ISMEA SURVEY – THE RECESSION TAKES HEAVY TOLL ON THE ITALIAN FOOD INDUSTRY

The current economic recession appears to be taking a heavy toll on Italian food industry enterprises according to a recent survey conducted by Ismea on a panel of 1,200 industry workers. The sectors that have registered the least damage are fruit and vegetable, olive oil, rice, pasta, and white meat producers.

According to the Institute for the Food and Agriculture Market, data has revealed that trust in the sector has also been hit hard, with a net fall of -13.6 in the fourth quarter of 2008 (the indicator used is between 100 and -100), a notably large decrease when compared to the -0.7 of the previous quarter.

The study also revealed that sector workers’ opinions were influenced by both the current levels of stocks and orders as well as the expectation of further deterioration for the first quarter of 2009. The number of enterprises that have declared an increase in remainder stock of final products due to the slowdown of orders and sales has also grown.
Similarly, large-scale food distributors also declared that in the fourth quarter of 2008 there was a notable increase in negativity towards the developing recession. According to the Ismea survey that was conducted on 200 enterprises, sentiment went from +12.2 for the third quarter of 2008 to a current -16.2.

It also appears that 73% of those surveyed claimed that the two main difficulties are the contraction of national demand and the financial situation in the sense of prolonged time periods for receiving payments and the difficulty of accessing credit. Above all, there is a strong deterioration in sales expectations, with an increase in the number of operators who have declared an above average level of stock for the period. The effects of the crisis have touched all products at a national level. In the different geographic regions, the negative sentiment has peaked in southern Italy and is only slightly less in central and northern Italy.

All products in the fourth quarter of 2008 registered negative sales, with high-end wines, sparkling wines, and fish being the hardest hit. In conclusion, the survey also revealed a strong increase in promotional sales by large scale distributors, while expectations on the dynamics for the first quarter of 2009 revealed a decrease for 28% of those interviewed (while expectations for a decrease in sales regarded only 2.3% of enterprises at the beginning of last year) and stagnancy for 58.6% (versus 25.7% at the beginning of 2008).