For the confectionery industry, Christmas of 2021 is really special because, never as this year the problem is not selling panettone, pandoro, nougat or other sweets but to find raw materials: paper, aluminum, containers and also drivers to get their products to Italy and around the world. The demand is growing not only compared to 2020 but also on 2019, when no one could imagine the long months of the lockdown. Exports also posted double-digit increases. But the production costs of energy and raw materials are also growing by double digits. If this is the national picture, the North West is a laboratory of this paradox.
In fact, one third of the Italian confectionery industry is concentrated in the North West. Piedmont with a percentage of 13.5% is the second region in Italy behind Campania (18.3%). At a territorial level, a Piedmontese confectionery company out of two is located in the province of Turin and 28.5% in the capital. One in 4 companies is in the Cuneo area and then there are Alessandria (12.2%), Asti (6.1%) and Verbano-Cusio-Ossola (3.1%). The remaining 4.1% of the Piedmontese confectionery companies is divided equally between the provinces of Biella and Novara.
“The supply chains have suffered an increase in costs between 30% and 40%, which however has not yet gone into consumer prices. If we increase prices by 30-40%, however, then people no longer have the money to buy, and it is not conceivable to increase wages by 30-40% because it would mean increasing production costs by 60% “, explains Franco Biraghi, 82 years old, who founded Valgrana in 1989, and is president of the agro-industry commission of Confindustria Piemonte.
If this is the case, then «an increase in prices on confectionery products, and agri-food products in general, is inevitable in 2022 if there will not be a significant drop in the cost of energy and raw materials. And in the short term it seems unlikely that this will happen », continues Biraghi.
According to UnionCamere, the regional entrepreneurial fabric of the sector, over 2300 companies, is made up for over half (57.1%) of micro-enterprises, in 46.9% of cases joint stock companies. The companies have an average employee of just under ninety employees and are characterized by a high presence of male workers. Only 14.3 per cent of companies have a turnover that significantly exceeds ten million and a small circle (7.1) exceeds 50 million. Four out of ten companies have a turnover between 50 and 500 thousand euros and 1 in 5 between one and 5 million.
According to Biraghi, «the bulk of the increase in the cost of electricity will come in 2022 but already now it affects a lot: last year I paid 45-50,000 euros per month, in October I spent 167,000 euros. For methane I paid 18-20,000 euros a month, now 95,000 euros. Packaging increased by 80%. And we sell at the same price, without passing the increases on to distribution. This is not the case, and it applies to everyone ». But it is not just a question of having to deal with price increases: «In the confectionery sector, flours are not available. Those who have wheat do not sell it, because they speculate on it hoping to get better prices in the future “-
What are the companies in the sector doing and what will they do? Marco Brandani, CEO of di Maina (gross turnover of 110 million and an export worth 20 percent) sees it this way: “There is a demand for a product that is 35 percent higher than last year and we have to manage it in a situation where the price increases of raw materials are added to their scarcity also as regards paper, cartons and packaging ». Brandani explains that thanks to the programming of the Christmas production Maina has managed not to download the price increases to the consumer but in 2022 a retouching of the price lists will be inevitable “but we will do everything to calm them down”.
Matteo Rossi Sebaste, CEO of the historic Torrone factory (13.5 million turnover in 2020 and exports at 40%) is also grappling with orders on the rise “higher than the spring planning forecasts”. We are talking about requests that exceed the demand of 2019 by 30% but “we can only partially satisfy it due to the difficulty of finding raw materials”. The costs of “production have increased considerably but we have decided to keep our price lists unchanged”.
And then there are artisans and small businesses. Also for Mattia Pariani, vice president of Unionalimentari, the association of members of Api has about one hundred members, 35% of the confectionery sector, “the difficulty of this Christmas is linked to the difficulty of guaranteeing raw materials because as far as we are concerned, we are faced with an ultra-receptive market with consumers looking for a direct relationship with artisans and specialized shops ».
Yes, the raw materials. «At this moment – (three o’clock on a working afternoon in December) – we are counting the panettone that we can produce with the raw materials we have available. There are huge delays on delivery times. For example, it seems that the cedar no longer exists on the face of the earth, the first delivery of the hat boxes will take place after February 15th. It’s really complicated ”, says Alberto Mossotto, Galup’s commercial director, with a turnover of 8.5 million in 2020 and double-digit growth in the current year. Galup faced this emergency situation by blocking orders in mid-November and “now we are gearing up to process those that arrived before that date”. Galup has kept the price lists unchanged but certainly gives a price adjustment in 2022. For Mossotto it would be “useful to have a national discussion table to calm price increases and price lists”.
Marco Avidano, the owner of the homonymous artisan pastry shop with a turnover of half a million, takes a step further: “It would be important for the government, as happened in Germany, to reduce VAT on electricity, which for us represents one of the main production costs “. In the Chieri shop, the cost of the electricity bill jumped from 2500 to 4500 euros per month: “We also register a similar incidence in the Turin shop, but there will be no impact on the price list on Christmas”.
.