ITALY

!   General about Italy

!   Aspects about Italy !   Factual !   Cultural !   Operational

!   The Italian retail trade

!   Advantages of dealing with Italy

!   How to get started in Italy

Italy – an overlooked market

Italy – a general presentation

Source: Danish Foreign Ministry

ITALY

Population: 59,8 mio (2009) •  of which 3,9 mio non-native Italians (6,5%)

Biggest cities (incl. provinces): •  Milano: 3.9 mio •  Roma: 4,1 mio •  Torino: 2.3 mio

The northern regions among the richest in Europe (Lombardia, Piemonte, Veneto, Alto Adige)

Economic growth approx +0,5 % p.a. (Q1 2010)

Disoccupation: 9,1% (Q1/2010) – (7,9% Q1/09) •  North: 6,4% (5,1% Q1/09) •  Centre: 8,4% (7,6% Q1/09) •  South: 14,3% (13,2% Q1/09)

Italy – a general presentation

Italy – a general presentation

GDP per inhabitant in PPS as a percentage of the EU-27 average (2004) (PPS: purchasing power standards)

Italy – crucial aspects for succes on the market

The cultural aspects The factual aspects

The operational aspects

Italy is extremely regionalised due to its history •  More like 20 different markets •  Even within each region there are huge differences in consumption patterns

Italy is not one but 20 markets

Italy is not one but 20 markets

Prepare for 3 times the number of competitors

> 400 different cheese types

> 2200 dairies (250 > 5mio € turnover)

450 producers of mozzarella

The Italian market is highly fragmented, regionalised as well as competitive

Extreme fragmentation and little transparency

> 325 retail organisations

> 400 supermarket logi

Approx 30 main buying groups

Fragmented Distributive system (Food) •  Tot.Stores : 217.000

Ambulanti 27.000 Ord. stores 190.000

» Hypermarkets : 415 » Supermarkets : 9.026 » Superettes : 6.756 » Discounts : 4.129 » Traditional : 170.000

Source: Federdistribuzione 2009

Zuvi, Spressa, Frachet, Motta, Bettelmatt, Mezzapasta, Grasso d’Alpe, Caprino Piemontese, Taleggio, Toma Piemontese, Bra, Tomino di Talucco, Murianengo, Moncenisio, Sargnon, Tomini, Mortarat, Toma del Maccagno, Ricotta Ossolana, Toma di capra, Ossolano, Toma brusca, Robiola, Nostrano, Paglierina, Seirass del fen, Acceglio, Castelmagno, Murazzano, Ceva, Castelnuovo Ceva, Clavesana, Montezemolo, Sale s. Giovanni, Priero, Bruss, Casteliosino, Ormea, Rebruchon, Roccaforte, Robiola d’Alba, Sora di Val Casotto, Testun, Tometta, Toumin del Mel, Raschera…….

AND

Gorgonzola, Grana Padano, Toma, Ricotta, Robiola…….

In total more than 50 registered cheese types – just in Piemonte

The Italian cheese market

Extreme fragmentation and little transparency

Strong market leaders – often Italian

The average advertising spending in Italy is among the highest in Europe

Italians love their brands and accepts paying a premium for them

Italy is still very much a branders paradise – less than 10% of retail is private label – depending on category

Italy is a branders paradise

Bureaucracy and control – both are heavy

Bureaucracy is getting lighter though still more outspoken than in the Nordic countries

•  Important that the paperwork is correct – signed and stamped correctly •  Intentions are fine – control is better •  Authorities in Italy are in uniform and armed

Documentation – get it right

The Italians have attention on documentation and paper work

•  ISO, HACCP, etc – Italians put great emphasis on this kind of documentation •  Product specifications have to be detailed and correct •  Written proof is important

Italy – crucial aspects for succes on the market

The cultural aspects The factual aspects

The operational aspects

Relations are key Trustworthiness – has to be earned Loyalty is strong

•  You do not trust people up front – it is always important to have someone vouch for you •  Strongly build into the Italian soul – you are sceptic of strangers until otherwise proven •  You can have the best product in the World – if the Italian counterpart do not like you, there will be

little chance of succeeding with a sale

Language is key

Italians basically speaks Italian

•  Communication can often be difficult in English •  Often discussions with decision maker will have to go through 3rd party

Decisions are taken from the top Rank matters as well as format

Italy tends to be more hierarchical than Nordic countries

•  It is important to show respect •  Your position is important •  Never be sure of a decision before it has been approved by the boss •  Showing off is an important part of the Italian culture

Creativity is strong Willingness for change is limited

•  Italians are good at identifying solutions for problems at hand •  Can be both in the positive as well as the negative way •  Stability is GOOD – far from the Nordic mentality •  Little job rotation during work life

Accept that logic will seldom prevail over feelings Information not necessarily build on facts

A logic, to-the-point Nordic mind-set is not the way forward on the Italian market

•  Do not expect that a selling argument will win if served by the wrong person •  Personal relationships are very important •  Information is often given so it serves the sender •  An in-transparent market makes it difficult to evaluate given information

A Nordic buyer will be studying your presentation and arguments – an Italian buyer will be studying you and your attitude

Italy – crucial aspects for succes on the market

The cultural aspects The factual aspects

The operational aspects

Respect the culture

Italy is a lot different to the Nordic culture in many ways .....

•  Working hours are different •  Appearance and education is important •  Respect in itself is a key word for the Italians •  A Nordic approach can be an advantage – but do not push it !

…… so when in Rome do like the Romans……

Analyse and understand

Information is often plenty available but analysis are not

•  The Italians usually have their own version of the reality •  Make sure you have hard data – then make your own analysis and conclusions

Be firm on politics

Do not leave things up for too much interpretation

•  Italians are not used to systems building on guidance and intentions •  Italians are used to strict laid out rules.... •  .... though follow these only if they are strictly policed •  Be aware of different interpretation of rules depending on region

…….. Intentions are nice – control is king

Control your sales and distribution structure Be present or find a partner

•  Fragmented and often complex market, though competition •  Italians like first hand relations so that they can “feel” their supplier/customer •  Operating agents or a sales team from the distance can prove difficult and with little results

•  Due to the fragmented structure of the market and different agendas by different distributors and agents it can prove fatal for a product if left to the decisions of the sales & distribution structure

Challenge the existing

Italians often likes ”business as usual”

•  The Italian mindset is usually not as eager for chances as we are used to in the Nordic countries •  The average Italian will change job 2-3 times less during a career compared to a Dane