The Italian mass consumption market abides closely to the metaphor of the half full/half empty glass: the positive trends of last quarter are contrasted negatively by poor results in the past days.
A global growth during the first quarter of the mass consumption market naturally lead to positive predictions for the future months, according to Nielsen’s report released a few weeks ago.
Mass Organised Distribution witnessed a 2.3% growth in sales between January to April 2019. The growth was led by a noticeable increase in food sales: fruit and vegetables up by 3.9%, drinks increased by 3.5%, meat by 3.2%, animal products by 3.0%, bakery products sales went up 2.8% and ice-creams/frozen products by 2,7%.
Easter sales further strengthened the predictions of a positive trend. Similarly, estimates from IRI bore important values; for example, the proportionally greater sales of refrigerated products compared to chemical ones, yet presenting values which are lower than last year’s ones.
At the end of the quarter, average price increased by around 0.5% and promotions on products went up by 0.6%. Supermarkets and discount stores benefitted the most, while other distribution networks such as “Casa e Persona” obtained average results, yet lower than last year.
Distributor brand and sustainability
Branded products gained greater interest from customers due to changing consumption trends, compared to industrial ones. Those who gain the most are BIO producers and those who can guarantee the products’ origins.
This is of no surprise given the current global progress towards more sustainable products. Only in America are consumers predicted to spend up to $150b in FMCG goods by 2021.
However, the positive numbers from Nielsen’s report do not hide the looming negative feeling towards mass consumption from investors.
The current economic situation and Sunday closures are holding back positive predictions. According to Nielsen, these two factors will negatively impact sales and competition among companies given the different distribution methods.
Another hold up
Towards the end of May, the positive trends took a U-turn. The decrease of 2.87% between the 20-26th of May has further weakened the growth from the 1st of January which now sits at a poor 0.28%.
From a geographical perspective, North-East Italy lost the most with 4,6% while North-West and Central regions went down to -3.38% and -2.58% respectively. Only the South of Italy was saved with small increase of 0.80%.
The eventuality of a crisis, the possible VAT increase and fiscal pressure keep being increased by Italian politics. Other positive variables, such as online food sales, are still not powerful enough to increase shopping sales.
Any prediction is currently difficult to draw. ‘Wait and See’ is the only viable option for now.