Insights

Fiera Milano, Rho
17-20.05.2021

Export and digital: the passport to F&B growth in 2020

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% growth between 2020 and 2021 for grains and moderate increases also for meat, fish and vegetable oils.

International trade that is resilient and... surprising

 

According to the Food Industry Monitor of the University of Gastronomic Sciences in Pollenzo, in collaboration with Ceresio Investors, growth in the Food & Beverage sector in 2020 will fall short by roughly 5%, not an encouraging figure but relatively positive if compared to the estimated drop in global GDP of -9.5%. 2021 will be a rebound year, with sector growth of 7.7%. The FIM also confirms that international trade will be the driving force, with exportation in the sector increasing by an average of 11% during the two-year period of 2020-2021. Segments that will 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.

 

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 2.6 billion € in exports in 2019, experienced another leap in terms of international sales in March, equating to 21% in volume, with the exportation of an additional 97,000 tons, 72,000 of which to EC markets. Against all expectations, wine has also seen positive results, up 5.1% on non-EU markets in the first four month period of 2020.

Intercepting an evolving global demand

 

But what are the really important factors for international consumers when purchasing a product? The 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, the main worry for 55% of people, along with health, for 53%. Environmental (38%) and social aspects (35%) are also important. In particular, consumers look out for a clear list of ingredients (65%) and the origin of the product and its ingredients (64%), but also for sustainable aspects such as compostable or recyclable packaging (68%), measures to reduce food waste (61%) and respect for the well-being of the animal (53%).

 

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. On-line and off-line 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, respect for the ingredients or nutritional values for example, but also in terms of product history and sustainability. 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. While on the one hand, the pandemic has resulted in an increase in the perceived value of certifications and designations of origins as a guarantee of safety, on the other hand we have seen a drop in rates for certain brands only because their respective products are not normally associated with that country or place of origin in the mind of the consumer. 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%) and the United States (20.3%) followed by the Netherlands (12.5%), Spain (12.2%) and the UK (10.4%). Less dynamic, but still on the up, are Germany (8.9%) and Italy (6.4%), while the worst performer is France (-0.7%).

 

One of the most interesting trends is the continuing growth, albeit to a varying extent in different countries, of private labels, with the partial exception of the UK and the Netherlands. White label products account for 33.9% of food in France (+1.7%), 30.9% in the Netherlands (+0%), 19.7% in Italy (+2%) and 18.7% in the USA (+0.5). There is negative growth in the United Kingdom (-2.4%), but this is in relation to a penetration that already equates to more than half the total (53%), by far the highest among the analysed countries.

 

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 +55%, for a total of almost one billion euro in value. Local stores are also performing well.

 

FOCUS

 

Five trends on which to bet

 

1. The on-line shopping boom is here to stay. Also for food. 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 White 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 to international markets, now is the time to do so, choosing reliable institutional partners.