Why this is important to Wisconsin businesses: Food is important in Italian culture and consumers are willing to pay a high price for quality, creating opportunities for imported premium products to remain competitive.
Italy is the third-largest country in the European Union, both in terms of population (60.3 million) and in terms of GDP ($2 trillion in 2019). Looking at the country’s economic development before the COVID-19 crisis, real GDP growth had stagnated in the prior two years: While it increased by 1.7% in 2017, in 2018 it grew by 0.8% and in 2019 by 0.3%. One reason for this stagnation is the high government debt and unemployment rate. With a national debt of 134.8% of GDP in 2019, Italy significantly exceeds the regulations of the Maastricht agreement, which allows a maximum national debt of 60% and applies to all states within the European Union. In addition, Italy’s unemployment rate is 9.9%, exceeding the EU average of 7.5%.
In the beginning of 2020, Italy was among the first countries in the EU hit by the pandemic. This has had a strong impact on Italy’s economy, which is expected to shrink by 10.5% in 2020. However, for 2021, an increase of 6.5% is predicted. If the EU decides on an aid package for countries particularly weakened by COVD-19, this would add some security to Italy’s weakened economy.
With revenue of around $170 billion in 2018, the agro-food sector is one of the most important industries of the Italian economy. Northern Italy especially is strong in agriculture, as well as food processing, due to the beneficial climate. One of the reasons for the strength of the food industry is the strong Italian tourism sector, drawing around 40 million tourists annually. In addition, Italians on average spend around one-fifth of their income on food, the highest expenditure on food in the EU. This emphasizes the high social value of food in Italian culture and the resulting large market for food products. The premium food segment in particular is growing, with strong demand for premium organic products and health food grocery categories. On the other hand, the sales volume of convenience food is also growing—one major reason for this being the increasing number of single-occupant households. In 2018, Italy imported food in total worth of $38 billion. Imported seafood made up the largest share, followed by meat, grain and bakery products, milk and coffee.
Despite the general economic downturn, Italy’s food industry performed well in 2020. In total, the expenditure per household on food increased by 5.5%, mainly due to stockpiling and more food preparation at home during the pandemic. Meat, dairy and bakery products had the highest increase this year. The industry is expected to continue to grow.
Wisconsin’s food exports to Italy have increased significantly in the last three years. While in 2017, $73 million worth of food was exported, in 2019 the value was already $120 million. This rapid increase is largely due to the trade dispute with China, which has led to lower prices for food imported from the U.S. Despite the pandemic, food exports from Wisconsin to Italy have remained stable at $84 million USD from January to September 2020. Wheat, kidney beans, cranberries and food preparations (not canned or frozen) are among the top categories imported from Wisconsin.
Along with stable demand for Wisconsin products in Italy, there are offers new opportunities for Wisconsin food businesses in the market. As the number of single-person households is increasing, this raises the demand for foods that are both convenient and nutritious. Wisconsin companies, with their strength in research and innovation, could support Italy in meeting this demand—and with Italians’ willingness to pay for high-quality food, premium products remain competitive in the market.
The agricultural and food industries are of high importance for the Italian economy. As the pandemic situation improves, these industries are expected to rebound. This also offers opportunities for Wisconsin companies, especially in the convenience and premium nutritional segments. The annual Cosmo Food Fair (Nov. 6-10, 2021) is a good opportunity to gain more insight and make connections in the industry.
