Italian agribusiness in the U.S.: the winning strategy in six points
The United States is one of the most important markets for Italian exports, and this is especially true for agribusiness exports. The U.S. is the third most important market (after Germany and France) for exports from this industry, representing 10% of overall agribusiness exports in terms of value.
What makes Italy’s agribusiness popular with the American market has to do with its traditional products and the so-called Mediterranean diet. A robust American economy has also favored this situation, along with a high level of consumer spending capacity and the strikingly fast way that Americans assimilate the new.
However, potential protectionist measures that may be taken by the Trump administration could have considerable impact on Italian exports to the U.S., with a reduction of 1.4 billion dollars over ten years. For this reason, it is no longer enough to put all of the focus on exports alone when it comes to the trading of Italian agribusiness products. The strategy needs to be changed, with a focus on direct investment in the country.
This is the theory presented in the study entitled “’Made in Italy’ agribusiness in the U.S.: a big opportunity for Italian industry,” presented by Luigi Consiglio (pictured), president of the GEA management consulting firm.
According to GEA, taking Italian companies international means selling to—or better yet—producing directly in the United States. Compared to the 45 billion in Italian exports that reach the U.S., the number of Italian companies with a base in the United States is still quite small.
The study offers case histories of Italian agribusiness (and other) companies that have successfully gone international, seeing success in the United States while continuing to expand in the country (some of these companies include Rana, Citterio, Zonin, Barilla and Ca’ del Bosco). The report offers the six key points of a winning strategy for taking a company international and investing directly in the U.S. market.
Using its established experience when it comes to taking companies international into the United States, GEA has come up with six key points for industry professionals, that allow businesses to enter into the market with success:
1) Being there. The number and complexity of decisions that need to be taken require a great deal of managerial capacity. This is not something that can be delegated. The speed of getting to market would be irreparably compromised.
2) Adapting products and the product range to consumers’ tastes and preferences. There needs to be a happy medium between our culture and the culture of the United States, which looks for a great deal of “wow factor” in making every choice. It is not necessary to judge habits and desires but to merely interpret, create and enrich one’s product range in order to meet the needs of millions of consumers. The collateral effect is often that the company’s entire product range is improved, and not just for the U.S. market.
3) Investing directly in the U.S. The export route helps in testing out the market and starting to gain visibility, but the best way forward in order to create a large, long-lasting presence is to enter into the local supply chain, creating brands that have value for that market and becoming a true American company. This is the only way to make the most of a company’s roots and expertise, which are reinterpreted and taken local.
4) Slowly building an Italian team willing to move to the U.S. It is almost impossible to hire skilled staff willing to enter into the American market with what is essentially a start-up, with all of the risks that go along with it. One of the most important factors for successfully launching on the U.S. market is to build a team that can build the production lines and get them going, as well as managing the administrative part.
5) Making the company attractive to local high-quality managers. Costs are typically higher as compared to Italian management costs so good headhunters—who know how to make the most of the company’s results outside the U.S.—are essential. Having American managers who are skilled in sales and marketing is another key success factor for this internationalization process.
6) Ability to build a cohesive, multicultural team. This requires one to have the ability to listen and understand those who are different, and this is still quite rare on the Italian market. American inflexibility—along with the clannishness of various ethnic groups, such as Hispanics—makes for quite a challenging mix. Because, in a short amount of time, the company must go local, or in other words, become an American company in order to have the best results, creating a cohesive multicultural team is the most important and delicate of the critical success factors.