Support for the international growth of Italian agri-food excellence

By the Intesa Sanpaolo Research Department

• The Italian agrifood sector plays an important role in Italy and is a driving force of Italian business worldwide, due to the quality of its products and various competitive factors that set it apart from its main European competitors. Overall, the agrifood system, understood the primary sector together with the food and beverage industry, generated added value of almost €66 billion in 2022, accounting for 3.8% of the national total, and employed more than 1.3 million people (5.3% of the total). The importance of the Italian agrifood system can also be seen beyond national borders: Italy ranks third in Europe by added value generated by its agrifood sector, making up 15% of the European total, and fifth by jobs. The strength of its regions is one of the ingredients of its success: seven Italian regions (Lombardy, Emilia-Romagna, Veneto, Sicily, Puglia, Campania and Tuscany) excel at the European level and appear in the rankings of the top 15 European regions with the highest added value in the agricultural sector.
• In the wine world, Italy retains its spot on the podium among the world's leading producers: after taking top position in 2022 (50 million hectolitres), in 2023 Coldiretti estimates a drop in production of 14%, to around 43 million, due to the damage caused by downy mildew and drought, surpassed by France (which is expected to come to between 44 and 47 million hectolitres) while Spain remains third at 36 million hectolitres.
• The strength of its regions and the quality of Italian agrifood offerings are borne out by the 879 PDO/PGI certifications present in Italy (second to France with 750 certifications), including 526 certifications for wines (France is second with 437), as well as by the 75% of national vineyards where more than 80 grape varieties are cultivated – a far higher number than the two main competitors, France and Spain, which have fewer than 15. There is also much more product diversification, where Italy clearly stands out in the international context.
• Italy is also distinguished by its innovation capacity, with a share of companies that have made product and process innovations of 57.6%, above the EU27 average (48.6%) and in line with Germany.
• In recent years, Italian food and beverage companies have strongly accelerated their R&D investments, approaching €350 million in 2020 (1.18% of added value), a figure that puts Italy firmly ahead of its competitors in Germany (at €333 million, just 0.65% of added value) and Spain (€270 million, or 1.1%).
• These factors have enabled the supply chain to gain an excellent qualitative position in international markets: in 2021 Italy confirmed its position as the fifth-largest exporter of agrifood products in the world, with a share of 4.1%, but climbed to fourth place (with a share of 5.4%) at the top end of the market. Its agrifood exports set a new record in 2022 with over €58 billion at current values (+15.3% compared to 2021); growth continued in the first seven months of 2023 (+2.5% agricultural products, +7.8% foodstuffs).
• Italian wine exports grew by 9.8% in 2022 at current values (with stable quantity) to almost €7.9 billion. The United States is the number-one target market for Italian wines, with almost 1.9 billion in 2022 (+8.3%), followed by Germany with about 1.2 billion (+4.8%) and the United Kingdom with over 800 million (+9.4%). In the first half of 2023, they remained essentially stable in value (-0.4% vs. first half of the previous year), although with different results in the main markets (US -6.9% vs. first half of the previous year; Germany +1.4%; UK +3.2%).
• The growth in exports bears witness to the increasing ability of Italian companies to conquer international markets: according to our estimates, Italian food and beverage exports accounted for 28.4% of turnover in 2022, an increase of more than 12 percentage points compared to 16.2% in 2008. In particular, wine has been at the forefront of this increasing projection into international markets, with the share of turnover consisting of exports exceeding 65% in 2022 (from 38.7% in 2008).
• These results are even more significant if one considers that the structure of the Italian agrifood chain is dominated, as in other sectors of the economy, by small and very small companies. The average size of agricultural businesses in Italy is in fact just 11 hectares, compared to an average of 70 hectares for France, over 60 hectares for Germany and 26 hectares for Spain, and in the food industry as well, 87% of companies have fewer than ten employees. If size has not prevented significant results so far, size and assets are elements to be further strengthened to favour investments in new technologies.
• Investments in innovation throughout the entire supply chain, from precision agriculture to the adoption of circular production models, to the digitalisation of processes, will in fact be fundamental to facing the great challenges that await agrifood companies, first of all in better coping with climate change and  meeting the needs of consumers demanding increasingly organic and sustainable products, but also in reaching new markets and new consumers able to appreciate Italian quality.
• Innovation, internationalisation and digitalisation will in turn require rethinking from the point of view of human capital, along with by a faster generational transition.
• The analysis of a large sample of Italian agrifood companies in fact confirms how success in the recent past has come from a complex mix of strategies: companies that have invested in environmental or quality certifications, patents or trademarks have performed better in terms of turnover growth and margin stability, thus suggesting the profile of winning companies for the years to come as well.