PASTA IN EUROPE: OPPORTUNITIES AND CHALLENGES FOR MANUFACTURERS UNAFPA/SEMOULIERS AND IPO BOARD MEETING 23 MAY 2014 - LYON ILDIKO SZALAI SENIOR ANALYST
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MARKET ENVIRONMENT ADDING VALUE TO PASTA LESSONS FROM BEYOND EUROPE KEY TAKEAWAYS
MARKET ENVIRONMENT 2014 Expected to Be Turning Point in Real GDP Growth Globally 4 World: % Real GDP Growth 2011 2012 2013 2014 4.0% 3.2% 3.0% 3.6%
MARKET ENVIRONMENT Modest Recovery Expected in GDP Growth in Europe by 2019 5 8 % Year on Year Real GDP Growth by Region 2009-2019 % y-o-y growth 6 4 2 0-2 5.4 2.9 3.3 3.7 4.6 2.4 2.0-4 -6-8 Asia Pacific Australasia Eastern Europe Latin America Middle East and Africa North America Western Europe 2009 2014 2019
MARKET ENVIRONMENT Pasta Volume Growth Remain Slower & Lower than Overall Food 6 World: Retail Volume Sales of Packaged Food Versus Pasta 2012-2014 % y-o-y growth 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2011-12 2012-13 2013-14 Packaged Food Pasta
MARKET ENVIRONMENT Underwhelming Growth in Western Europe 7 % y-o-y growth 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Pasta: Retail Volume Sales Growth Eastern and Western Europe 2012-2014 2011-12 2012-13 2013-14 Eastern Europe Western Europe World
MARKET ENVIRONMENT Value Growth Outpace Volume in Global Pasta 8 US$ bn rsp 40 20 0 Global Pasta Market Size by Category Value 2010-2014 2010 2011 2012 2013 2014 Dried Pasta Chilled/Fresh Pasta Canned/Preserved Pasta 5.8% CAGR '000 tonnes 20,000 10,000 0 Global Pasta Market Size by Category Volume 2010-2014 2010 2011 2012 2013 2014 Dried Pasta Chilled/Fresh Pasta Canned/Preserved Pasta 1.4% CAGR
MARKET ENVIRONMENT Europe Contributes Little to Global Pasta Value Growth up to 2018 9 2013 Global Pasta Retail Value: US$27.9 billion 2018 Global Pasta Retail Value: US$31.3 billion Absolute Market Value Growth by Region 2013-2018 -500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Middle East and Africa Latin America Eastern Europe Asia Pacific North America Australasia Western Europe
MARKET ENVIRONMENT Only Two European Markets Ranks in Global Top 10 10 US$ mn rsp 400 350 300 250 200 150 100 50 0 Pasta: Top 10 Markets Absolute Market Value Growth 2013-2018 6 5 4 3 2 1 0 % CAGR 2013-2018 Absolute Market Value Growth - 2013-2018 (US$ mn rsp) % CAGR 2013-2018
MARKET ENVIRONMENT Top Growth Markets in Europe 2013-2018 11 United Kingdom 0.9% Belarus 3.9% Germany 2.2% Austria 3.7% Ukraine 3.3% % CAGR 2013-2018, retail value terms, 2013 fixed exchange rate, US$ million Serbia 2.7%
MARKET ENVIRONMENT Still Dried Pasta Generates Most of European Growth 12 Absolute Market Value Growth 2013-2018 - US$ mn rsp 200 180 160 140 120 100 80 60 40 20 0-20 Top 10 European Pasta Markets Growth Prospect by Category 2013-2018 Germany Russia UK Austria Norway Ukraine Poland Belarus Serbia Portugal Canned/Preserved Pasta Chilled/Fresh Pasta Dried Pasta
MARKET ENVIRONMENT Market Value Contraction in European Markets 13 0.0 Five European Markets Negative Growth Prospects 2013-2018 -100.0 US$ mn rsp -200.0-300.0-400.0-500.0-600.0 Italy Spain Switzerland Romania France Absolute Market Value Growth - 2013-2018 (US$ mn rsp)
MARKET ENVIRONMENT Moderately Consolidated but Private Label Dominated Europe 14 Axis Title 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Western Europe Pasta Competitive Landscape 2010-2013 2010 2011 2012 2013 Top 10 Companies Private Label Others Axis Title 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Eastern Europe Pasta Competitive Landscape 2010-2013 2010 2011 2012 2013 Top 10 Companies Private Label Others
STILL UNSTABLE MARKET ENVIRONMENT ADDING VALUE TO PASTA LESSONS FROM BEYOND EUROPE KEY TAKEAWAYS
ADDING VALUE TO PASTA Pasta Opportunities in the Gloomy Economy 16 Convenience Big Night- In Health Credentials
ADDING VALUE TO PASTA Time Scarcity Drives Need for Convenient Shopping 17 60 Western Europe: Pasta Distribution Channel Breakdown 2008/2013 Supermarkets % sales 40 20 0 2008 2013 Hypermarkets Discounters Independent Small Grocers Smaller outlets lose share % sales 40 30 20 10 0 Eastern Europe: Pasta Distribution Channel Breakdown 2008/2013 2008 2013 Supermarkets Hypermarkets Discounters Independent Small Grocers Supermarkets/ hypermarkets stand up to discounters
ADDING VALUE TO PASTA Pasta Meals: Convenient Cooking - Preparation 18 Pasta dish promotions Cooking time promoted front of package Single portion on-the-go consumption
ADDING VALUE TO PASTA Premium Price of Healthy Pasta Offers Dynamic Growth but on Small Scale 19 % y-o-y growth 30 25 20 15 10 5 0-5 Western Europe: Pasta Growth Performance by HW Category 2009-2013 2008-09 2009-10 2010-11 2011-12 2012-13 Gluten-Free Pasta NH High Fibre Pasta Organic Pasta Pasta Western Europe: Pasta Retail Value Sales by Category - 2013 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Gluten-Free Pasta NH High Fibre Pasta Organic Pasta "Standard" Pasta
ADDING VALUE TO PASTA Dried Pasta Eating into Share of Foodservice 20 US$ billion Western Europe: Total Retail Value Sales through Full-Service Restaurants 2009-2014 235 230 225 220 215 2009 2010 2011 2012 2013 2014 % of total chilled ready meals % Italian Chilled Ready Meal 2008-2013 30 20 10 0 2008 2013 Austria Germany Challenging economy underpins home cooking trend Italian cuisine grows in popularity
ADDING VALUE TO PASTA Chilled Formats Thrive on Quality and Price in Germany 21 Natural ingredients Variety of vegetable fillings No preservatives Euro / 400 g pack 3 2 1 0 Variety of Retail Formats Dried vs Chilled/Fresh Pasta Unit Prices through Supermarket vs Discounter - 2013 Germany Austria Germany Austria Dried Pasta Supermarket Discounter Chilled/Fresh Pasta
ADDING VALUE TO PASTA Dried pasta outperformed chilled/fresh formats in the UK 22 Benefits from television cooking New shapes, even for children Dried formats are the real Italian style Wholegrain and organic lines tap into health trend Price Dried Pasta Big night in occasions
ADDING VALUE TO PASTA Strongest Western European Growth for Pasta - the Austrian Way 23 Austrian brands dominate Pasta for less than 1 per kg Innovation targets food intolerance consumer group Nostalgia in packaging
ADDING VALUE TO PASTA Increased Travel to Italy Inspires Eastern European Pasta Sales 24 1,500 Tourism Arrivals from Eastern Europe in Italy 2000-2014 000 trips 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Arrivals from Poland Arrivals from Russia Travelling to Italy is expected to increase significantly because of safety concerns in competitor markets like Egypt and Tunisia. Italian-travelled consumers in Eastern Europe are more receptive to pasta offerings than the rest of the population.
ADDING VALUE TO PASTA Russia: Pasta Dynamically Growing Source of Carbohydrate 25 000 tonnes 12,000 10,000 8,000 6,000 4,000 2,000 0-2,000-4,000-6,000-8,000 Pasta Versus Rice and Potato in Russia. Retail Volume Growth 2009-2013 Potatoes Pasta Rice Total Volume, 2013 % CAGR 2009-2013 6 5 4 3 2 1 0-1 -2-3 -4 % CAGR 2009-2013
ADDING VALUE TO PASTA Eastern Europe: Expansion In Independent Groceries a challenge 26 % of pasta sales through Independent Small Grocers Pasta Sales Through Independent Small Grocers 2008-2013 50 40 30 20 10 0 Russia Hungary Poland 2008 2009 2010 2011 2012 2013 Consumers continue to be quite price sensitive and trade down to side dish staples during periods of economic duress Low, competitive price at independent groceries is necessary
ADDING VALUE TO PASTA Europe: Producers Target Wider Consumer Range 27 The health conscious Wholemeal, free-from, organic, fortified The price conscious Diverse distribution channel Pasta for less than 1 per kg The time conscious Promote short cooking time/easy pasta recipes The taste conscious Continuous expansion of premium fresh pasta offerings, e.g lamb-filled wine flavoured chilled pasta
STILL UNSTABLE MARKET ENVIRONMENT ADDING VALUE TO PASTA LESSONS FROM BEYOND EUROPE KEY TAKEAWAYS
LESSONS FROM BEYOND EUROPE Middle East and Africa & Latin America Drive Global Growth 29 Absolute Market Value Growth by Region 2013/2018 - US$ mn rsp 72.0 482.5 992.3 1,825.1 Latin America Middle East and Africa Europe Others
LESSONS FROM BEYOND EUROPE Versatility and Adaptability the Key to Success 30 Latin America Proven specially popular among less affluent consumers. Middle East & Africa Adoptable to a variety of traditional cuisine with sauces and fillings Mexico Pasta Beyond Europe Versatility is a key driver of sales in the Mexican market. Iran Diversification of products on store shelves & withdrawal of bread subsidies
STILL UNSTABLE MARKET ENVIRONMENT ADDING VALUE TO PASTA LESSONS FROM BEYOND EUROPE KEY TAKEAWAYS
KEY TAKEAWAYS Winning Strategies in Europe 32 Western Europe: Largest Potential in Premium formats Eastern Europe: Strike Balance between Quality and Price Tailor and market offering to wide range of consumer segments Retail Expansion is Key for Reaching New Consumers
THANK YOU FOR LISTENING Ildikó Szalai Senior Analyst Euromonitor International www.euromonitor.com ildiko.szalai@euromonitor.com +44 (0) 20 7251 8024 EXT 2406