The role of Italian export in eastern Europe market of Pasta

The role of Italian export in easternmostern Europe trade of alimentary paste universeMain goalsThis report aims to be a complete and accurate analysis of the pasta market in Eastern Europe, and to show how three of the most signifi seatt italian pasta exporters were able to penetrate in this market. We will also show the possibility of growth of this market and his development for classs to come.Some tuitions close Russia and PolandI decided to analyze these two countries because, as I will explain in more detail below, historic and political reasons direct the great deal to founder similar nutriment consumption. However, beyond slightly other differences much more pronounced (like the geographical size or the number of inhabitants), both countries pass water a market characterized by the importation of pasta from Italy close to identical. Yet a estate is a member of the EU, the other not. One enjoys the privileges of Europe treaties and has no duty. The other dunge ons the ruble and taxes and tariffs influence all over the consumption of merchandise products.1.2.1) RussiaThe collapse of the Soviet Union has brought about great changes in Russia. The economy was centrally planned and has flat become a global market. The economic reforms in 1990 withdraw privatized fabrication grinder, except for some strategic spheres such as energy and defense. To know the factual role of Russia, Id like to show you that this country is the largest exporter of natural gas in the whole world, the second oil exporter and the thirdly exporter of aluminum steel. This makes Russia an economically strong country, but weak about fluctuations on the variability of commodity prices. After a long economic crisis (1998), the economy began to grow on ordinary 7%. However, the youthful global crisis influenced heavily the new essence class. The Central Bank of Russia employ a third of its 600 billion U.S. dollars in international reserves to avoid the crisis and stabilize the ruble. The government has also spent $ 200 billion for a rescue plan to increase liquidity in pecuniary argonna and aid for Russian companies. In 2010 happens black situation from the environmental point of view, with a severe drought and wildfire in central Russia that begin reduced plain production, tip to a ban on straw exports for the year, and increase in other sectors, such as manufacturing and retail trade (but the growth is really slow).1.2.2)Poland.In 1990, Poland has begun a policy of economic liberalization and today is one of the most active transition economies. Before 2009, GDP had grown by about 5% per year, main(prenominal)ly due to inflows of EU funds. GDP per capita is still below the EU level, but it is among the most high in the Baltic states. Unfortunately, EU membership was stop by the unemployment rate to 11.8% for the year 2010 and for inflation to 4.2%, above the upper limit of the tar seduce audience of the National Bank and the deficit of public sector cypher went to 7.9% of GDP, for the crysis events. The countrys potential held back by lack of modern infrastructure, an inefficient commercial court, a code of hard work and too much bureaucracy.RussiaPolandGDP (purchasing power parity)1$2.229 trillion (2010 est.)$2.147 trillion (2009 est.)$2.331 trillion (2008 est.)$721.7 billion (2010 est.)$698.6 billion (2009 est.)$687 billion (2008 est.)GDP real growth rate3.8% (2010 est.)-7.9% (2009)5.2% (2008)3.3% (2010 est.)1.7% (2009 est.)5.1% (2008 est.)GDP per capita (PPP)$15,900 (2010 est.)$15,300 (2009 est.)$16,600 (2008 est.)$18,800 (2010 est.)$18,200 (2009 est.)$17,800 (2008 est.)GDP composition by sectoragriculture 4.2% pains 33.8%services 62% (2010 est.)agriculture 3.9% attention 31.8%services 63% (2010 est.)Labor force by occupationagriculture 10%industry 31.9%services 58.1% (2008agriculture 17.4%industry 29.2%services 53.4% (2005)Unemployment rate7.6% (2010 est.)8.4% (2009)11.8% (2010 est.)11% (2009 e st.)Population below poverty line13.1% (2009)17% (2003 est.)Investment (gross fixed)18.9% of GDP (2010 est.)19.5% of GDP (2010 est.) populace debt9.5% of GDP (2010 est.)8.3% of GDP (2009 est.)50.5% of GDP (2010 est.)46.4% of GDP (2009 est.)Inflation rate (consumer prices)6.7% (2010 est.)11.7% (2009)2.4% (2010 est.)3.5% (2009 est.)Industr. production growth rate8.3% (2010 est.)6.5% (2010 est.)Exports$376.7 billion (2010 est.)$303.4 billion (2009 est.)$160.8 billion (2010 est.)$142.1 billion (2009 est.)Exports disclosenersNetherlands 10.62%, Italy 6.46%, Germany 6.24%, China 5.69%, jokester 4.3%, Ukraine 4.01%Germany 26.06%, Italy 6.84%, France 6.78%, UK 6.38%, Czech Republic 5.85%, Netherlands 4.14%Imports$237.3 billion (2010 est.)$191.8 billion (2009 est.)$167.4 billion (2010 est.)$146.4 billion (2009 est.)Imports assistantsGermany 14.39%, China 13.98%, Ukraine 5.48%, Italy 4.84%, US 4.46%Germany 28.08%, Russia 8.65%, Italy 6.5%, Netherlands 5.59%, China 5.27%Debt external$480 .2 billion (2010 est.)$467.2 billion (2009)$252.9 billion (2010 est.)$239.6 billion (2009 est.)1.3)Some information about the industries1..3.1) barilla S.p.a.Barilla S.P.A. is an international food company founded in 1877 in Parma. The company is still privately held, and mud in family ownership and bind also today. Barilla_pasta_logo.svg.pngBarilla Group control multiple prints. The most famous are Mulino Bianco, Pavesi, Voiello, Alixir, Wasabrod, Misko, Filiz, Yemina and Vesta. The Group has several production plants all over the world in Italy, Greece, France, Germany, Russia, Sweden, Turkey and get together States, but the central office remains in Parma.Barilla alimentary paste produces various kinds of pasta and bakery products is one of the worlds leader in pasta, with 25% of the US market and 40% of European Market. Barilla produces 4,000 tons of dried pasta annually in over 120 shapes and sizes. It is also the leading wanderer of bakery products in Italy. After the ac quisition of the Swedish company Wasa, Barilla became the worlds major producer of flatbread.The Group has 16,000 employes, control 20 different brands and has a turnover of 4.5 billion euros. This market giant produce all year 3000000 tons of food products.In East Europe, the group is pre displace in different countries according to the website information, is present in Poland from 1999 with the brands Wasa, Barilla and Mulino Bianco.In Russia is present a bakery plant, and 880 population works there. Barilla set his presence in Moskow from 2003 and sell products like Barilla, Harrys and Wasa.In Sweden the society is present since 1999, with offices, production plants and a mill. 545 employees works for the group in Filipstad, and create food for brands Wasa and Barilla.1.3.2)Pasta ZaraPasta Zara S.p.A. Italian food is specialized in the production of pasta, founded in1898 with factories in Riese Pio X (TV) and Muggia (TS).The company is the leading exporter of pasta in the worl d and the second in term of production. Exports represent 95% of the market for Pasta Zara, and 13.5% of meals eaten in the world is Zara, in 2009 has sold 208,000 tons of pasta. Actually exports to 97 countries and change magnitude sales particularly in Asian markets, America and Russia. In its continued growth, Pasta ZARA has launched an industrial development plan with the aim is to increase the production capacity from current 208,000 tons per year to about 320 thousand tons by 2015. It works about 300 people in his factory, and is one of the few italian companies that succesfully survived the recent financial crisis.logozara.pngPasta Zara has also been active for years an interesting collaboration with the Italian chefs, and is an active social life of its region by promoting a number of sporting and culinary events, as well as sponsoring several youth sports teams.1.3.3) De CeccoIt was founded in 1886 in Fara San Martino by Filippo Giovanni De Cecco. His father, Nicola De C ecco, a few years ago produced flour in a small local anaesthetic mill. As early Filippo De Cecco had the insight to properly modify the pasta so that they can maintain and withstand the long journeys to America. The current factory in Fara San Martino was built in the early 70s when that age was no longer able to produce the quantities required by the market. In 1950 it was rebuilt in Pescara on the industry model of the former mill town from the years 20 and almost completely destroyed during arena War II. Industry Pescara De Cecco is called Mill and De Cecco pasta and is a public limited company controlled by the parent F.lli De Cecco di Filippo Fara San Martino SpA. De Cecco pasta produces water-based and durum wheat, although the laws in many countries allow the use of blends based on durum wheat and wheat flour that are called semolina. Pasta De Cecco has spread to 90 countries around the world including Italy, Great Britain, Japan, United States, and France for over 100 ye ars. It has recently started exporting in Mongolia. logo_home.pngThe pasta market in east Europe2.1) What is pastaPasta is a so commonplace food for many reasons its nutritional measure out, taste and convenience. This is a healthy and important part of a balanced diet (such as mediaterranea).The inventor of pasta is still unknown legends says Marco Polo imported from the east, turn for others the differences between westerly and eastern pasta are too great, and they think that the Etruscans were the first to prepare pasta. There are two kind of pasta fresh or dried. The dry consists of semolina, which is produced by grinding kernels of durum wheat. Sometimes other grains are also used. The semolina is intermingleed with water to form a dough. Usually, the fresh pasta is prepared by adding eggs too. You can enrich the mixture with other ingredients such as spinach, tomatoes and saffron to change its color. The dough is kneaded until it r severallyes the right consistency, and t hen is pushed (extruded) through a coat disk with holes. The size and shape of the holes in the disk determine what shape of pasta will be. When the pasta reaches the right length, is cut with knives. The paste is then sent through large dryers which circulate hot, moist air to slowly dry the pasta. The pasta is then packed in bags or boxes. The fresh pasta preferably should be consumed within a few days of preparation, without the stage of drying. The most popular type of pasta in the world is spaghetti.2.2) Similarity and differences between east and west marketThe differences between these two worlds are very marked. In west side, pasta is the most common food ever, on the other, at best, a simple seasoning. Export pasta in these countries does not mean selling a product, means to make them deal as a lifestyle. Some Italian companies there are trying, even now.2.2.1) Russia and Poland Pasta MarketHistorical reasons (including the three partitions of Poland in 1772, 1773 and 17 75) and social behaviours urge me to consider the current pasta market of Russia and Poland as similar in many aspects, both unique, but distinct from those of Western Europe.These two markets, so similar to consumer preferences, have one big difference Poland is a member of the European Union, and as such have access to products faster and cheaper, in the case of Russia, but the products are burdened with duties and exchange rates.The Russian and finale food market is highly fragmented and there is not a single monopoly the top 10 retailers hardly reach a market share of 10 percent ( informations from 2006). In these two countries, traditional trade detail shop are common, in Russia still remain the Soviets (small independent stores), representing three quarter of total food sales. However, in both countries are becoming more modern retail chains. Hypermarkets and supermarkets are growing rapidly. Most of them have started business in capital of the Russian Federation and are no w slowly expanding into other regions. The centerpiece of the food market and based for all foreign companies wishing to spread throughout the country is the area of Moscow and St Petersburg. The degree of success for future expansion can be examined by the successful sale of their products at the increasingly large middle class and upper-middle in these cities. The most important fair in this area is World Food Moscow, held annually in September. The fair is an international fair, the bigger and largest in central and eastern Europe. Manufacturers who want to introduce their products and brands in the Russian market must participate to this event (with nearly 1,300 exhibitors and 60,000 visitors, most of them are international wholesalers and retailers of food).Prices are not set by law, but vary from region to region. This is due to differences in income and cost of living across the country. Russians spend a higher ploughshare of their income than consumers desserts in many othe r countries. In 2007 the total consumption was 1.1 million tonnes.About taxation, the prices of modern retail stores are subject to a 18% value added tax (VAT) flat rate which can make it ticklish to compete.Import tariffs can vary from 5-20 percent depending on the product and the country is imported from has the precondition of most favored nation. In the case of Italy, the nominal tax rate is 20 per cent.Poland does not have these problems because it adheres to the Schengen Treaty and E.U. and the goods may be imported without tariffs.In general, corruption and bureaucracy are the major obstacles to doing business in Russia. However, the Russian government abolished many requirements and simplified import licensing and reduction of existing non-tariff barriers, the accession to the World Trade Organization. Food companies who want to import into Russia must apply for certification by the Russian Agency for Health and Consumer Rights, which confirms the safety and quality standa rds.In these countries, where for historical and social reason consumption of pasta is naturally very small, extensive marketing campaigns are needed, a lot of patience and creativity to support the business.It s very interesting to note that the lack of duties has facilitated the export of pasta in Poland. scarce what we can analyze from Russia? If we apply corrections to the data due to distortions and harden the population, we get very similar fuel consumption. So is it true that the duties will not affect this business?No, for one simple reason in Russia imported pasta is a luxury item. It is certainly not a few rubles on the price that discourages the wealthy citizens of Moscow from buying Italian products. Because the larger part of these products is sold in Moscow. and St. Petersburg, the be part of Russia is not a consumer of Italian products. A reduction of duties could encourage the spread of pasta between other groups of the population, while businesses might think of high gamma products for rich citizens.2.2.2) West-Europe pasta marketIn the Europe of the east, the pasta is a well- known food. Its nutritional and organoleptic characteristics make it an clear food, balanced and healthy for human consumption. In fact, the pasta is also at the base of the Mediterranean diet.Production volumes is estimated at 3.2 million tones, and continues to grow. The italian market in 2009 represented about 1.5 million tons, worth about 2.7 billion euro.Approximately 52% of national production is exported. In 2009, Italian pasta companies have increased their export volumes of around 1, 35%.Pasta is definitely one of the key areas of the Made in Italy, but competition with foreign countries, in particular the European Union is very strong.Despite phenomena of short duration (for example, sales crisis), the Italian pasta continues to be a success in international markets, where consumption is insurrection everywhere. Overall, they were exported around 1.7 mil lion tonnes of Pasta, worth approximately 1.7 billion.In particular, 1 million and 145 thousand tons of pasta were exported to EU countries (4% more than last year) and 514 000 tonnes to third countries.As regards the geographical distribution of exports in the rankings of the five largest customers, Germany confirms first place with a share of 20% in quantity, followed by France (16%), the United Kingdom (15%), United States ( 7%) and Japan (5%).In ten years the production of pasta in the world has risen from around 7 million tonnes to around 12 million tonnes. This means that, with about 3.2 million tonnes of production, our country is about 26% of world production of pasta and 75% of the EU at a scan a pasta dish eaten all over the world in 4 and 3 out of 4 in Europe is made with Italian pasta.However, the Italian leadership cannot be taken for granted. New international competitors now face the global market.The gradual reduction in the number of pasta- makers (consider that in 1970 the companies were 450, now about 150) concerned as an indication of the difficulties in the sector.The Italian pasta market, right now, suffering considerable difficulty, as demonstrated by the actions of antirust Italian, which cyclically apply sanctions to the main producers.The Italian market is saturated the prices are very low compared to the raw material, the number of producers is high and profit margins are very low. But this concern only the Italian pasta. If we add to this the cheap products imported from Spain, but even more from Asia and South America, the situation is really problematic.Many artisan pasta makers have closed, and the remaining have had to made compromises to maintain an adequate levels of prices. There is no place in the market for new innovations. Focus on new forms or in terms of recipes is very difficult because it is a subject already much exploited. Is possible to focus in increase quality level, but the return of sales compared to the pri ce increase requested is not cheap. Sales are down and prices are strongly influenced by the fluctuation of raw material (such as the recent fire in Russia has led to a shortage of grain in the world). Thats why many companies have decided to invest abroad, in America some of the others in East Europe2.3) General indicatorsCountrytons of pasta producedItaly3,161,707Russia858,400Poland150,00CountryPer capita consuption of pasta (kg)Italy26,0Russia6,0 (fast grown)Poland3,0 (quite stable)CountryAverage selling price ()Italy2Russia4Poland3Market shares of Italian companies in the area of pasta in Italy2.4) Consumers behaviourItaly West EuropeEast-EuropePasta is a food for all peopleIs healty and cheapThousands and thousands of differents brandsBrand name and reputation create trustsRecipes are usually fresh and light, tastefull.The buyers knows dissever of things about pasta, how to prepare the best recipe, a lot of obtain of the product.Is made in ItalyUnlimited existence of differe nt size and shapesThe package is less important than the brandPossibility of collusion between similar products to keep high pricesThe original Made In Italy Pasta is an expensive productWhen controls are are carried out strictly, the product has a good quality save the most famous brands and names can attract a foreign customer.Expensive marketing campaigns can help selling pastaCultural mix of italian pasta and west-Europe products can create unpleasant tastes (Pasta with Vodka sauce)Lack of basic knowledge. Especially about cooking timeFake products are common (unfortunately)Spaghetti, Macaroni, Lasagne, Fettuccine. No more.The package must be as distinctive as brand, particularly for the expensive productsFees and taxation keep high pricesQuantity of pasta exported (tons)graph.emfThe Italian industry in West EuropeAs seen above, De Cecco and Barilla are two companies leading her Italian pasta. If we add to Zara, the largest exporter of pasta, we get a great deal of products t o be sold in these countries. Each of these three companies has followed a different corpse, with strengths and weaknesses, which we will analyze in detail.3.1) BarillaAs seen previously, export pasta in these countries is difficult because there is no culture of pasta. Barilla has begun the process of its introduction in the country with the acquisition of two companies operating in different sectors.We had to remember that Barilla was sold to U.S. multinational W. R. Grace and Company in 1970. For the company the acquisition was very helpful because it help to increase sales and became famous and hefty. But it remains a national pride in foreign hands. In 1979, Pietro Barilla with his sons repurchase it. Initially, to inject liquidity in the difficult moments of the 80 and 90, the Barilla became partner with Walter Wurth, chairman of Oerlikon Buhrle, a major Swiss company producing weapons. Its probably the first international Italian food company it begins acquisition of severa l foreign companies in the same industry, such as the Greek Misko (1991), the Turkish Filiz (1994) and Swedens Wasa (1999). In 1999 opened its office in Poland, where he began to export pasta produced in Italy in local markets.The landing in Russia and not planned, but with the acquisition of Harrys Wasa gain control of these companies small offices in Moscow. We are in 2002 and the situation for a foreign investor is well-heeled to the resumption of the Russian economy after the financial crisis of 1998. So Barilla decided not only to invest in the country, but also to get up the production facilities, acquiring the plant Solnechnogorsk.The process is not smooth 20 million being spent to rebuild the plant Solnechnogorsk after a disastrous fire in 2004. Another 40 million are used, from 2004 to 2007, to improve the production of this plant that produces only for the subsidiarys Harry. Barilla pasta that matter in Russia everlastingly comes from Italy.Harrys hand and the colossus of French bread loaves, which produces many varieties suitable for each meal. To bear the internalization, the company has suffered over the years, many structural changes. The holding has also changed over the years several times its operating structure to achieve its present form. Then the system for foreign Barilla provides direct entry into the market, acquiring companies that can provide knowledge and know-how, to use as a base for future expansion of its core business abroad.While this system is characterized as very solid, almost textbook economics, however, is only possible by companies such as Barilla, that have large, very solid financial basis (also accessible through the weapon trade), faith banks, large availability of money for long-term investment. Although the expansion in Eastern Europe has begun for the last decade, the recent imbalances of the economy are putting a cover on the coffers.barilla organigramma.jpg3.2)Zara in West EuropePasta Zara is an unusual case in the Italian industrial sector. While most other food companies producing for the domestic market and possibly export the surplus, since 1958 this company, with rare foresight, has started to export, so that now the export is the main source of income of the company. In Italy it is a little known brand in the main distribution channels, but through some sub-brands popular discount stores. The experience in Eastern Europe began in the 80 and 90. with small improvements every year, Zara was the first going through uncharted territory.Zaras experience in Eastern Europe is very attractive. Pursuing a long policy of small steps, it has earned the trust of consumers and respected brands and quality. This system is fairly inexpensive, considering that need no infrastructure in place but only an exporter with a warehouse. mustiness be added also costs of marketing. It s true that with this system Zara has become the largest exporter of pasta in the world but to become it took years of e ffort, sacrificing the domestic market to focus entirely on exports. And it was really long But the positive side is that now Zara, while its competitors are suffering and reel, squeezed by banks and crisis, has an enviable financial position, rather it is also able to expand its production facilities. A successful economic policy, therefore, provided to be able to wait many years and do not be alarmed by the lack of results.zara organigram.gif3.3)De Cecco in west EuropeDe Cecco has always been the pride of Italian quality. It began to export its products only recently, but in Russia especially stood out for its products in the range Premium Segment.In particular, the company has distinguished itself for its commitment in the use of new technologies, especially the e-commerce and Web 2.0. The use of these powerful new media and online marketing campaigns, combined with the companys presence in social networks and YouTube, have fostered his knowledge outside of Italy.Is too early to comment on the results obtained by De Cecco nellexport online. The system is in fact not be operational until 2007, after a year that had put a strain on the company. It seems that the idea to focus mainly on trade web has been in practice a gamble in which few people believed. In the absence of funds and massive investment, however, seemed a logical solution. In practice it is not exported to Eastern Europe but to explore a whole new space (internet), very little used by Italian companies to sell their products. The data so far are very fragmentary. On social networks, the company has a large number of fans, as well as recipes on youtube channel. This is the first Italian company to have understood the potential of Web 2.0, but there is no practical data on the quantities sold. Despite this, I think this is an excellent system, able to demonstrate that the business is not achieved only with exaggerated amounts of money, but also with good ideas and lots of advertising.Future of P asta marketThe pasta is a food that is going through a second youth, in recent years. Its nutritional properties make it an excellent item, but not yet adequately known outside the Mediterranean region and North America. From this point of view, the efforts of many Italian companies to showcase the product is impressive, especially in the East of EuropeIn a few years the consumption of pasta in those countries began to grow exponentially, a sign of the goodness of product. But if the increased consumption of pasta, it makes it necessary to increase the users understanding of the product and best practices on how to consume it. Only in this way, a product still popular but seen as a foreigner will be able to enter definitively into the hearts of people.However, the paste cannot hope to increase its market share in the intensely until remains a niche product of luxury. If this can start to attract more wealthy clients, it must then expand to all other social classes, with appropriate pricing policies and promotional purposes.It should not underestimate the different cultures from which the users come. If in some cases the result of any intersections of recipes is not pleasant, very often you get tasty combinations.The expansion into new markets becomes the only option for companies at home suffer more and more competition. Not only the internal ones (in Italy exists, in each store, tens of hundreds of shapes and products) but also from China and countries in the developing world.It is important to point out then that the real Made in Italy for wine and food products every year suffer more from clones from different countries, much cheaper but with much lower quality.Not only that, the pasta industry is still in insecurity from the changes in the price of wheat (see fires in Russia that in 2005 and 2010 have destroyed the stocks of that country, a formidable exporter) and in general of market imbalances particular the recent crisis has led to a negative peak of exports, and fear for one of the key sectors of Italian economy, although it is early to reach definitive conclusions or analysis.But this I can definitely say that the pasta industry will expand only through export.ConclusionsThe situation of the market for products derived from corn is very precarious. On one side we have the farmers, who are fighting daily against nature to obtain a more healthy wheat, but their efforts are frustrated by the industries that underpaid their product.From other side we have to endure the same companies that increasingly stringent budgetary constraints in order to sell their products, and increasingly fierce competition.Thats why these three large Italian companies have decided to export its products to countries that are foreign to the culture of pasta.Someone called him a chance, something else a fail, but all these companies are fighting every day to sell their products.It s just business, but it is also through these channels that the real Made i n Italy spreads. We have seen how difficult it is to enter a different market. is a long-term investment, and massive investments of money, time and energy are required, as well as know-how previously unknown. Until 2009 these companies have made it. With the recent crisis, the situation has deteriorated drastically, and perhaps have a good product will not be enough to save himself.Sources1) www.istat.it2) Comtrade3) www.barillagroup.com4) www.cia.gov5) http//www.pastazara.it/6) http//www.dececco.it/IT/Barilla official report 2001 -2010http//www.eiu.com/public/Italian Embassy in Moscow www.ambmosca.esteri.itwww.confindustria.itwww.worldfood-moscow.comhttp//www.unipi-pasta.it/dati/andam.htmhttp//www.pasta.it/consumo.htmTutto il Grillo che conta (Beppe Grillo, Feltrinelli 2006)http//www.intracen.org/appli1/TradeCom/TP_IP_CI.aspx?RP=643YR=200816) http//www.pastaria.it/rivista-pasta/russia-un-mercato-promettente/