Italy Food and Drink Report Q4 2012

The prognosis for Italian consumers remains relatively grim, as we forecast that private consumption will contract by 2.3% in 2012, significantly worse than the 1.6% contraction in 2009. Further, we expect private consumption to fall by a further 0.1% in 2013 as Italian households are hit by austerity measures. In March, households paid the increased regional surtax on personal income and, in mid-June, they were hit by a new property tax. A proposed VAT increase in October was put off, only to be replaced by EUR26bn in spending cuts that will hit social transfers. Unemployment will also continue to weigh on consumption, and overall Italian household purchasing power is being eroded. We also have revised our real GDP forecast for Italy down from -2.1% to -2.3% in 2012 and from 0.1% to 0.0% in 2013 as the result of new austerity measures implemented by the government.

Headline Industry Data (local currency) ? 2012 per capita food consumption = -0.2%; forecast to 2016 = +4.3% ? 2012 alcoholic drink value sales = +2.9%; forecast to 2016 = +13.3% ? 2012 soft drink value sales = -1.8% ; forecast to 2016 = +5.2% ? 2012 mass grocery retail sales = -0.2%; forecast to 2016 = +5.2%

Key Industry Trends And Developments Barilla Announcements Fit Branded Focus: In summer 2012 Italian food group Barilla announced that former Unilever executive Claudio Colzani is to be the company’s new CEO. The move came shortly after Barilla revealed it was looking to offload its German bakery business Lieken. Taken together, these moves provide a signal of the firm’s underlying strategy, with a focus on its core consumer brands likely to take centre stage. Barilla is the world’s largest pasta producer and therefore looks particularly threatened by the growth in private labels, with pasta proving to be a sector for which the advantages of branded products are harder to convey. However, with strong brands and a focus on its premium positioning alongside innovation, we believe Barilla is likely to be able to keep this threat at bay over the longer term.

Campari Acquires LdM and Enters Rum Sector: In September 2012, Italian drinks giant Campari made the third largest acquisition in its history with the purchase of a majority stake in Lascelles deMercado & Co, parent company of the Appleton Estate and Wray & Nephew rum brands. The move marks Campari’s entry into the rum sector. Campari has agreed to buy 81.4% of the company from CL Financial, with a view to purchasing the company outright for US$414.8mn. The addition of the Italy Food & Drink Report Q4 2012 © Business Monitor International Ltd Page 8

Appleton, Wray & Nephew and Coruba rum brands will help the company further build its presence in key North American markets. Key Risks To Outlook

Our outlook is conditional on developments both in the eurozone crisis and in Italian politics. Our core view for the eurozone to ‘muddle through’ is premised on robust German demand allowing the eurozone economy to rebalance gradually. Also although the substantial fiscal adjustment implemented over the last 18 months has put Italy on a sustainable fiscal trajectory, allowing credit conditions across the economy to ease gradually in 2013, the country’s large public debt load leaves it vulnerable to crises of confidence.

Table of contents

Chapter 1 - BMI Industry View

SWOT Analysis

Italy Food Industry SWOT

Italy Drink Industry SWOT

Italy Mass Grocery Retail Industry SWOT

Chapter 2 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Western Europe Risk/Reward Ratings

Table: Western Europe Food & Drink Risk/Reward Ratings Subcategories, Q (scores out of )

Table: Western Europe Food & Drink Risk/Reward Ratings, Q

Italy’s Food & Drink Risk/Reward Ratings

Macroeconomic Outlook

Table: GDP By Expenditure

Chapter 3 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, -

Canned/Prepared Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, -

Table: Frozen Fruit & Vegetables Volume Sales, Production & Trade, -

Table: Snack Foods Volume Sales, Production & Trade, -

Table: Pasta Volume Sales, Production & Trade, -

Meat, Fish And Dairy

Table: Meat Volume Sales, Production & Trade, -

Table: Fish Volume Sales, Production & Trade, -

Table: Oils & Fats Volume Sales, Production & Trade, -

Drink

Soft Drinks

Table: Soft Drink Value/Volume Sales – Historical Data & Forecasts, -

Alcoholic Drinks

Table: Alcoholic Drink Value/Volume Sales – Historical Data & Forecasts, -

Mass Grocery Retail

Table: Mass Grocery Retail Sales By Format , -

Table: Retail Sales Breakdown By Format Type

Trade

Table: Trade Indicators – Historical Data & Forecasts, -

Chapter 4 - Food

Key Industry Trends And Developments

Barilla Announcements Fit with Branded Focus

Parmalat Sales Grow At Home And Abroad

Barilla Posts Threefold Rise In Net Profit

Princes To Acquire AR Industrie Alimentari

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Ferrero Invests In Mexican Confectionery Sector

De Cecco Looks To Russia For Growth

Stevia’s EU Approval Will Spur Product Development

Market Overview

Food Processing

Consumption

Prepared Food

Confectionery

Chapter 5 - Drink

Key Industry Trends And Developments

Campari Acquires LdM and Enters Rum Sector

New Tax on Soft Drinks

Lavazza Considers Franchising for Key Indian Business

Italian Wine Producers Look To Asian Market

Russian Standard Vodka Looking To Italy For Wine

Market Overview

Hot Drinks

Soft Drinks

Alcoholic Drinks

Chapter 6 - Mass Grocery Retail

Key Industry Trends And Developments

Conad Investing Following Resilient Performance

Auchan Continues Expansion

Conad Buys Billa Stores As Local Operators Continue To Outperform

Difficulties In Italian Retailing Highlighted

Esselunga Results Highlight Price Sensitivity Of Italian Retail

Private Labels Gaining Market Share

Market Overview

Table: Structure Of Italy’s Mass Grocery Retail Market By Estimated Number Of Outlets, -

Table: Annual Average Sales Per Outlet By Format (US$mn)

Chapter 7 - Competitive Landscape

Table: Key Players In Italy’s Food Sector

Table: Key Players In Italy’s Drink Sector

Table: Key Players In Italy’s Mass Grocery Retail Sector

Chapter 8 - Company Monitor

Food

Gruppo Galbani (Lactalis)

Perfetti Van Melle

Gruppo Barilla

Carapelli Firenze SE

Drink

Gruppo Campari

Birra Peroni (SABMiller)

Mass Grocery Retail

Conad

Chapter 9 - Country Snapshot

Italy’s Population By Age Group, - (‘)

Italy’s Population By Age Group, - (% of total)

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Italy’s Key Population Ratios, -

Italy’s Rural And Urban Population, -

Chapter 10 - BMI Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 11 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 12 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Italy (in Europe)