“To curb the rise in food prices, we need an agreement with producers”- Corriere.it

The game is played together. Branded industry and large-scale distribution move on the same terrain: safeguarding Made in Italy productions and accompanying the consumer through a complex phase. But that’s bound to get better. Gabriele Villa, the general manager of Esselunga, leads the operating machine of the distribution group of which Marina Caprotti is executive president.

The table with the branded industry

a colossus that grinds 8 billion in turnover. With his team for a year, Villa has been managing the difficult balance between the flare of inflation and product lists. Overheating on foodstuffs reached a peak of 12.6% in December, compared to the overall annual average of 8.4%, and dropped slightly in January (+12.2%) of this year. It is essential to open a table with the branded industry because the common goal is not to make our products lose market shares – says Villa – because in moments like this the consumer tends to reduce the quantity and quality of his shopping. Customers can only cut these costs because they cannot intervene on energy, the real engine of the inflationary surge. All the distribution groups have seen that consumers have changed their spending habits, opting for a lighter trolley, with a lower receipt.

Support consumers

In the first five months of 2022, Esselunga pulled the brakes as hard as possible to protect consumers from increases in raw material and energy prices, while the industry asked for more price list updates because in turn it was dealing with more compressed margins. With the strategic decision to sacrifice margins in order to meet the over 5.7 million customers, in the first six months of the year Esselunga’s gross operating margin amounted to 214.6 million, down on the 427.1 million. Without for this the group sacrificing investments: 151.9 million in the same period of time. A sign – he explains – of the effort made towards consumers. In the first half of 2022, the Esselunga group achieved sales of 4.32 billion, down by 0.2% compared to the same period of 2021 which was also affected by a very high comparison base (+6.7%).

Esselunga Smart products

The total inflation poured into our shopping cart over the year, a couple of points lower than the overall food data, underlines Villa who also takes stock of the anti-inflationary counter-moves implemented by the group that blocked prices on a basket of 450 Esselunga Smart branded items. We have focused on these good quality products, made by over 400 suppliers, which cover all food categories and which extend to personal and home care products and have the lowest prices on the market – explains the manager -. On the major brands we have partially absorbed the increases, between four and five points less than the inflation received at the time of purchase. We are still doing it now, leaving the increases “parked”.

The rock of inflation

Now we look at the further effort to be made. We have to wait, we are convinced that the situation, albeit slowly, will improve, the pressure on prices will slow down with the cost of energy falling. We cannot pass increases at the moment – adds Villa -, we are convinced that sitting around a table the distances between industry and distribution can be shortened. The risk alienates customers, even from the industry that is Italy’s crown jewel. Collaboration among all is essential to overcome the obstacle of inflation and support consumption. Distribution and branded industry must present themselves united before the consumer in a market that has become increasingly competitive. In the background, a picture that hasn’t been seen since the 1980s – they say in Esselunga – which shows a reduction in consumption as a whole, with volumes going down.