The outlook for food exports remains positive, with further demand growth from overseas expected, due to the strong reputation of “Made in Italy”.
- The food sector is one of the most important industries in Italy, employing around 385,000 people and generating a total turnover of about EUR 135 billion in 2015, with exports amounting to EUR 36.9 billion. After several years of suffering from the domestic economic downturn, the Italian food sector´s performance has rebounded since 2014, benefiting from lower raw materials and energy prices.
- Italian food production, processing and retail remain strongly fragmented, with fierce competition, high gearing and pressure on margins. Even the biggest Italian food retail businesses are small compared to other major international players. The average size of food producers is typically small, which hampers international expansion. It is expected that the concentration process in the Italian retail segment will accelerate further in 2017.
- Many Italian food businesses (especially in the pasta and bakery segments) benefit from the strong international reputation of the “Made in Italy” trademark. The short-term outlook for Italian food exports remains positive, with further demand growth expected in the EU, the US and in Asia.
- Since October 2012 a new law (‘Article 62’) lays down a maximum payment term in the food sector of 30 days for perishable goods and 60 days for non-perishable goods. However, the effects of the law have been limited so far, as payments in the food sector take about 90 days on average. In general, payment delays and insolvencies are low compared to other Italian industries and are expected to level off in H1 of 2017 compared to H2 of 2016.
- Value added growth of the food sector is expected to increase 0.8% in 2016 and 1.2% in 2017. Our underwriting stance for Italian food businesses remains generally open.
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Market Monitor Food December 2016
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