Coop Report 2022, overview of Italy in the crisis

The Coop Report 2022, presented on 8.9.22 in digital preview, offers an analysis of the effects of the systemic crisis – war, inflation and recession, climate crisis – on the daily life of residents in Italy.

Awaiting the general winter, the only good news is the resilience of Italians. They have so far managed not to give up food consumption, despite economic and social difficulties.

Coop Report 2022, the bleak scenario

The scenario which follows the European Union’s engagement in the fratricidal conflict in Ukraine is increasingly bleak. The Coop Report summarizes some aspects:

• food poverty is rapidly growing (also due to speculation on commodities),
• the European trade balance is plunging like never before,
• the climate emergency has a deadly impact on everyone’s daily life

The Russo-Ukrainian conflict  has fanned the fire, generating an immediate recessive effect on the world economy:

• global GDP shows a decline from +5.7% in 2021 to a forecast +2.9% in 2022.
• for Italy, GDP growth forecasts are +3.2% for 2022 and +1.3% for 2023. But the Bank of Italy does not exclude a return to negative GDP in 2023 (-2%).

The impact of the crisis on food consumption

The food supply chain  is stressed by the ongoing crisis, given the involvement of global supply chains.

Inflation in Italy on processed food products has reached +10%. Slightly less worse so far than Germany (+13.7%) and Spain (+13.5%).

Food consumption Italians, moreover, still resist high prices:

• sales volumes show +7.8% (first half 2022 vs 2019), with a
• trend still positive. +0.5% in Italy, compared to -5.4% in the United Kingdom, -3.7% in Germany, -2.3% in France and -1.3% in Spain.

The approaching winter saves food

The general winter  will bring with it a further increase in food prices, as well as electricity and gas bills. But Italians still seem unconcerned about the trouble (nor its causes).

Almost half of the citizens, according to Nomisma projections based on sample surveys, declare themselves willing to reduce quantity but not quality of food. Cooking more, as in the lockdown.

Less food, but Italian and sustainable

Italianness and sustainability are the attributes of foods that the sample of respondents declare indispensable. To the detriment of ethnic foods,  free from, ready meals. Unfortunately, organic could also lose ground (-38%). A sign that Italian consumers still do not understand its essential and unparalleled value for health LINK ORGANIC AND IMMUNE SYSTEM and combating the climate emergency.

The  private label  (distributor brand, MDD) continue to develop, with a market share in 2022 close to 30% (+2.0 compared to 2019). And the branded industry (IDM), consequently, loses ground. With a further decline, -1.8%, compared to 2019 (with a  market share from 14.9% to 13.1%).

The large-scale retail trade in the vise

For the large-scale retail trade the ongoing crisis presents serious challenges. Distributors are indeed squeezed between rising industrial price lists and high energy costs and the reduced purchasing power of consumers.

Some items are unsustainable imbalances:

• against an annual increase of 15% in the prices of food products sold by industry to the GDO chains, sales inflation just exceeds +9% (the difference between purchase price and sales price marks a -5.7%, entirely to the disadvantage of large-scale distribution). The biggest price increases affect basic products. Seed oil rises by +40.9%, olive oil +33.1%, pasta +30.9%, flour +25.4%,
• The energy costs of the GDO which in 2019 amounted to 1.7% of turnover based on futures energy will triple, reaching 4.7% incidence in 2022 and 5.2% in 2023,
• the retail food retail is a structurally low-profitability sector, where small margin variations can seriously compromise the economic balance. Every 100 euros spent by the consumer generate for the retailer a net profit of just over 1.5 euros.

Discount and ecommerce

In 2022, after the slowdown imposed by the first phase of the pandemic, GDO marks a slight return to surface expansions, mostly to the detriment of neighborhood stores. However, the Discount, while the decline of hypermarkets continues.

Theecommerce (e-grocery) has lost the momentum driven by the lockdown and remains at very low levels especially compared to the rest of Europe. In 2021 it stands at 2.9% with 2030 forecasts not exceeding 6%, against much higher dynamism in the UK (from 12% to 19%) or France (from 8.6% to 16%).

The beacon of Coop branded products

The scenario outlined in the Coop 2022 Report seems to reward the choice by Coop, announced in May 2022, to invest more in branded products.

‘It may also have been a bold choice according to some, but born from objective data that the Coop Report 2022 confirms’, comments Maura Latini, CEO of Coop Italia.

the choice seems well established. ‘In the breakfast segment, the first to be renewed, we recorded in the first two months of launch (June/July) an increase in the market share of branded products by quantity of 8.3%, thus rising from 23.6% to 31.9%. The potential savings for families is considerable. First results in a difficult situation that we claim with a right dose of pride’.

Defending purchasing power

‘After thirty years, the cost of living has returned with high inflation not seen since the 1980s; for many consumers and many businesses it is an entirely unknown situation. Likewise, wages remain frozen and the Report highlights the widening gap between a growing part of the country that remains fragile and the wealthier classes’, recalls Marco Pedroni President of Coop Italia and Ancc-Coop (National Association of Consumer Cooperatives). ‘

In view of the electoral appointment a previously made request is reiterated. ‘There is a need (…) to redirect significant resources in favor of consumption by acting, for example, on the tax relief of basic products and with a renewed environmental policy in line with the current emergency’.

All numbers from the Coop Report 2022

The Coop Report 2022 – ‘Consumption and lifestyles of Italians today and tomorrow’ – is prepared by the Ancc-Coop Research Office (National Association of Consumer Cooperatives) with scientific collaboration from Nomisma, analytical support from Nielsen and original contributions from Gs1-Osservatorio Immagino, Iri Information Resources, Mediobanca Research Office, Nomisma Energy, Npd.

All the infographics  of the Report are available at this link.