's Core Global Industry Views .......................................................................................................................................................................... 12
Table: Core Views .............................................................................................................................................................................................. 20
Western Europe Risk/Reward Ratings...................................................................................................................................................................... 21
Table: Western Europe Food & Drink Risk/Reward Ratings Subcategories, Q412 (scores out of 10) ................................................................ 21
Table: Western Europe Food & Drink Risk/Reward Ratings, Q412 .................................................................................................................... 24
Italy's Food & Drink Risk/Reward Ratings ............................................................................................................................................................. 25
Macroeconomic Outlook.......................................................................................................................................................................................... 26
Table: GDP By Expenditure ............................................................................................................................................................................... 28
Industry Forecast Scenario .......................................................................................................................... 29
Consumer Outlook ................................................................................................................................................................................................... 29
Food......................................................................................................................................................................................................................... 31
Food Consumption.............................................................................................................................................................................................. 31
Table: Food Consumption Indicators - Historical Data & Forecasts, 2009-2016 .............................................................................................. 31
Confectionery...................................................................................................................................................................................................... 31
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2009-2016....................................................................................... 32
Canned/Prepared Food....................................................................................................................................................................................... 32
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2009-2016........................................................................................ 32
Table: Frozen Fruit & Vegetables Volume Sales, Production & Trade, 2009-2016 ............................................................................................ 33
Table: Snack Foods Volume Sales, Production & Trade, 2009-2016 .................................................................................................................. 34
Table: Pasta Volume Sales, Production & Trade, 2009-2016............................................................................................................................. 36
Meat, Fish And Dairy ......................................................................................................................................................................................... 37
Table: Meat Volume Sales, Production & Trade, 2009-2016 .............................................................................................................................. 38
Table: Fish Volume Sales, Production & Trade, 2009-2016............................................................................................................................... 39
Table: Oils & Fats Volume Sales, Production & Trade, 2009-2016.................................................................................................................... 41
Drink........................................................................................................................................................................................................................ 44
Soft Drinks .......................................................................................................................................................................................................... 44
Table: Soft Drink Value/Volume Sales - Historical Data & Forecasts, 2009-2016............................................................................................. 44
Alcoholic Drinks ................................................................................................................................................................................................. 45
Table: Alcoholic Drink Value/Volume Sales - Historical Data & Forecasts, 2009-2016.................................................................................... 46
Mass Grocery Retail ................................................................................................................................................................................................ 47
Table: Mass Grocery Retail Sales By Format , 2009-2016................................................................................................................................. 47
Table: Retail Sales Breakdown By Format Type................................................................................................................................................. 48
Trade........................................................................................................................................................................................................................ 48
Table: Trade Indicators - Historical Data & Forecasts, 2009-2016 ................................................................................................................... 49
Food ............................................................................................................................................................... 50
Key Industry Trends And Developments .................................................................................................................................................................. 50
Barilla Announcements Fit with Branded Focus................................................................................................................................................. 50
Parmalat Sales Grow At Home And Abroad ....................................................................................................................................................... 52
Barilla Posts Threefold Rise In 2011 Net Profit.................................................................................................................................................. 53
Princes To Acquire AR Industrie Alimentari....................................................................................................................................................... 53
Italy Food & Drink Report Q4 2012
© Business Monitor International Ltd Page 4
Ferrero Invests In Mexican Confectionery Sector............................................................................................................................................... 54
De Cecco Looks To Russia For Growth.............................................................................................................................................................. 55
Stevia's EU Approval Will Spur Product Development ...................................................................................................................................... 55
Market Overview...................................................................................................................................................................................................... 56
Food Processing ................................................................................................................................................................................................. 57
Consumption....................................................................................................................................................................................................... 57
Prepared Food.................................................................................................................................................................................................... 57
Confectionery...................................................................................................................................................................................................... 57
Drink............................................................................................................................................................... 59
Key Industry Trends And Developments .................................................................................................................................................................. 59
Campari Acquires LdM and Enters Rum Sector ................................................................................................................................................. 59
New Tax on Soft Drinks ...................................................................................................................................................................................... 59
Lavazza Considers Franchising for Key Indian Business ................................................................................................................................... 60
Italian Wine Producers Look To Asian Market................................................................................................................................................... 61
Russian Standard Vodka Looking To Italy For Wine .......................................................................................................................................... 62
Market Overview...................................................................................................................................................................................................... 62
Hot Drinks .......................................................................................................................................................................................................... 62
Soft Drinks .......................................................................................................................................................................................................... 62
Alcoholic Drinks ................................................................................................................................................................................................. 63
Mass Grocery Retail ..................................................................................................................................... 64
Key Industry Trends And Developments .................................................................................................................................................................. 64
Conad Investing Following Resilient Performance............................................................................................................................................. 64
Auchan Continues Expansion ............................................................................................................................................................................. 64
Conad Buys Billa Stores As Local Operators Continue To Outperform............................................................................................................... 65
Difficulties In Italian Retailing Highlighted........................................................................................................................................................ 65
Esselunga Results Highlight Price Sensitivity Of Italian Retail ........................................................................................................................... 66
Private Labels Gaining Market Share................................................................................................................................................................. 67
Market Overview...................................................................................................................................................................................................... 68
Table: Structure Of Italy's Mass Grocery Retail Market By Estimated Number Of Outlets, 2003-2010.............................................................. 70
Table: Annual Average Sales Per Outlet By Format (US$mn)............................................................................................................................ 70
Competitive Landscape ............................................................................................................................... 71
Table: Key Players In Italy's Food Sector .......................................................................................................................................................... 71
Table: Key Players In Italy's Drink Sector ......................................................................................................................................................... 72
Table: Key Players In Italy's Mass Grocery Retail Sector.................................................................................................................................. 73
Company Monitor ......................................................................................................................................... 75
Food......................................................................................................................................................................................................................... 75
Gruppo Galbani (Lactalis).................................................................................................................................................................................. 75
Perfetti Van Melle............................................................................................................................................................................................... 76
Gruppo Barilla.................................................................................................................................................................................................... 77
Carapelli Firenze SE........................................................................................................................................................................................... 79
Drink........................................................................................................................................................................................................................ 80
Gruppo Campari................................................................................................................................................................................................. 80
Birra Peroni (SABMiller).................................................................................................................................................................................... 82
Mass Grocery Retail ................................................................................................................................................................................................ 84
Conad ................................................................................................................................................................................................................. 84
Country Snapshot......................................................................................................................................... 86
Italy's Population By Age Group, 1990-2020 (‘000) .......................................................................................................................................... 87
Italy's Population By Age Group, 1990-2020 (% of total).................................................................................................................................. 88
Italy Food & Drink Report Q4 2012
© Business Monitor International Ltd Page 5
Italy's Key Population Ratios, 1990-2020 .......................................................................................................................................................... 89
Italy's Rural And Urban Population, 1990-2020 ................................................................................................................................................ 89
BMI Risk/Reward Ratings Methodology...................................................................................................... 90
Table: Rewards................................................................................................................................................................................................... 90
Table: Risks ........................................................................................................................................................................................................ 91
Weighting................................................................................................................................................................................................................. 91
Table: Weighting................................................................................................................................................................................................. 91
BMI Food & Drink Industry Glossary........................................................................................................... 92
Food & Drink........................................................................................................................................................................................................... 92
Mass Grocery Retail ................................................................................................................................................................................................ 92
BMI Food & Drink Forecasting & Sourcing................................................................................................. 94
How We Generate Our Industry Forecasts .............................................................................................................................................................. 94
Sourcing.............................................................................................................................................................................................................. 95Table: Core Views
Table: Western Europe Food & Drink Risk/Reward Ratings Subcategories, Q (scores out of )
Table: Western Europe Food & Drink Risk/Reward Ratings, Q
Table: GDP By Expenditure
Table: Food Consumption Indicators - Historical Data & Forecasts, -
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, -
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, -
Table: Frozen Fruit & Vegetables Volume Sales, Production & Trade, -
Table: Snack Foods Volume Sales, Production & Trade, -
Table: Pasta Volume Sales, Production & Trade, -
Table: Meat Volume Sales, Production & Trade, -
Table: Fish Volume Sales, Production & Trade, -
Table: Oils & Fats Volume Sales, Production & Trade, -
Table: Soft Drink Value/Volume Sales - Historical Data & Forecasts, -
Table: Alcoholic Drink Value/Volume Sales - Historical Data & Forecasts, -
Table: Mass Grocery Retail Sales By Format , -
Table: Retail Sales Breakdown By Format Type
Table: Trade Indicators - Historical Data & Forecasts, -
Table: Structure Of Italy's Mass Grocery Retail Market By Estimated Number Of Outlets, -
Table: Annual Average Sales Per Outlet By Format (US$mn)
Table: Key Players In Italy's Food Sector
Table: Key Players In Italy's Drink Sector
Table: Key Players In Italy's Mass Grocery Retail Sector
Table: Rewards
Table: Risks
Table: Weighting

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