Developing Responses to Challenges in the Global Pasta Market

November 2015

Pasta is a tough market to be in. In the West, the Italian staple is losing out to rice and noodles, as Asian cuisine surges in popularity. Despite rapid growth in developing markets, it continues to underperform against rival staples. This briefing examines these problems and highlights potential avenues of growth for manufacturers. It suggests that long-term goals should take precedence over short-term revenues, and discusses potential solutions to sclerosis

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Branching out into different pasta types and products a must

Dried pasta generates the majority of global sales of pasta, yet it is struggling to achieve growth in its biggest markets. However, consumers in these core markets still want to eat pasta –they just want more convenient and healthier versions. Subsequently, high fibre and chilled pasta are outperforming and will gain market share in the future.

Private label iterations undermining growth of brands

Similarly to many other staples, pasta companies are struggling against private label in markets with consolidated retail competition. Private labels are able to offer a decent quality of goods with low prices. Only the US and Latin America offer an ideal balance of low private label share with fast growth.

Long term thinking needed in Asia Pacific and other non-core pasta markets

Per capita sales of pasta are so low in China and India, and so entrenched are staples such as rice and noodles, that getting consumers to eat more pasta will take a number of years. Manufacturers need to be patient in these markets, but also need to make sure their products available sooner rather than later in the likes of China and India. This is something that has been achieved by the likes of Maggi noodles in India.

Introduction

Scope
Key findings
Stern challenges ahead for pasta manufacturers

The Global Picture

Pasta sales too reliant on Western Europe and Latin America
Chilled pasta adding value in Western Europe
US market experiences similar struggles to Italy
Mixed forecast for consumption growth
Strong price competition with other staples helps Middle East sales
Qualified optimism for pasta in other regions
Pasta has a broad presence despite its relatively small size
Pasta consumption sharply demarcated globally
Affordability a significant advantage for other staples in Asia Pacific
Experimentation in Asia Pacific as Barilla launches instant pasta

The Competitive Landscape

Fragmented market continues to splinter; private label grows
Private label poses serious challenges in Western Europe
Brazil’s fast growth and small private label make a suitable market

Beyond Pasta: What Next?

Synergies a key focus in core pasta markets
Short-term consolidation: Bolstering “free-from” presence
C hilled pasta a good fit for delivering value growth
Developing synergies in core markets should be a priority
Underdeveloped expansion in leading pasta markets
Ready meals and selling to private label are potential solutions…
… whilst sauces may also provide growth
Appliances are one way of potentially adding value to brands
Long term focus required in peripheral markets
The case of Maggi noodles in India

Recommendations

A mixture of proactivity and patience required for manufacturers
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