Dry pasta, 2013 consumption in Italy on the decline11 September 2013
In Italy sales drop by 1.6 % in the first quarter. Only discount brands aren’t hit.
by Carlo Pisani
A minus sign has also appeared alongside dry pasta consumption in 2013. There are those who interpret this data as a “predictable” reaction of demand caused by further reductions in the purchasing power of Italian families. Others, on the other hand, associate these figures with the negative impact of a prolonged economic crisis of serious proportions.
An indication, in other words, which is a little more worrying than a simple change in trends. The minute a non-cyclical product like dry pasta (and food in general) goes into negative figures, it expresses something more than a normal defensive reaction of the consumer, faced with a burdensome double-dip recession following the recession endured in 2008 – 2009.
Let’s take a look at the figures. Based on the surveys carried out by the Ismea-Gfk Eurisko panel in the first quarter of 2013, sales of semolina pasta, which represent the “hard core” of the sector, suffered a quantitative reduction of 1.6% compared to the same period last year. We should remember that the same datum referring to the entire year closed with a plus sign, albeit limited to a fractional 0.2% compared to 2011.
Last year pasta consumption had, in short, managed to stay roughly on a par. But this year it seems that the situation is changing rapidly. The minus 1.6% of actual purchases in fact takes on an even more worrying meaning when one considers that, between January and March 2013, spending registered a sharp drop of 10%.
The high rate of promotions in large retail outlets, where discounts in the supermarket’s pasta section are basically constant, explains the severe drop in turnover. With purchases which in fact appear to be moving, not en masse but certainly in significant volumes, over to products on special offer as well as towards low cost brands and private labels (own brands) which are making ground in this second wave of recession, both in terms of market shares and consensus, across the whole range of references taken into consideration (+6.2% of the overall turnover in 2012).
But what do these figures hide, in particular the heavy about turn in expenditure which is now also affecting a market leader and low cost product such as dry pasta?
First of all we need to have a better understanding of the phenomena at the bottom of the last two recessions in Italy. The first, in 2008-2009, as Confindustria (Italian employers’ federation) Study Centre explains in its latest report “Industrial Scenarios”, lasted for no less than seven quarters, although not consecutive, and led to a fall in GDP of 7.2%. The curb on the economy was due mainly to the decline in exports (-21.7%), rather than the fall in domestic demand (-3.8%).
On the other hand, the second recession, still underway which has so far lasted for eight quarters (a post-war record), has resulted in a reduction in GDP of 4.1% up to the first quarter of 2013, but in this case it has been determined solely and exclusively by the collapse in domestic demand (-11.7% up to the end of 2012), with exports growing, albeit at a slower pace compared to the previous two years.
That consumption, even of pasta, is therefore experiencing a major negative impact during this period linked to a longer (even if not so deep) recessive cycle, is not surprising. The extent of the phenomenon, however, is worrying, with overall retail sales for foodstuffs (including beverages) recording a -1.2% figure in the first quarter of 2013 (according to Istat -Italian National Statistical Institute) compared with the same period of last year.
If then we look at the non-food sector, the fall is even more substantial (-4.9%). What’s more these figures incorporate the trend in both quantities and prices and which therefore, being deflated, reveal an even more marked physical decline in purchased volumes.
Going back to the topic of pasta, with the exception of discount brands which continue to make ground, all sales channels are showing a negative trend in domestic purchases. The first quarter of 2013 has almost halved, no less, the volumes sold by traditional retail outlets (neighborhood stores) with the amount of dry pasta sold in a year falling by 47.5%.
The -5.1% registered by mini-marts is also a bad sign. For super- and hypermarkets the sales budget is still producing a negative figure (though less marked) with their volumes slipping by 1.9%.
In contrast only discount stores (+7.4% in volume), which also in turnovers have managed to benefit this year from a driving force in sales, have recorded an increase of 4.5% compared to the first quarter of 2012.
In large retail outlets, on the other hand, the turnover for pasta sales dropped by 10.8%. Already last year supermarkets and hypermarkets suffered a cut of 1.9% in proceeds, compared, however, with volumes which grew by almost 3 percentage points.
On the other hand, the last 12 months didn’t go very well for the discount stores which despite recording a physical drop in pasta sales of almost 5% compared to 2011, still managed to achieve a consolidated turnover, up by half a percentage point.
On a regional level, the geographical cross-section of the data returns a negative trend in the consumption of this type of pasta which is more apparent in the North. The quantitative results of these first three months of 2013 indicate reductions of 2.6% in the North-West and 2.1% in Triveneto and Emilia Romagna.
In the central regions, including Sardinia, 1.3% of the volume recorded in the first quarter of 2012 has been lost, while consumption in the South has dropped by just 0.9%, even in the face of a -12.2% in overall spending compared to reductions of around 9% recorded in other regions.
Returning to general data, the crisis (as we have said) is chipping away at this stage above all at consumption. But also national exports, which in 2012 registered an overall increase of 3.7%, this year showed signs of a first setback after three years of uninterrupted growth. For the whole of March 2013, Istat data certifies an annual decline in overseas sales of 0.7%. Food and drink however still continue to highlight progress, with a + 7% calculated by Istat compared to the first three months of 2012.
With regard to dry pasta, the quarterly budget documents (although the figures are still provisional), a marked improvement in overseas sales, which confirms the trade-off between domestic consumption and exports. With almost 535 million euros the overseas turnover scored an increase of 6.7%. Even more accelerated is the trend in volumes, with shipments of pasta sent abroad exceeding the 490 thousand tons mark (+8.6% compared to January-March 2012).
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