Unpacking the Financial Impact of COVID-19 on Italian Food and Beverage Processing SMEs

This research offers an in-depth examination of the financial consequences of the COVID-19 pandemic in Italy for small and medium-sized Food and Beverages Processing enterprises (SMEs) operating in the food and beverage sector. Leveraging financial and managerial data from the AIDA database, the study investigates both the immediate disruptions caused by the health crisis and the recovery patterns observed in its aftermath, aiming to clarify the sector's resilience and vulnerabilities.The analysis draws on an original sample of 1,600 SMEs, observed over a five-year span (2019–2022), with classifications based on firm size and geographical distribution. A range of financial performance indicators—including Return on Equity (ROE), Return on Investment (ROI), debt ratio, and production value per employee—was used to assess the evolution of corporate health before, during, and after the pandemic.The findings show a substantial downturn in profitability in 2020, with ROE plummeting most sharply in northern Italy (–147%), while southern areas and islands were less severely affected (–49%). ROI patterns revealed strained investment efficiency, with incomplete recovery by 2022. The debt ratio exceeded 70% during the height of the crisis, indicating strong reliance on external funding, although signs of gradual improvement emerged in 2023—especially among firms in the north. EBITDA, after contracting by 10% in 2020, experienced a significant rebound the following year, despite rising production costs, such as an 8.3% increase in labor expenses by 2022.A deeper examination reveals that smaller firms faced the greatest pressures during the crisis but demonstrated notable recovery potential by the end of the observation period. The strength of enterprises in northern Italy—both in terms of capital structure and post-pandemic resilience—underscores the role of regional factors in shaping economic recovery. The study ultimately highlights significant disparities in performance by firm size and location, emphasizing the need for targeted policies that promote long-term financial sustainability and improve sectoral preparedness for future shocks.