Hunger Games – Food, Italy, and the appetite of Sovereign Investors

by Francesco Galietti

This note is meant to provide an initial overview of what seems to be a rethinking of Italy’s concept of “sensitive assets”. In the author’s view, the national concept of sensitive assets is de facto not limited to traditional areas such as defence, technology or energy but takes into account Italy’s economic strengths, too.

In this respect, the food sector is a crucial element of Italy’s export capacity, and a top contributor to Italy’s GDP. While foreign acquisitions in this space have increased significantly, there might be more at stake. In fact, the Fondo Strategico Italiano (“FSI”) – largely considered as Italy’s domestic sovereign wealth fund – has specifically included the food industry into the scope of investment of its corporate joint ventures with foreign sovereign investors such as the “IQ Made in Italy Venture”, with Qatar Holdings LLc, and the JV with the Russian Direct Investment Fund.

On one hand, food is a top contributor to Italy’s GDP and export. As pointed out by deputy Minister of Economic Development and Foreign Trade Carlo Calenda on a September 2013 parliamentary hearing, Italy’s food exports total approximately 26 bn€, equal to 6.7% of aggregate exports. The food industry is the country’s second largest manufacturing sector, and it purchases as much as 72% percent of the domestic agriculture production.

On the other hand, foreign acquisitions in the Italian food industry are hardly a novelty, and sometimes foreign buyers are State-backed, as for instance Spanish giant Ebro Foods where the Spanish state has a 11% stake. As the following table shows, foreign buyers have acquired several well-known Italian players, without prompting strong economic xenophobia.

Hunger Games – Food, Italy, and the appetite of Sovereign Investors