The Italian Way

Italy’s food can market shows resilience amid continued supply chain and pandemic disruption By Brenda Dionisi, in Milan.

Global supply chain delivery delays and price tensions continue to disrupt Italy’s otherwise robust food can production sector. With profit margins squeezed, food canners expect prices to rise across the board for these long shelf-life food staples.

According to Italian can manufacturing industry association, Associazione nazionale italiana dei Fabbricanti di Imballaggi Metallici e affini’s (ANFIMA) most recent data, Italy produced 698,523 tonnes of rigid metal packaging (tinplate and steel) and 24,745 tonnes of aluminium packaging in 2020, up 3.6 per cent and seven per cent from the same period the previous year, respectively.

Italy’s can sector utilises plenty of steel because of the strength of its food industry, whose products are best stored in these robust containers. About 60 per cent of all rigid metal packages were destined to the domestic market in 2020, while 40 per cent were sold abroad. Total revenues in 2020 amounted to €1.7 billion, down by approximately three per cent from 2019, said ANFIMA, which represents about 80-90 per cent of the companies operating in the country.

Subsectors

The most significant subsectors are metal caps and closures, which represented 21.85 per cent of the Italian metal packaging market in 2020 and generated €378 million in revenue that year (+4.57 per cent from 2019); metal food packages, which represented 34.44 per cent of the market and generated €97 million in revenue (-1.85 per cent from 2019); and beverage containers, which represented 11.72 per cent of the market in 2020 and generated €203 million in revenue (-13 per cent compared to 2019).

“While we expect overall metal packaging production numbers in 2021 to remain stable compared to 2020, we hope the number of metal food cans and accessories produced this year will be positively influenced by the particularly favourable tomato harvest this summer [2021], which is up about 10 per cent mainly due to the slight increase in area of cultivated lands dedicated to tomato production coupled with favourable climatic conditions,” said Giovanni Cappelli, ANFIMA manager.

Unsurprisingly, the Italian metal packaging sector’s biggest revenue contributor is the country’s powerful food-processing industry, said Cappelli. He explained that many Italy-based metal packaging plants make food cans and lids and are situated in important food processing areas where packaging must be done in a very tight time range, such as in the Campania region, where tomato canning must be completed with 24 hours of picking, and the Emilia Romagna region, which produces both tomatoes and legumes in cans. Other important Italy-made canned products are preserved tuna, edible oils and pet food.

Can industry companies

The can manufacturing industry comprises 50 companies that employ over 4,300 workers – food companies generally undertake their own filling. ANFIMA said it is made up largely (85 per cent) of small- to medium-sized businesses with under 200 employees, while the number of larger companies employing more than 200 workers are a mix of foreign- and family-owned companies (12 per cent). Among the latter is domestic leader Trivium Packaging (1), which is headquartered in the Emilia Romagna region and operates seven can manufacturing plants in major food processing areas.

Another leading manufacturer of food cans and ends is Crown Imballaggi Italia Srl (2), today a subsidiary of Europe’s biggest packaging company Switzerland-based Eviosys, which was formed in September (2021) and is owned by New York City-based global private equity firm KPS Capital Partners, which bought Crown’s European food packaging business earlier this year. With 800 employees and four production plants in Italy, Parma-headquartered Crown Imballaggi mainly supplies cans to Italy’s tomato processers. (3)

Cappelli noted the global importance of some family-owned businesses, such as Bologna-based Pelliconi, a global leader in the manufacture of metal crown corks for glass bottles, producing 30 billion caps annually and exporting to over 100 countries. “The Italian [metal packaging] sector is not very large compared to other countries and is quite homogenous, but it does have some very dynamic and world-leading corporate realities,” he said. In 2019, Pelliconi registered €163 million in turnover. In spring 2020, it announced it would proceed with plans to open a second, $13 million production plant in Changzhou, China. (4)

In-house canning

The ANFIMA manager also noted that some Italian food processors also handle some canning in-house, such as Salerno-headquartered La Doria, Europe’s leading producer of preserved legumes and a leading producer of peeled and chopped tomatoes in retail distribution channels. However, this family-controlled business, which reported €8.48 billion in turnover in 2020, 97 per cent of which generated through sales of private sector brands for major national and international food retailers, is currently negotiating with the Switzerland-based Investindustrial International Holdings for the sale of a majority 63 per cent stake in the Milan Stock Exchange listed company, aimed at financing growth and further international expansion. (5)

Cost crunch

With global steel and aluminium prices increasing overall in 2020 due to the Covid-19 pandemic, Italy’s metal packagers and canned food producers have felt the cost crunch. Italy imports the majority of tinplated and tin-free steel used to make metal food containers largely from China and India. Last year China was not exporting at pre-pandemic levels and was unable to satisfy the jump in global demand caused by an increase in home consumption of food. This coupled with low inventories made tin prices jump on average by 30 per cent to 40 per cent, explained ANIFMA’s Cappelli. “Today we can say that the situation has improved, albeit Chinese exports remain contained and tinplate prices still remain above 2019 levels,” he told CanTech International.

Tomato canning

Furthermore, supply shortages led to delivery delays, which at one point during last year’s tomato harvest [2020] put tomato canning at risk. Because tomato processing and canning is completed over a two-month period, any delays in the supply chain can have a very negative impact on production output, Capelli explained.

A significant part of Italy’s food processing sector is dedicated to exports, particularly premium canned peeled tomatoes, where over half of domestic production is sent abroad, according to Italy’s vegetable processors association ANICAV (Associazione Nazionale Industriali Conserve Alimentari Vegetali).

ANICAV director Giovanni De Angelis explained that Italy produces 3,500 billion canned tomatoes every year, 5.2 million tonnes of processed tomatoes in 2020, and is the world’s third biggest tomato processor, behind the USA and China, representing 13 per cent of global production and about 53 per cent of European production. Italy is also the world’s top producer and top exporter of preserved tomato and derivatives for end-consumers, with an annual turnover in this product category reaching EUR3.5 billion, of which EUR1.8 billion is generated from exports. Exports are shipped mainly to Europe (68 per cent), including Germany, France and the UK, while nine per cent is shipped to the USA, 10 per cent to Asia, nine per cent to Africa and four per cent to Oceania, according to ANICAV data. (6) In 2020, the turnover of the entire production sector of preserved vegetables in Italy, which includes preserved tomatoes and legumes, reached EUR4.7 billion, over 70 per cent of which produced by associated companies, reports ANICAV. (7)

Production and logistics costs

De Angelis expressed concern over an overall increase in all packaging and manufacturing costs in the past year. “This includes packaging costs related to tin can manufacturing, the paper placed can labels and even the ink used on the labels,” he told CanTech International. Production costs have also risen largely due to the spike in energy prices for gas and methane.

Logistics costs have also increased, especially ocean freight prices, which have tripled and quadrupled since the pandemic hit, he said. “ANICAV is currently working to negotiate more sustainable sea freight prices, since current prices are absolutely unsustainable for our industry,” he said.

He expressed concern that these cost disruptions would inevitably have a negative impact on exports, especially for the premium canned products that are shipped by sea to important export markets such as the USA. “Extra costs will have to be offset by rises in commercial prices abroad. Why would a US consumer pay US$3 or more for a can of premium peeled San Marzano tomatoes when they can pay US$1 for a can of California grown ones?” De Angelis asked.

Fish canning sector 

The same supply chain disruptions and price tensions are also crushing profit margins for Italy’s otherwise healthy tuna and fish canning sector, said Simone Legnani, president of Italy’s national association of preserved tuna and seafood processors (ANCIT – Associazione Nazionale Conservieri Ittici e delle Tonnare).

After Spain, Italy is Europe’s leading producer of canned tuna and it is one of Europe’s biggest canned tuna consumers. In 2020, the Italian canned tuna market was valued at over €1.40 billion, with national production reaching 80,300 tonnes and national consumption at over 160,000 tonnes (about 2.67 kg per capita). (8)

When considering other preserved fish, such as anchovies, mackerel, salmon, sardines, other fish specialties and smoked salmon, the overall market value of Italy’s preserved fish sector exceeded €2 billion last year, Legnani told CanTech International.

More than 30,500 tonnes of production is shipped to foreign markets, mainly within the Europe (Germany, Greece, Czech Republic, Slovenia) and to Canada, Saudi Arabia and the United Arab Emirates, with exports valued at over EUR200 million. Based on a preliminary analysis of 2021 data, ANCIT estimates that Italian-made preserved fish exports could reach 35,000 tonnes and register a 10 per cent increase in value by the year’s end, a significant portion of which is canned.

The supply chain risks and uncertainties that are affecting the global food industry are also having an important impact on the domestic canned fish market, he said. “What we are witnessing is a perfect storm, a totally atypical situation that is not comparable to the pre-Covid-19 period,” he said.

Today, fish processors are facing increases in production costs across all phases of the supply chain, he underscored, and this makes supply chain planning difficult for processors and their suppliers and these operating cost increases “cannot be metabolised by processors alone,” he concluded.

 

NOTES:

1 – https://triviumpackaging.com

2 – http://www.crownimballaggi.it

3 – https://www.eviosys.com/wp-content/uploads/2021/08/Eviosys-launch-release-1.pdf

4 – https://www.prnewswire.com/news-releases/pelliconi-group-signed-the-investment-agreement-to-build-high-end-packaging-materials-facility-in-changzhou-national-hi-tech-district-301334472.html

5 – https://www.gruppoladoria.it/IT/press/comunicati-news.xhtml

6 – https://anicav.it/i-prodotti/pomodoro/

7 – https://anicav.it/wp-content/uploads/2021/06/Comunicato-stampa-ANICAV-    e-il-comparto-Giugno.pdf

8 – https://ancit.inc-press.com/ancit-lassociazione-nazionale-dei-conservieri-ittici-compie-60-anni-litalia-mercato-di-riferimento-mondiale-per-la-qualita-delle-conserve-ittiche-le-esportazioni-di-tonno-in-scatola-cresciute-del–122-in-dieci-anni#

 

 

 

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