3. MARKET STRUCTURE IN ITALY
3.3 Pasta distribution channels
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MD usually offers branded producers the possibility of implementing dual branding strategies - simultaneous production of their own product line and a branded one (private label).
The realization of these products allows companies to saturate the production capacity of the plants and to turn to a more attentive price range without affecting the image of their brand but above all to obtain from distributors a better allocation of products on the shelves, one of the main critical elements in the relationship between brand industry and the MD. Given the high penetration reached in this sector by private labels, the major distributors have begun to implement
differentiation strategies for lines of private label products, through the creation of lines of typical products, opening spaces also for small and medium-sized producers, operating at local level, otherwise unable to access this channel given the high investments required. However, these producers must guarantee high quality standards.
The tables below show the distribution channels and their distribution by value in Europe and Italy for the pasta and noodles market.15 The small shops sector is a feature of the Italian distribution market, whose consumer prefers a smaller but more welcoming store than the big supermarket.
Figure 18 Europe and Italy pasta & noodles market distribution, % share by value 2017
The export
The sale of pasta to customers of this channel takes place both directly (45%) and through the intermediary of the wholesaler (55%). The lively evolution of out-of-home pasta consumption recorded in recent years, in parallel with the tendency to deconstruct the meals of Italian families, is offering the sector's producers new opportunities to expand activity levels, against a mature
domestic consumption. In this sense, a strategy is represented by the opening of restaurants /
trattorias or corners within shopping centers, already positively tested by some large manufacturers.
The strategies proposed by companies to cope with exports can be many and varied. In a broadly
15 MarketLine Pasta & Noodles report (in EU and Italy)
EU Italy
Hypermarkets & Supermarkets 64.9% 57.7%
Convenience Stores 26.0% 28.3%
Food & drinks specialists 3.2% 9.7%
eRetailers 1.9% 2.0%
Other 4.0% 2.3%
% Share
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open context abroad, the 2012 ISTAT survey shows that, in order to improve competitiveness on international markets over the past two years, the set of Italian manufacturing companies has to a large extent favoured both strategies for improving quality or increasing the range and
technological content of the products, and measures to contain sales prices.16
The destination of exports by geographical area highlights the primacy of Western Europe as the largest destination market for Italian exports, with a weight equal to 60.02%, a moderate decrease compared to the beginning of the 2000s. An intensification of the flows has interested in recent times almost all the areas with different intensities with the exception of Oceania and Central and Southern Africa. The substantial resilience of exports directed by the Western European markets confirms the presence of viscosity linked to the costs of penetration and promotion of typical products in foreign markets, whose costs borne by the companies are aggravated by the structural absence of international projection in the large Italian distribution.
The analysis of the ranking of the top ten destination countries confirms the centrality of the advanced countries as major outlet markets, including the substantial weight held by Germany, France and the United Kingdom. This result is attributable to a contamination of the culinary tradition among countries that are geographically close, originating from the intensity of the
migratory and tourist flows that have affected the relations in continuous mode. The ranking of the first commercial partners does not show a particular dynamism, signaling a consolidated
composition of the target markets. The entry of Russia and the Swiss margin should be highlighted with respect to the beginning of the last decade. The analysis of the distribution of imports by geographical area shows a strong concentration. Consistently with the findings for the
manufacturing industry as a whole, the majority of the sector's imports originated from Western Europe, with a weight of 91.9%, significantly higher than the average for the industrial sectors in these markets. A recent growth of the New EU Countries is evident, which reached in 2013 a weight close to 3% on national purchases, and an Asia seal after the deterioration experienced in the period 2003-08, which is confirmed as second supplier with a weight of 4% on domestic purchases.
Within the ranking of the main world exporters, Italy is in first position, holding with a share over 35% an undisputed leadership on the international scene, affected by a moderate deterioration during the last two years.
Among the main competitors in the relevant markets for Italy we note China with a growing share.
Two other Asian countries are positioned within this ranking, both with increasing shares, namely Thailand and South Korea.
The less dynamic character of the competitive arena is linked to the presence of high levels of production specialization of Italian companies and to the typical Made in Italy of the reference product, which configure competitive assets that are difficult to imitate.
The data referring to the Netherlands and Belgium and Luxembourg is not exempt from the
16 https://www.istat.it/it/files/2013/02/cap3_nuovo.pdf Internazionalizzazione delle imprese e performance
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presence of critical statistics, linked to the commercial hub activity of the ports located throughout the territory.
The ranking of the major world import markets shows the United States in first position with a substantially stable weight. It should be noted that between the two-year period 2007-2008 and the two-year period 2012-2013 the major European markets such as Germany, France and the United Kingdom lose weight while remaining at the top of the ranking.
The sector has shown in recent years a fair international competitiveness, as evidenced by the growth of exports at constant prices, in line with market demand. In general, the good alignment with the world demand for exported quantities is an indicator of the ability of companies in the sector to take advantage in a timely manner of the opportunities offered by foreign markets, which open for the first time to import pasta and therefore have margins for growth important compared to the already saturated internal market.
Italy is a country of strong specialization and also for this reason the incidence of imports on domestic demand is a marginal aspect. In 2013, however, imports grew more than recorded by the trend in consumption, a trend that led to an increase in the sector's import penetration, but above all an indication of an appeal through purchases from abroad to more convenient supplies to satisfy a demand that is increasingly attentive to saving. Much of the growth in imports is
attributable to flows from Western Europe and only secondarily from Asia from the area of North Africa and the Middle East. The analysis shows a more sustained variation of the exported values, fed a little from all the monitored areas. Given also the size of the markets and the affinities in the diets, Europe and North America have offered the greatest contribution.
Faced with an expected foreign demand to gain a bit of liveliness, in 2014 and 2015 it is estimated that the dynamics of exported volumes can further accelerate, remaining above the historical average also in 2016. Imports in volume should assume in the two-year period 2014- 15 a trend on rates lower than those of exports, although improving thanks to a livelier consumption scenario along the scenario. The sector balance is therefore expected to continue its growth path throughout the forecast period.
Overall we can outline various strengths, including the very high level quality achieved, the image and recognition of Made in Italy, the variety of the offer combined with good innovation skills and in-depth knowledge of the product, and various weaknesses including the basic unit margins due to the high costs of Italian raw material , the strong pulverization of Italian industry, as well as the scarce presence abroad due to greater product orientation instead of distribution orientation.
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Figure 19 Geographical export distribution by area
Figure 20 Ranking of the top 10 destination countries and weight of each country on total exports
Figure 21 Geographical import distribution by area
micro sector manufacturing index
2003 2008 2013 2013
Western Eu 61.60 64.6 60.2 20.9
New countries EU 2.90 3.8 4.8 8.9
Other countries EU 1.90 3.6 5 7.6
NAFTA 13.70 9.5 11.4 9.1
Asia 8.40 7.8 8.1 10.1
Afr. Cent.South-Oceania 7.10 5.2 3.4 2.6
North Africa-Middle East 2.80 3.3 4.5 7.8
America Latina 1.60 2.2 2.7 3.1
micro sector manufacturing index
weight weight weight weight
2003 2008 2013 2013
Germany 19.10 19.20 17.50 12.80
France 14.30 14.50 13.70 11.10
UK 11.10 12.90 11.60 5.30
US 11.50 7.60 9.30 7.30
Japan 6.70 5.80 4.60 1.70
Russia 0.80 1.60 2.80 3.00
Netherland 3.00 3.40 2.70 2.30
Sweden 2.60 2.60 2.70 1.00
Belgium and Luxembourg 2.30 2.10 2.40 3.20
Switzerland 1.90 2.00 2.20 5.30
micro sector manufacturing index
2003 2008 2013 2013
Western Eu 83.60 94.4 91.9 60.3
New countries EU 0.30 0.3 2.6 9.9
Other countries EU 0.00 0 0 4.8
NAFTA 0.30 0.1 0.1 4.1
Asia 12.60 4.4 4 15.1
Afr. Cent.South-Oceania 0.80 0.3 0.1 1.5
North Africa-Middle East 2.20 0.4 1.3 2.5
America Latina 0.10 0.1 0 2
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Figure 22 Foreign Trade, Average Annual Variations (constant Prices)
Values in million euros
Values in million euros 2013.00 2012 2013 2014 2015 2016
IMPORT 42 9.9 3.5 2.49 4.3 3.8
EXPORT 1730 2.7 3.9 4.6 6.2 4.2
Trade balance 0 1614 1688 1751 1840 1897
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