08/09/2020 – Trends In Trade / Export / TUTTOFOOD / Italy
Export & digital: The passport to F&B growth
Ahead of next year’s TUTTOFOOD (17–20 May 2021 in Milan), the leading expo’s organisers reveal insights on what they predict will be the key drivers for the food and beverage sector in 2020 and beyond.
Is the worst really behind us? While Asia and Europe gradually move towards the ‘new normal’, the Americas are still battling the peak of the epidemic, many other countries are working to contain possible new clusters, and the financial consequences are still unknown. Until now, the agricultural and food industry has suffered less than other sectors – but, warns the FAO in its June Food Outlook Report, there is still work to be done to prevent the health emergency turning into a food emergency. The role of international trade will be fundamental, underlines the organisation. As of now, the Report predicts 2.2-per-cent growth between 2020 and 2021 for grains, and moderate increases also for meat, fish and vegetable oils.
Resilient international trade
Recently published ISTAT data regarding Italian exportation during the first half of the year appears to confirm the sector’s resilience. Italian pasta, in particular, after a record e2.6 billion in exports in 2019, experienced another leap in terms of international sales in March, equating to 21 per cent in volume, with the exportation of an additional 97,000 tons, 72,000 of which went to EC markets.
Against all expectations, wine has also seen positive results – up 5.1 per cent on non-EU markets in the first four-month period of 2020.
The Food Industry Monitor estimates confirm that international trade will be the driving force of growth in a sector that in 2020 will fall short by roughly five per cent: exportation in the sector will increase by an average of 11 per cent during the two-year period of 2020-2021. Segments expected to perform the best include spirits, flours, food equipment, confectionery, water, coffee and milk. Performance in the salami and cured meat, wine, beer and packaging segments will be in line with the sector average, while preserves and pasta will experience more limited growth.
Tapping into evolving demand
But what are the really important factors for international consumers when purchasing a product? A global study entitled ‘What matters to consumers when buying food?’, conducted by DNV GL – one of the most active certifying bodies in the sector – highlights how the coronavirus emergency has resulted in a focus on food safety. Environmental and social aspects are also important. In particular, consumers are attentive to a clear list of ingredients and the origin of the product and its ingredients, but also to aspects of sustainability such as compostable or recyclable packaging, measures to reduce food waste and respect for animal well-being.
In order for TUTTOFOOD to continuously interact with all actors in the supply chain, the insight adds to the data comparison a qualitative analysis based on interviews with buyers from some of the most important international large-scale retailers. Among other things, what emerges is that an acceleration towards e-commerce and home deliveries is driven by increasingly direct requests from the users themselves. Online and offline, shopping trends do not always seem coherent though, and this poses new challenges for operators.
One of the main challenges that large-scale retailers face is to support consumers who are increasingly inclined to make informed choices. An increasing number of retail chains are making this information transparent for consumers with sustainability ‘stickers’ and points measuring a product’s environmental footprint.
The push towards territoriality and the local – in itself positive – should be carefully monitored. It is likely that this dynamic will be alleviated as international trade resumes, but one definite medium/ long-term effect will be that brands have to pay more attention to reputation aspects.
Markets on which to focus
So, which countries are the ones to keep an eye on in terms of Food & Beverage? IRI’s Consumer Spending Tracking analyses spending at large-scale retailers in eight key advanced markets (Italy, France, Germany, Spain, The Netherlands, the UK, the USA and New Zealand). The most recent report (May) shows the greatest food and beverage growth in New Zealand (21.2 per cent) and the United States (20.3 per cent), followed by the Netherlands (12.5 per cent), Spain (12.2 per cent) and the UK (10.4 per cent). Less dynamic, but still on the up, are Germany (8.9 per cent) and Italy (6.4 per cent), while the worst performer is France (-0.7 per cent).
One of the most interesting trends is the continuing growth, albeit to a varying extent in different countries, of private label products, with high growth in France, the Netherlands and, most of all, in the United Kingdom: although so far there had been a negative growth (-2.4 per cent), it is necessary to consider a penetration that already equates to more than half the total (53 per cent).
As for Italy, the priority lies in diversifying its channels. Top of the class in 2020 is undoubtedly e-commerce, with Food & Grocery growth that the B2C eCommerce insight, promoted by the School of Management at the Politecnico di Milano and by Netcomm, estimates to be more than 55 per cent, for a total of almost one billion euro in value. Local stores are also performing well.
Five trends on which to bet
1. The online shopping boom is here to stay – and that applies to food e-commerce too. Even small stores and local independent shops are latching on to digital, for an increasingly diversified offer that also meets the demands of more demanding targets, such as Millennials.
2. Sustainability is not a fad. With the emergency, even the most sceptical have realised that adopting a responsible approach towards the environment, people and resources is not greenwashing, but a necessity in order to continue to grow in the medium/long term.
3. Quality pays in every sense. Consumers are more aware and better informed.
We’ve been saying this for a while, but the data now confirms it. And, surprisingly, they are not so social. What really counts is the label and certified quality, for which they are willing to pay more.
4. Build brand awareness. Research confirms that the consumer trusts more in brands they know well. And private label products can also be ‘brand name’ if supported by the prestige of the chain. Investing in brand awareness is money well spent.
5. Your market is the world. International trade will drive the recovery in 2020 and 2021. For those who have not yet opened up to international markets, now is the time to do so, choosing reliable institutional partners.
International food fair TUTTOFOOD – the meeting point between Italian agri-food excellence and food & beverage companies from across the world – returns for its next edition in Milan from 17–20 May 2021. For further details, visit: www.tuttofood.it/en