Crisis or no crisis, it's business as usual for French cheese.
Nicolas Rovecchio took over his fromagerie on the trendy food shopping street Rue Lepic six years ago after 12 years of training at another cheese shop.
His business weathered the 2008 credit crisis and annual revenues have remained stable at 900,000 euros ever since.
I know quite a few food retailers but I don't know any who have had to close their shop, said the 31-year-old father of two. People can talk a lot about the crisis, but once they leave the office, they have to eat.
He plans to keep his down-to-earth-approach in running his business: stick to great products, stay professional and help his customers the best he and his team of three employees can.
Our clients come to us for a quality product and there's a price attached. They don't want less. They want that specific product, crisis or no crisis. It's out of the question to eat something different.
Companies in Italy, France and Germany, the three largest economies in the euro zone, are reacting to the bloc's debt emergency with varying degrees of nonchalance and alarm, mainly depending on how much their clients, and their own business models, are reliant on loans.
Residential home builders and the companies that supply them are worried about how skyrocketing sovereign debt yields will affect mortgage rates and new home purchases. Retailers are cutting jobs and trying to trim other costs.
But many also say the crisis could create business opportunities, spur a healthy industry shake-out and possibly even encourage better labour practices.
INTEREST RATE RISK
For French residential builder Maisons France Confort (MFC), the biggest risk is interest rates. Uncertainty can slow down new housing starts, but a spike in interest rates can stop them altogether.
The insecurity that comes with this crisis affects people's morale. All this talk about the French debt rating and higher interest rates makes French people worried, and can make them postpone a real estate investment, MFC CEO Patrick Vandromme told Reuters.
The group, which is France's biggest builder of individual stand-alone dwellings, had an order book of 5,768 houses at the end of October, a fall of 6.6 percent in number and 3.1 percent in value compared to the same period last year.
If rates in France were to spike that would be a hard blow, he said.
We do expect slightly higher rates for next year anyway, because banks will need to increase their share capital and because of Basel III (tougher capital adequacy rules). But if rates were to shoot up sharply, that would make housing unaffordable for lots of people and have an instant effect on our order book, Vandromme said.
In Germany, where rates remain relatively low, banks are nevertheless reluctant to lend for residential building projects, said Roland Luhmann, export manager at Raumplus, a maker of wardrobes and sliding doors in northwestern Bremen.
This crisis is also a housing crisis. Not as many houses are being built, and therefore the demand for our kind of products has dropped, Luhmann said.
Exports make up between 50 and 60 percent of total turnover at the firm, which ships its modern furniture to around 60 countries. It has been relying on its diverse international clientele, given weaker business sentiment in Europe.
Some markets are struggling. It's the countries you see in the news every day ... Portugal, Greece, Spain, Italy and Ireland, while Germany, Austria and Switzerland are doing quite well, Luhmann said, adding that Asian markets were also contributing to growth.
STICKING IT OUT
Some small businesses are sticking it out without significant changes to their operations. Luigi Lucchini's Don Lisander, one of Milan's oldest restaurants, halfway between the La Scala opera house and the fashion district, is a favourite haunt of financiers, bankers and politicians.
Italy's new prime minister, Mario Monti, is among his clients.
People spend less, eat less, they order one glass of wine instead of a bottle, said Lucchini, a keen sommelier who has about 600 bottles stacked in the cellar of his restaurant, once the chapel of an 18th-century villa.
The silver-haired 54-year-old said the financial crisis had taken its toll, with revenues down a third since 2007. The intimate restaurant can accommodate up to 50 guests.
I don't believe Italians have become poorer. But they're becoming more cautious, he said.
The traditional eatery, whose menu includes a pricey 20.5-euro Risotto alla Milanese, had refrained from cutting prices for more than two years. He also refuses to change his staff, some of whom have worked at the restaurant for 19 years.
Our clients like to be recognised. When they arrive at the table, for example, the waiter would offer them a piece of salami because they know they'd like it. A part-time worker wouldn't know that, he said.
Paolo Ricciulli is another Italian businessman who says he can handle whatever challenge the crisis flings his way.
Ricciulli, awarded a Knight of Labour honour for his business achievements, employs around 220 people at his Althea-Delfino group, Italy's biggest manufacturer of ready-made pasta sauce, with revenues of 62 million euros and two plants in Parma and Acerra, near Naples; 80 percent of his output is exported.
Our sauces dress half a billion plates of pasta, the tall, grey-haired engineer told Reuters, sitting in his elegant living room with a breathtaking view over the Bay of Naples.
Ricciulli said he expected revenues to be flat this year despite higher volumes, because he did not want to pass higher raw material costs onto consumers.
We were forced to lower prices, keep our heads down and wait for the storm to pass, Ricciulli said.
German retailers have already started reining in costs.
DIY store operator Praktiker, which saw sales at its stores outside of Germany plunge 12 percent in the first nine months of the year, has renegotiated contracts with suppliers and cut 9 percent of its workforce.
Given the fact that everybody has fiscal problems, we do not expect easy times. Private consumption is not picking up as we expected at the beginning of the year, financial officer Markus Schuerholz said after the company reported third-quarter results.
He added there were few further opportunities to cut costs, given what he described as the severe measures the company had already taken.
Metro, the world's fourth-largest retailer, which runs supermarkets, department stores, cash and carry and consumer electronics stores, said it was also stepping up cost-cutting efforts this month.
We're cautiously observing what's going on out there. The world has changed since the summer and the debt crisis is weighing heavily on consumption. An anxious and cash-strapped customer is not the best, Chief Executive Eckhard Cordes said.
Food sales have grown in nearly all countries, but non-food is difficult to sell, he added.
AUSTERITY AND REFORM
Italy's parliament has approved a financial stability law that included austerity measures such as raising the pension age to 67 from 65 by 2026 and making it easier to move public employees to different jobs.
Prime Minister Monti said on Thursday his government was looking at more measures to reduce the deficit and spur growth. He said he would consider re-introducing a property tax on residential houses and carrying out a fiscal assessment of people's assets to fight tax evasion and help ease levies for those who do pay. [ID:nL5E7MH1UJ]
Michele Perini, whose company SAGSA supplies Bauhaus-style furniture for offices and has annual sales of around 10 million euros, is concerned the new measures could squeeze small firms who are already finding it difficult to get access to credit and withstand higher labour and input costs.
Many suppliers have already gone bust, the 59-year-old told Reuters at his office in Milan.
Perini said he was prepared to pay extra wealth taxes on his personal assets but warned against going further than that.
If they imposed a tax on companies' assets, many would be forced to close, he said.
Pasta sauce maker Ricciulli agreed painful measures were necessary, but said that alone would not be enough to put Italy on the path to recovery.
I don't think we are making the boat go faster. We are trying not to make it sink, he said.
Perini criticised labour practices such as the extra two months' salary that big Italian companies traditionally pay out.
We cannot afford it anymore. It was good while it lasted, Perini said.
WINNERS AS WELL AS LOSERS
As always in business, there was potential for winners as well as losers.
Crises offer more opportunities than periods of boom, Ricciulli said. He pointed to his own experience buying two loss-making companies at cut-rate prices and turning them into a large successful operation.
MFC's Vandromme said a real estate crash would shake out many of the smaller players in the highly fragmented French residential construction market.
MFC sells about 5,000 individual detached houses per year and claims a 6 percent market share in France. It competes with peers Geoxia and AST Groupe along with hundreds of small family-owned construction groups that often build a few dozen houses per year.
There are some 3,000 players in this market. During a crisis, the weakest ones will disappear. That is why it is important to be in good financial health when a crisis hits, Vandromme said.
While Raumplus's business had been growing slowly since the 2008/09 crisis compared with the boom years before, the company remained optimistic about the future and expected sales to pick up this year compared with the previous year.
Our partners have positive results at the moment and are looking positively at the future. That's what I hear from my customers, Luhmann said.
Cheese shop owner Rovecchio said he did not look too far ahead and instead tried to remain nimble -- if the crisis deepened he could adapt his stock levels in about two weeks to a month. While he had no investment plans himself, he said a producer of goat's cheeses had decided to await the outcome of next year's French presidential election before expanding.
He first wants to see what the programme looks like and based on that decide what he'll do. I think that's intelligent.
On the other hand, if a great business opportunity came, there's no time to lose, crisis or no crisis, whether or not it's the right moment, sometimes you just have to go for it.
(Reporting by Antonella Ciancio and Michel Rose in Milan, Laura Viggiano in Naples, Geert De Clerq and Caroline Jacobs in Paris, Veronica Ek in Berlin and Victoria Bryan in Frankfurt; Editing by Sonya Hepinstall)