Report Highlights: Italian food and beverage exporters have market promotion resources available to them from the EU, the Italian government, and from regional budgets. This report outlines the main institutions, programs and philosophies underlying the distribution of this support.
GENERAL ECONOMIC DATA:
Italy is the world's sixth largest economy, with a GDP of almost $1.5 trillion, and average annual per capita income of over $25,000. This economy remains divided into a developed industrial north, dominated by private companies, and a less developed, welfare-dependent agricultural south, with 20% unemployment. Italy has a population of 58 million people who spend 20% of their disposable income on food.The population is aging and will shrink in coming years. While living longer, Italians are having fewer children and are marrying at a much later age.Also, contrary to trends across Europe, the majority of Italians continue to live in small cities and towns.Consumer price inflation has been around 2% per annum, but this has been accelerated by the conversion from the lira to Euro, and by the strength of the Euro against the dollar.Unemployment has remained stable at 9%.
ITALIAN AGRICULTURAL SECTOR AND INTERNATIONAL TRADE:
Italy is one of the largest agricultural producers in the European Union. Its major trading partners in food and agricultural products are EU member states, with neighboring France and Germany each accounting for roughly a fifth of Italy's trade. The US is Italy’s largest non-EU market.Italy's major exports are wine, olive oil, cheeses, and fruits and vegetables. Italian perception of the place and role of Italian food in the global marketplace ties into the issue of protected designations of origin, or geographic indications, which represent only a small fraction of the value of total food production yet loom large in Italy's national marketing of its food exports as 'high quality and Italian”.
On balance, Italy is a net importer of agricultural products. In 2004, Italy's annual imports were valued at $43 billion and exports were almost $30 billion. Italy relies on agricultural imports for food or fiber manufacturing, processing, or repackaging, and subsequent export as value-added, consumer-ready exports. With the major exception of wine grapes, and a few other products including tomatoes and buffalo milk for mozzarella, Italy's food industries turn out finished, consumer-ready products using raw products from non-Italian sources.
Because the export market drives the Italian food processing sector, world market conditions, and particularly the economic performance of Germany and other northern neighbors, heavily influence Italian business performance. Outside the EU, the weak dollar and strong Euro have continued to exert pressure on Italian food export prospects. The notable exception is the U.S. where Italian wine sales continue to grow in spite of the 'expensive' Euro.
The EU-25 supplied almost 70 percent of Italy's global food and forestry imports in 2004. Italy's exports of wine dominate its food export profile, followed by pasta and fruits and vegetables. Italy is Europe's largest producer of organic fruits and vegetables.
As previously mentioned, trade with the EU member states dominates Italian commercial activity in food and beverages.Yearly, about 65% of Italian food and agricultural exports globally are destined to EU partners.Horticultural products are significant in the mix. Italy’s foremost customers worldwide (by value) for food and beverages are Germany, followed by France, the United Kingdom, and the U.S. The government of Italy promotes food and wine in northern Europe and the rest of the world, by targeting consumer interest in high-value gourmet products, and selling an image of Italian regional specialties.Preliminary data for 2005 indicate growth in Italian wine exports - export volumes have grown by 9 percent, but value only by 2. The reason for this is much larger exports of table wines, both bottled and bulk, and reduced profit margins on the quality wines.Exports to the U.S. were stable in quantity, but declined in value. The Italian wine industry is very concerned about the growing price and quality competition on the world market from “new” wine producing countries, such as Australia, Chile, Argentina and South Africa.Imported wine was until recently a negligible element in the total Italian wine market, and usually comprised prestige products, such as Champagne, Port, and Sherry from other EU countries.Recently, however, imports have been rising rapidly, first because of available inexpensive Spanish bulk wines, which are blended domestically, and, second, starting in 2004, because of significant shipments of U.S. bulk wine, which is bottled locally and then re-exported to other EU countries.