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April 20, 2020

Italy food sector fears fall in demand after Covid-19 spike

Italy's higher demand for homegrown food products is "atypical and fleeting", the president of food industry association Federalimentare has warned.

Italy’s higher demand for homegrown food products is “atypical and fleeting”, the president of food industry association Federalimentare has warned.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

Ivano Vacondio said hoarding by Italian consumers during the Covid-19 outbreak has, until now, camouflaged problems that will soon emerge.

Moreover, for its members, Federalimentare expects a 10-15% drop in sales of Italian food and beverage products across the domestic and overseas markets, leading to a halt in growth, or even a drop, in production output during the fourth quarter of this year.

The temporary closure of the foodservice industry in both Italy and across Europe has already dampened demand and is likely to be slow to re-emerge, even after businesses are given approval to reopen, with no date for this in sight.

Vacondio said the fact that foodservice outlets generate a large part of demand for medium-to high priced foods, such as meat and traditional protected designation of origin products like cheese has been reflected by Italy’s food exports falling since the start of the Covid-19 crisis. 

A survey conducted by national farmers’ association Coldiretti claimed to show about 70% of companies in Italy’s agri-food sector that export products reported a decrease in foreign sales in March, with fruit and vegetables, cheese and other dairy, cured meats and food preserves sectors notable victims.

Within Italy, declines in foodservice sales of manufactured foods is also a problem, given that over the past decade, the out-of-home sector has registered growth, while the at-home market has fallen, Federalimentare says.

Out-of-home food consumption generated EUR83bn in sales in 2019, representing a third of Italian national food consumption receipts last year, which reached EUR250bn.

Short-term headaches for Italy’s food industry include continual logistics delays caused by longer border controls and a lack of seasonal workers needed for the harvest months, already in full gear in Italy’s south.

Current concern is for perishable fresh fruit and vegetables and still unmet labour demands for the harvest, which normally employs nationwide around 350,000 foreign seasonal workers from over 155 countries, mainly Romania, Bulgaria and Poland. 

Travel bans to Italy in these countries means a quarter of crops are at risk due to a current lack of 200,000 foreign workers, estimated Coldiretti.

Italy’s minister of agriculture, Teresa Bellanova, told the Italian Chamber of Deputies on 15 April she is working on an emergency action plan to respond to the agricultural labour shortage. The plan will include an online platform to link labourers to farms and provide a real-time map of agricultural work needs. The system will deliver residency and work permits for irregular labourers who are already physically in Italy; and a rise in seasonal entry immigration quotas to support food producers.

In the meantime, Coldiretti is lobbying for the introduction of a simplified voucher payment system to persuade Italian students, pensioners and the unemployed to work on farms.

Last week, Coldiretti sounded the alarm over rising prices of fruit and vegetables, particularly apples and potatoes, due in part to the lack of seasonal foreign labourers.

Meanwhile, there is concern export bans in Serbia and Northern Macedonia, as well as Russia and other former Soviet states, will cause grain shortages in Italy within six weeks.

Vacondio, however, has argued the shortages in supply on some raw materials sourced in foreign countries – and any resulting price hikes for producers and retailers – would probably be resolved in the second half of 2020.

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Free Report
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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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