Consumer demand for high quality prepared food is driving sales of chilled processed food in Italy. Emily Woon reports on a market that supports locally produced food to the hilt.

Retail value sales of chilled processed food in Italy are expected to reach EUR9.4bn (US$11.1bn) in 2005, according to Euromonitor International’s latest research. This equates to growth of a robust 10.5% on 2004. Put in the context of Western Europe, this is even more impressive, as Italy is the second fastest growing market in the region. Indeed, the Western European average value growth rate for chilled processed food is only expected to register 4.2% for the same period.

Such robust growth is largely driven by key categories such as chilled processed meat, ready meals and processed fish/seafood, where manufacturers are becoming increasingly successful in launching new products that satisfy consumers’ demand for prepared and high quality food.

Strong nationalistic attitude drives NPD

As a result of a series of food scares such as BSE and avian flu in 2003, Italians generally prefer products made from national ingredients, which are considered to be safer and of higher quality than imported products. Such continuing concerns regarding food quality have led to the appearance of DOP (original name control) and IGP (protected geographical indication) products, especially in the chilled processed meat category.

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In line with this new trend, manufacturers are increasingly emphasising the origin of their products in their marketing materials to differentiate their products from standard ones. For example, manufacturers of mortadella, a traditional type of cooked pork-based cold cut, began to re-launch the traditional mortadella in the form of IGP products. By doing so, the manufacturers hoped to enhance the reputation of mortadella, which is traditionally perceived as being fatty and produced with inferior quality meat. According to the latest finding by Euromonitor International, IGP mortadella was indeed more popular among the Italian consumers than the standard mortadella in 2004.

Strong demand and supply of premium meat products drive growth

Chilled processed meats, which account for more than 85% of value sales in the Italian chilled processed food sector, will continue to witness strong growth in 2005, with retail value sales expected to grow by 11.2%. This is partly attributed to the continuing shift of consumers away from unprocessed meat, as a result of a lack of time for food preparation among increasingly busy Italian consumers.

More importantly, however, growth is due to the strong demand and supply of superior salami and ham products. Such products, which constitute part of the traditional Mediterranean diet, are increasingly sought after as more Italian consumers are returning to their traditional way of eating.

On the supply side, manufacturers are turning their attention to DOP and IGP cured hams in order to satisfy consumers’ demand for better quality ham products. Among the different types of ham, cured hams are still the favourite among Italian consumers as they are perceived to be healthier and of superior quality. Such perception is largely attributed to the fact that most cured hams sold in Italy are endorsed by consortia such as Parma and San Daniele, which guarantee that the hams are manufactured according to certain traditional standards and the pork used is of national origin.

Chilled ready meals benefits from fresh image

In 2005, the chilled ready meals sub-sector is expected to be the most dynamic category within the chilled processed food sector. According to Euromonitor International’s estimates, retail value sales of Italy’s chilled ready meals are likely to register a substantial year-on-year growth of 12.3%.

Chilled ready meals products, which are generally perceived to be fresher due to their very short shelf life, are becoming increasingly popular among many Italian consumers, who demand quick and easy-to-prepare food but remain uncompromising in terms of taste and quality. Among the different types of chilled ready meals, pasta-based, as well as chicken-based, ready meals are received best by the Italian consumers. Based on Euromonitor International’s findings, retail value sales of chicken-based ready meals registered a very promising growth of 43.2% in 2004.

Chilled fish/seafood assimilates into the Italian eating culture

Retail value sales of chilled fish/seafood is expected to continue to perform well, posting a healthy growth of 8% in 2005. This is largely due to the fact that chilled processed fish is no longer associated with any particular eating occasions and is increasingly common in the Italian diet. For example, chilled processed fish is widely used in “antipasto”(starter) dish such as fish salads.

On the other hand, the increasing presence of cheaper and decent quality private label products has also played a vital role in driving sales of chilled processed fish. This is largely due to the continued weakness in the Italian economy, where consumers are becoming more price-sensitive and would generally prefer value-for-money products.
Looking beyond 2005

Euromonitor International predict that consumption of chilled processed food will remain stable, with retail value sales forecast to grow at compound annual growth rate (CAGR) of 4.7% between 2005 and 2010, which is 0.3 percentage point higher than that recorded between 2000 and 2005.

Growth will continue to be driven largely by strong demand and supply of high quality chilled processed meats such as cured hams. Given the noticeable success of DOP and IGP products in recent years, more manufacturers will step up their production of such premium products in the near future.

However, the most robust growth is likely to come from the chilled ready meals sector, with retail value sales of chilled ready meals predicted to register a CAGR of 14.6% between 2005 and 2010. The fresh and healthy image associated with chilled ready meal products combined with new product innovations will continue to generate demand from the local consumers, who are increasingly intrigued by the convenient yet tasty product.

Related research from Euromonitor

Chilled Processed Food in Italy