Expenditures and Activities of
European Union (EU) Member Countries
The Italian Trade Commission (ICE) is the national agency responsible for developing and implementing Italy's international export promotion programs. The ICE has been restructured several times, as the Italian government has begun moving much of the control and promotional funding to the 20 regions. For the last several years, a large portion of the promotional funding has been given directly to the regions, although the majority of the international programs being conducted are still organized by the ICE. In 1998, almost one quarter of Italy's $30.4 million agriculture export promotion funds were targeted at maintaining and increasing farm exports, currently valued at about $1.5 billion to the United States.
Italian Promotion Activity
ICE's promotional activities include trade shows, ad campaigns, wine and food tastings, and public relations activities. To strengthen the effectiveness of the ICE, final details are being worked out on a law providing a three-year budget (2000-2002) of between $65 million and $81 million.
ICE originated the "Made in Italy" slogan and has used effectively world wide. The slogan also is used domestically to reflect pride in Italian food products and a belief in their high quality and safety. International, Italian food products are in vogue in many countries, both for their quality and taste as well as the reported health benefits of olive oil and red wine. ICE's goal is to encourage restaurants to use authentic Italian products, and to increase consumer sales by targeting promotional activities at the major grocery store chains.
Funding for ICE comes from several sources. The Ministry of Agriculture, in its budgets for 1998/1999 and 1999/2000, of 10 billion lire ($5.4 million). Funding will increase to 15 billion ($8 million) in 2000/01, but return to 10 billion lire in 2001/02. The funding is for promotion of appellation of origin products, as well as organic goods. About one - third of the money is spent on wine promotions, with the rest going to meats, cheese, and some processed products. The main targets are the United States, Canada, Japan, Sweden, and Denmark. The Ministry of Foreign Trade allocated about 6 billion lire ($3.2 million) to ICE in both 1998 and 1999. This budget will increase to at least 12 billion ($6.4 million) annually beginning in 2000. Funds are spent almost entirely on trade fairs, where participation of small- to medium-sized companies is subsidized. The main market for these funds is in the United States with some money going to Canada, Germany, and France.
Government and private funding are used. ICE has annual government funds in the amount of 5.8 billion lire ($3.1 million) to co-sponsor with private companies on a 50/50 basis, generic "quality" food products through promotional events, workshops, and point of sale promotions. Advertising programs are also funded. The budget is expected to increase to 7.7 billion lire ($4.2 million) in 2001, and 8.6 billion lire ($4.6 million) in 2002. Ministry of Trade and Regional funding is provided. In a "program agreement," ICE has 8 billion lire ($4.3 million) available for promotion of regional products with matching funds coming from the regional budgets.
This budget was expected to increase to 13 billion lire ($7 million) in 1999 and 14.5 billion lire ($7.8 million) in 2000.
Regional Government Promotions
The 20 regions have an estimated 50 billion lire ($27 million) available for promotional activities. Expenditures are not tracked nationally and in general, the regions are not willing to provide budget information. Based on trade contacts, FAS estimates that approximately 50 percent of the funds are spent domestically. Of the remaining 25 billion lire ($13.5 million), 8 billion lire ($4.3 million) is used for the co-funding of projects with ICE described above. The balance of 17 billion lire ($9.2 million) is spent in regionally controlled promotional programs, including advertising trade fairs in Europe, workshops, and promotional items. FAS estimates that approximately $1.8 million is used to target markets in the United States, mainly through advertising and some participation in trade fairs.
On average, about 25 percent of the total promotional budget is spent for fresh produce, 20 percent for wine and beverages, and the remaining 55 percent for processed foods. The main target for the promotional activities is the United States where approximately 20 to 25 percent of the funds are spent. Japan and Germany are the next largest markets. Activities in other European countries, and some activities in Canada, account for the remaining funds. The main products promoted by ICE are Parma and San Daniele cured hams; Parmigiano and other hard cheeses; wines; olive oil, and fresh fruits and vegetables, to the other latter EU countries.
ICE has trade offices in New York, Chicago, and Atlanta, but only the New York office with approximately 10 employees involved in agricultural promotion handles agricultural products. It is FAS estimates that the agriculture-related component of the ICE New York office costs about $1 million per year.
Italy participates in all available EU programs in the Common Agricultural Policy (CAP). Export subsidies, particularly for canned fruit, are included in these programs, but are based on reimbursement of the higher-than-world-average cost of some inputs as opposed to direct subsidies to the end user. Italy does not provide any national export subsidies or credit programs.
SOPEXA, the French national market promotion agency, has by far the most active market promotion program in Italy. With an office of 6-8 people in Milan, SOPEXA participates in most Italian food trade shows organizes press and ad campaigns, and organizes in-store food promotions.
Many SOPEXA programs in Italy are co-funded by exporter associations or private companies. The focus of the programs in the past several years has been on French beef, and the safety of the French food inspection system, following concerns over Bovine Spongiform Encephalopathy (BSE) in British beef sometimes known as ‘mad cow’ disease, is a disease of cattle first identified in 1986. Beef consumption, while not back to pre-BSE levels, has recovered; SOPEXA can be expected focus to other activities.
SOPEXA also has a strong connection to many of the major wholesale and retail food chains. Auchan, a French chain, is present in Italy, and several retail chains have French partners. As a result, French food products are readily available in Italy. Many chains work directly with the French companies for in-store promotions, but SOPEXA also get involved in generic promotions.
Most other EU member states also promote their products in Italy. After SOPEXA, Germany's marketing organization, CMA, is probably the most active. This organization has two offices in Italy and mainly promotes meat, dairy products, juices, beer, and wine. CMA also participates in many of the food shows and works closely with the large retail and wholesale food chains.