19 Jan Interview with Matteo Picariello, director of ICE – Agency for Canada
Canada’s passion for made in Italy
Made in Italy is much loved by Canadians. From agri-food to fashion, to new sectors of excellence less known to the general public, such as pharmaceuticals and mechanics, Italy in Canada has such strength and numbers as to better withstand the impact of the pandemic crisis than the trends in international trade. The Centro Studi Italia Canada talked about it with Matteo Picariello, director of ICE – Agency for Canada.
This is confirmed by Matteo Picariello, head of the ICE office in Canada – one of the organizations committed to promoting Italian consolidation and development on the Canadian market – with whom the Centro Studi Italia Canada had an interesting conversation on strength, numbers and the prospects of Italian companies in Canada.
Italian excellences are an expression of the uniqueness of our production ecosystem. A reality that has established itself through an identity defined by the made in Italy brand name, which has no equivalent in the world and which recalls a universe of stories and cultures, even before raw materials and products. Focused on internal disputes and polarizations, we perhaps too often forget how much Italians are loved abroad, as well as our products. It is true everywhere in the world and it is especially true in Canada, with which Italy has a cultural as well as commercial relationship with a long history behind it.
What are the Italian products / sectors that are most attractive to Canadians?
Overall, in addition to the more traditional sectors of excellence that have been most affected by the confinement imposed by the pandemic, such as fashion (clothing, footwear, cosmetics), furniture (furniture, lighting, ceramics) and jewelery, new sectors of excellence where Made in Italy was less known, at least by the general public: such as pharmaceuticals.
Medicaments are today the first Italian product ever exported to Canada with 455 million, in constant strong growth over the last twenty years.
The organic chemistry sector with 161 million is also gaining momentum, especially for antibiotic products of which today we are Canada’s leading supplier with 49 million and a market share of over 32%.
Other emerging products are:
motor vehicles (214 million dollars) driven by the acquisition of the Chrysler group by Fiat
products of cast iron, iron and steel, whose exports have doubled compared to the same period of the previous year (228 million)
raw rhodium of which exports have tripled (51 million), used mainly together with platinum and palladium (of which we export for another 50 million) in catalytic converters for vehicles
We must certainly not forget that the mechanical sector, dominated in Canada for more than 63% by the US and China, represents 29% of our exports (with a value of 2 billion dollars). The sector is driven by taps, packaging machinery, gears, parts of turbojet engines for the aeronautical industry and gas turbines.
It should be noted that we are the first suppliers in Canada with shares of around 30% of machines for processing pulp and paper and cardboard and of machines for processing marble and stone.
However, the sector that is currently responding best to the crisis is undoubtedly the food sector. With 1.2 billion dollars of exports in the first ten months of the year, it represents 17% of our exports and is composed of 55% of food products and 45% of wine.
What is the situation of Made in Italy SMEs in Canada (in the sense of Italian SMEs with commercial relations with Canada or which have invested in Canada) in this highly stressed global economic context? Has the Italy-Canada trade balance changed?
Although the latest import data published by Statistics Canada for the first 10 months of 2020 record a drop in our exports of 8% (7.3 billion dollars) unfortunately impacted by the pandemic crisis, we underline a drop in the same period of imports from the world by 12% and even 13% from the EU.
The most important supplier countries such as the USA and Mexico, with which the first free trade treaty signed by Canada in 1994 (CUSMA in the updated version in force since this summer) is in force, have lost 15% and 23% respectively.
Only China and South Korea achieved a better result than Italy, recording a decrease of 2% for China and 3% for South Korea, with which a free trade agreement has been in force since 2015.
However, the situation of commercial relations with Canada, especially among Italian SMEs, requires great attention in this moment of economic crisis.
The trade balance has always been growing in recent years up to 2019, closed with exports from Italy of 9.5 billion Canadian dollars, up + 5.2%, even in the face of growth however significant of imports from Canada of + 4.2% and a value of 3.2 billion Canadian dollars.
Canada has always been an important trading partner for our country.
In the early months of 2020, as indicated, we witnessed a reversal of the trend with a decline in our exports in the face of an increase in Canadian exports to Italy.
How are you supporting Italian companies in this difficult situation?
ICE Agency for Canada aims to favor in every way the restoration of an important growth trend in the trade balance to pre-Covid levels, trying to anticipate the recovery trends with respect to the current health and economic crisis and the restrictions on free movement of people who caused the sharp reversal.
We are extensively supporting, for example, the wine sector by continuing to raise awareness among agents and importers accredited by monopolies, maintaining B2B contact opportunities not only through remote conference platforms, but also and above all with market surveys and with “virtual” tasting spaces even in these difficult times in which the closure of shops and social events is prescribed.
From the Milano Wine Week in spaces organized to seminars and tastings in Toronto in favor of a hundred Canadian operators in connection with the Italian wineries, to smaller tasting sessions at the same premises of the ICE office in Toronto with the participation of agents who thus met the wines and producers associated with Wonderfood.
The Italian agri-food sector has withstood the trade crisis with Canada better than other sectors of the basic products.
Among the reasons there are also the evident restrictions on trade that allow the grocery sector to continue to operate in the shops of the large Canadian cities, or at least in a large part of these. On the contrary, the non-essential genre has suffered and is suffering closure even during the Christmas period. Thus the furniture, textile, clothing, leather goods, jewelry, cosmetics and the whole personal / fashion / home system has suffered and suffers from closure and distribution operators have warehouses full of unsold items.
Our market analysts maintain constant contact with buyers of made in Italy products, trying to sensitize the offers of companies that relate to the main business aggregators of the special companies of the Italian chambers of commerce. We see how difficult it is to intercept interest in this moment of uncertainty about the future, but constant contact allows us to feel the pulse of the market and prepare for recovery.
We Love Moda in Italy 2020 – Source: ICE – Canada
The Italian agri-food sector is therefore demonstrating greater resilience in the context of the Coronavirus emergency. What are the products that are responding best?
The Italian agri-food sector has grown in the last 10 years from 400 million dollars to 1.4 billion, registering an average annual growth of 7%.
In this sector, Italy is Canada’s 4th supplier country worldwide and the first in the EU.
In the first 10 months of 2020, our exports to Canada grew by 6%.
We note, in this period, a considerable increase in exports of cereal and flour-based preparations, in particular pasta (+ 27% for a value of 75 million).
Cheese exports (79 million) grew by 18% thanks to the CETA agreement which increased the duty-free imported quota (247%) and opened the quota to retailers.
Italy is the leading supplier of cheese and mainly exports hard cheeses such as Parmigiano Reggiano or Pecorino Romano to Canada.
CETA also facilitated our frozen beef exports which went from 0 in 2018 to $ 13 million in 2020. CETA also facilitated our frozen beef exports which went from 0 in 2018 to $ 13 million in 2020.
Cured meats continue to grow, recording an increase of 23%, thanks to salami (+ 60%) and hams (+ 12%), reaching 48 million dollars. This too is a growing industry despite the major food safety restrictions imposed by the CFIA.
Our coffee exports to Canada have continued to grow over the past 10 years and the increase this year is 22% for a value of 61 million.
Vegetable and fruit preparations also increased in this period, in particular preserved tomatoes (+ 37%) and jams and marmalades (+ 60%).
Fish preparations and preserves also increased by 30%.
However, in the first 10 months of 2020, exports of fresh fruit, mainly consisting of kiwis, plummeted by 47% due to the supply chain.
Even exports of olive oil (83 million dollars), of which we are always the first supplier country, have lost 3% but the cause is to be found in a significant decrease in production due to bad weather and olive leprosy which devastated most of the olive groves in Puglia.
A separate discussion must be made for wine.
This sector lost 5%, penalized by the closure of restaurants and the suspension, motivated by logistical problems, of private imports imposed by the provincial monopolies.
Over the same period, imports from the US increased by 7% due to easier supplies and less restrictive health measures adopted by the US administration.
It should also be noted that until the month of June our wines continued to record an increase of 5%.
However, Italy remains the second supplier country in quantity (62 million liters) and is now the third supplier in value with 443 million dollars.
As Coldiretti reports, sales of Italian wine in the world are down by 4%.
This is an unprecedented turnaround in the last 30 years, essentially due to the coronavirus health emergency.
Small shops versus GDO. The Italian presence abroad is generally strengthened by small retailers, but it is also true that we have brands that are able to compete in large chains. What characteristics does the distribution of Italian products in Canada have from this point of view?
Food distribution in Canada is characterized by a strong regional dispersion, due to the vastness of the territory (10 million km2) and the need to cover even the less populated areas and more distant from the main economic-productive poles of the country.
More than 60% of Canada’s 37 million inhabitants are concentrated in the provinces of Ontario, the province where the Italian product is most imported, and Québec, the French-speaking province that has the most growth potential for Italian products due to cultural affinities.
It will also be noted that large distribution chains have different market shares depending on the province.
For example, in the Atlantic provinces they dominate, with 77% of sales, while on the other hand, in the French-speaking province of Québec, where the presence of independent retailers and gourmet stores is stronger, they hold a market share of only 36%.
In gourmet stores the availability of the Italian product is very wide and the quality of the products is medium-high.
In large-scale distribution channels, supermarkets and retail stores, Italian products have an important position in product categories such as pasta, cured meats, cheeses, preserved tomatoes, balsamic vinegar or olive oil but with larger brands consumption and often of private labels.
Among other things, in the Canadian large-scale retail trade, the presence of a private label dedicated only to the Italian product is noted.
The trend today would seem to be more that of proposing with the private label an authentic quality product linked more to the store that offers it than to the manufacturer, as if it were an exclusive product.
Many large-scale distribution stores reserve spaces set up in a more elegant way for imported quality products, highlighting them and distinguishing them from the more ordinary products. As a general rule, Italian brands find their space here, often in small packages that have the advantage of making the product more accessible.Many large-scale distribution stores reserve spaces set up in a more elegant way for imported quality products, highlighting them and distinguishing them from the more ordinary products. As a general rule, Italian brands find their space here, often in small packages that have the advantage of making the product more accessible.
An interesting example of Italian brands present in large-scale distribution are the COOP products that Walmart has recently introduced in Canada, which proves that Italy actually has brands that can compete in large-scale distribution.
ICE Agency is planning a promotion with Walmart to promote the authenticity of the Italian product offered through the e-commerce channel.
Another interesting example of Italian brands is the presence of Parmigiano Reggiano in practically all Canadian food chains, but especially at Costco where it is offered at a much lower price than any other similar local product.
Unfortunately, the Italian product in large-scale distribution has to face competition from the Italian Sounding product, particularly in product categories such as pasta, cured meats or cheeses.
When we talk about internationalization paths, we often refer to more structured companies. However, the Italian fabric made up largely of SMEs cannot remain outside the opportunities offered by exports. How can small businesses be able to compete abroad?
The internationalization paths are to be considered more and more mandatory steps for all manufacturing companies of consumer goods and goods for industry.
The boom in online shopping due to restrictions on people’s mobility and social distancing measures in all major countries sees an ever-increasing share of electronic commerce in its various marketplace platforms and specialized e-commerce sites.
Today, therefore, the path for companies not yet internationalized often begins with the digitization of their business, with the use of the e-commerce channel and above all converting to corporate data management based on the use of the most advanced information technologies.
In order not to risk the loss of definitive competitiveness in an increasing number of product sectors, it is necessary for Italian companies to fill an information gap with respect to competitors that are also completely new to the sector, but which have an advantage in the systematic collection and evaluation of data, in the development and pursuit of strategies suitable for the new digital reality.
This conversion does not require a high financial effort but rather a corporate mentality and culture.
This is the reason why ICE Agency’s internationalization support activity with greater centrality and importance is business training and youth training.
Our programs – which can be consulted and accessed from the pages of the website www.exportraining.ice.it – intend to strengthen companies with specialized training aimed at managerial executives and young professionals in digital export management who will be able to provide temporary service to companies and find placement in long term, naturally if the combination with the company has found the desired success.
The placement rate is generally around 60-65% for young export managers trained by our TEM Academies.
Why do we focus on companies and young people?
We believe that each economic unit must have its own strategic objective and plan to achieve it, without delegating to outsiders this function of improving its databases and customer relationship management information systems that account for the profiles of its customers as well as competitors of distribution channels.
If these resources are already present or to be trained well, ICE Agency training programs intervene, but if they are not present and not even able to train then we equip the Digital Export Manager by focusing on the training of young professionals and future company executives by supporting youth employment in a strategic sector for recovery such as exports.
What should a small business take into account to carry out a penetration and expansion project in Canada through the digitization of sales?
An unstructured company that intends to adapt to digital export to Canada must first of all consider the country’s peculiar extension and territorial division.
That is, it must take into account the differences between the provinces, Ontario and Quebec for example, to name those closest geographically, divided by consumption and purchasing habits for various reasons.
Furthermore, it is necessary to evaluate the behavior of the largest competitors (online sales on which retailers and marketplaces and following growth trends), their skills (by studying exactly all the sales conditions that are required by the retailer), their presence in social networks and that of the various marketplaces and specialized e-commerce sites.
The choice of the distribution channel in digital marketing has new indicators and promotion spaces that were unimaginable only ten years ago: followers, mentions, google adwords have equal importance to the physical location of the product.
The message is therefore not to consider your internationalization path concluded with the presence on an e-marketplace or e-commerce site, believing that you have the same potential visibility of the more structured and important competitors and recognized by consumers, because it is difficult to get traffic without :
observe competitors: how they set up their online presence, which SEO tools, social media, blogs or others they use and which ones work best
study the prices and impressions of the in-store campaigns that allow individual marketplaces, that is, to win the so-called “background noise” with “embedded” marketing within one’s own showcase
provide for inventory and business planning software in a vertical sense: ownership, management, production, logistics and storage
With the CETA, Canada has opened the opportunity to EU companies, including Italian companies, to participate in public tenders for goods and services at all levels, federal, provincial and municipal.
3 years after the entry into force of CETA, what results have been achieved by Italian companies in this sector?
Following this opening and to intercept new opportunities, in 2018 we set up an Observatory on tenders and public procurement at the ICE office in Montréal in collaboration with the Italian Embassy in Ottawa with the aim of promoting participation of Italian companies to the Canadian tendering and procurement system.
The observatory carries out monitoring, analysis and reporting of the great opportunities offered by public markets in Canada. The observatory has a dedicated website (www.gareappalti.ca) and publishes a quarterly newsletter containing a summary of the main reports and information on large projects, contracts and awards of Italian companies in Canada.
With regard to this final point, in recent years there has been an increase in the contracts obtained by Italian companies and therefore in participation in Canadian tenders in various sectors.
Some examples of the last few months:
Ghella participates in the extension of the Millennium Line of the Vancouver Skytrain
Bonatti (through the Canadian subsidiary Pacific Atlantic Pipeline Construction) has obtained several contracts for the construction of the Coastal Gaslink pipeline in BC
Leitner-Poma for consulting on the design of the Burnaby Mountain gondola project in Vancouver
Freesia for the supply of snow blowers to the federal government
That said, assessing the concrete impact of CETA on the activities of Italian companies in the field of public procurement is not easy.
Usually the European companies that participate in public procurement in Canada are part of a consortium of local companies created ad hoc or in any case participate through the Canadian branch they opened at the time. In the latter case, for the purposes of the tender, they are considered Canadian companies, thus bypassing the application of the CETA agreement.
However, in the case of large projects, even though many of the restrictions related to local content that could have been applied before CETA are eliminated, a stable presence on site remains essential, even if in the form of a partnership with a local company, to be able to respond to contract requirements and submit a competitive offer.
The opening of provincial and municipal markets is undoubtedly the most important advantage negotiated by CETA.
But even here we must point out that in many sectors there are still considerable challenges to be faced for foreign companies that are not permanently present and, in this sense, it is also worth remembering that there are important inter-provincial barriers that can slow down for some types of contract the company permanently present in one province but not in the other.
As far as municipal contracts are concerned, although they represent an important market, they are less attractive in some respects for Italian companies that do not have a stable presence.
The costs and logistics to present the offer first and to follow up the work afterwards make the offers not very competitive.
However, it should be added that CETA has leveraged the harmonization of the public procurement systems of the various Provinces, contributing to the achievement of an important commercial agreement between the various provinces: the Canadian Free Trade Agreement (CFTA), which aims to reduce to remove inter-provincial barriers to the free movement of goods, services and investments within Canada itself.
At the moment we can see that one of the great advantages of CETA for Italian companies is the almost total elimination of the local content requirement clauses that previously could be required in most public procurement within the limits of the WTO agreements. This further opens the way to subcontracting, previously limited by local content requirements.
Finally, thanks to CETA, Canada is in the process of implementing a single and centralized platform for all public procurement in the country (Single Point of Access, usable starting from 2022), whether federal, provincial or municipal.
The platform will make it faster and easier to access public procurement given that, to date, governments use different platforms of their own making it difficult to submit an offer, particularly for all those tenders whose deadline is often less than 30 days.
It is considered that CETA represents a step forward by guaranteeing the opening of the Canadian market and giving Italian companies the necessary security to invest in the country, also facilitating the transfer of skilled labor necessary for the execution of contracts.
It is therefore hoped that with these changes Italian companies will be able to increase their activities in the field of public procurement in Canada and the ICE offices are at their disposal for support and assistance, in particular through the Tenders and Procurement Observatory created at the Montréal office.
How does ICE collaborate with other entities committed to supporting Italian companies in Canada, such as the Italian chamber system in Canada?
The recent reform that transferred to the Ministry of Foreign Affairs and International Cooperation the competences regarding the definition of the strategies of the commercial and promotional policy with foreign countries and the development of the internationalization of the country system has involved, among other things, direct oversight of the ICE-Agency by the Farnesina, in agreement with the Ministry of Economic Development.
Thanks to the new institutional structure, the strategic vision of supporting the internationalization of the Italian production system is unified. Entrepreneurs and associations now have a single institutional contact for internationalization and commercial policy issues.
Through the rationalization of governance, a single platform for internationalization was created, with greater integration of the 128 Embassies and 80 Consulates with the 78 Offices abroad of the ICE Agency. An entire network, branched and present all over the world, at the service of companies, to facilitate the promotion of Made in Italy, the protection of our excellence and market penetration.
Last June, within this new framework, the Pact with exports was presented, a series of extraordinary measures worth 1.4 billion euros to relaunch exports, a new strategy for internationalization to support critical issues generated by the pandemic and which takes into account the proposals received from companies.
Among the various measures envisaged there is also the new single portal on internationalization dedicated to Italian companies to orient themselves in the world of exports and more easily access all support services for exports.
This is Export.gov.it, the portal that collects in a single site all the services and tools made available by the parties involved in internationalization, including Sace and Simest.
All this strengthens and places the traditional collaboration and support activity between ICE and the chamber network abroad in an institutional context.
All subjects operate not only with common objectives but also within the Italian System itself.
In Canada, where excellent relations and various joint programs between the ICE and the Chambers already existed, the new reference framework therefore only reinforces already consolidated practices.
The know-how and the consolidated network in the territory, business and personal relationships and networking of the Chambers, both in Ontario and Quebec and especially in British Columbia where ICE does not have its own direct observatory, are very useful tools to support ICE’s promotional programs and Embassy.
Also read >>>
Don’t want to miss the updates of Centro Studi Italia Canada?