The presentation deals with marketing channels and points of consumption, with data about Italy and Europe, to stimulate the debate about which marketing strategies could be more appropriate in a given environment

Santucci, Fabio M.

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Organic Eprints

1Fabio M. Santucci, DSEEA Uni PG 1“Marketing issues in OA ”Fabio Maria SantucciDSEEA – Sezione di EconomiaFabio M. Santucci, DSEEA Uni PG 2Dimensions of the market (106 €)no. Country 2004 2005 2006 2007 20081   Germany 3.500 3.900 4.600 5.300 5.8502   France 2.200 1.700 1.900 2.5913   United Kingdom 1.661 2.333 2.831 2.560 2.4944   Italy 1.500 1.900 1.870 1.970  Italy 2.400 2.650 2.915 2.7695   Switzerland 765 763 764 790 9056   Austria 450 530 740 8107   Denmark 307 434 580 7248   Sweden 400 433 379 490 6239   The Netherlands 419 419 460 500 53710   Spain 270 350 600 35011   Belgium 177 245 na 305Source: The world of organic agriculture, 2006 - 20102Fabio M. Santucci, DSEEA Uni PG 3Individual annual expenditure (€)Country 2004 * 2005 ° 2006a 2007b 2008c  Switzerland 103,0 103,0 102,0 105,0 119,2  Denmark° 50,0 57,0 80,0 106,0 132,3  Austria 56,0 64,0 89,0 97,4  Sweden 47,0 48,0 42,0 53,0 67,8  Germany 42,0 47,0 56,0 64,0 71,2  Italy 26,0 42,0 32,0 32,0 33,0  United Kingdom 30,0 39,0 47,0 42,0 40,8  France 37,0 27,0 30,0 40,5  The Netherlands 26,0 29,0 28,0 30,0 32,8  Belgium  17,0 23,0 27,0 28,6  Ireland 17,0 na 17,0 23,6  Finland 15,0 11,0 12,0 14,0  Norway 9,0 14,0 17,0 27,7  Lichtenstein 8,0 86,0 86,0 84,9  Luxembourg 86,0 84,5  Spain 7,0 2,0 13,0 7,7  Greece 5,0 na 5,0  Portugal 5,0 na 7,0  Czech Republic 1,2 3,0 5,0  Croatia 5,0 6,0 9,1  Poland 0,8 1,0 1,0  Hungary 0,6 1,0 2,0Fabio M. Santucci, DSEEA Uni PG 4Market share  Germany 2,1 3,0  Switzerland 3,7 4,5  United Kingdom 0,9 1,3  Austria 2,4 3,0  Italy 0,7 1,6  France 0,7  Sweden 1,7  The Netherlands 1,2 1,8 Denmark** 3,5  Spain* 0,2 0,2  Europe 1  1-3  USA°  2-2,5  Japan° <5Sources: For 2001 Hamm and Gronefeld 2004               For 2005 Richter 2007 and ° Garibay 2007              * 2003, Joensen 2004.CountryNational Market Share (%)National Market Share (%)2001 20053Fabio M. Santucci, DSEEA Uni PG 5Typologies of consumers• SELFISH: to protect / enhance their own health and that of their family• Ecologically motivated : to defend and protect the environment• Socially motivated : to defend a group at risk• Religiously motivated : to respect some rules and beliefsFabio M. Santucci, DSEEA Uni PG 6Food risks perception in EU, 2003Area RisksResidues of pesticides 63Residues of hormones 62GMO 58Preserving products, artificial colors 57Dangerous products during processing 49Viruses (AI) 62Bacterial contaminations 61Dioxine, mercury 59Mad cow disease 53Hygiene products  outdoor 62Animal welfare 55Allergies 43Hygiene products  indoor 32Source: Eurobarometer 238Risks linked with the production processRisks linked with pathologies and contaminationsRisks linked with consumption and other risksEU254Fabio M. Santucci, DSEEA Uni PG 7Motivations in EuropeCountry Primary motives  Secondary motives Tertiary motives  Austria Own health Responability for children Regional development  Switzerland Health Better or good tasteEnvironment, animal welfare, farmers' income  Germany Own and children's health Support of shops and farmers Taste  DenmarkLifestyle, environmental protectionOwn health Support to an ideal world  Finland Environmental protection Health (pure foods, no residues) Animal welfare  France Healthy nutrition Better or good taste Respect for the living world   Italy Health (safety) Better or good taste  United Kingdom Own health (no chemicals) Local farming and fair trade EnvironmentSource: Schmidt, Sanders and Midmore, 2004.Fabio M. Santucci, DSEEA Uni PG 8Motivations in Europe 2CountryNature ProtectionHealth / Food SafetyAnimal WelfareTasteRegional OriginNon GMO  Germany 3 7 5 422  Switzerland 4 7 6 523  United Kingdom 4 6 3 323  Austria 4 6 3 231  Italy 3 6 1 524  France 6 7 4 64  Sweden 5 6 3 212  The Netherlands 5 7 2 5  Denmark 6 6 4 413  Europe 4,9 6,2 3,4 4,3 2,5 2,8 (7=very relevant, 1=not relevant at all)Source: Hamm and Gronefeld 2004.5Fabio M. Santucci, DSEEA Uni PG 9Marketing channels• At the farm: on the field, at the outlet, at own restaurant• E marketing• Box schemes (at farm or cooperative or platform)• Farmers’ markets • Processing firms (profit oriented or cooperatives)• WholesalersEach channel has advantages anddisadvantages and requires careful analysisFabio M. Santucci, DSEEA Uni PG 10Marketing channelsChannel % output % farms*Direct sale at farm 26 66Specialized shops 17 40Middlemen 16 24Organic open markets 9 18Processors 4 7Marketing coop 11 12Other channels 19 24Total 100* Total exceeds 100 because multiple channels are usedSource: Miele 19946Fabio M. Santucci, DSEEA Uni PG 11Marketing channelsChannel no. % - Middlemen 391 44,2 - Consumers 134 15,2 - Cooperative 121 13,7 - Other forms 81 9,2 - Organic shops 16 1,8 - Organic supermarkets 4 0,5 - Supermarkets 2 0,2 - Internet 1 0,1Total 884 100,0Source: INIPA 2001Fabio M. Santucci, DSEEA Uni PG 12Marketing channelsProduce Direct sale Middlemen CoopPrivate ProcessorsSupermakets / shopsBio shops Other - Veggies 32,3 29,4 29,4 2,9 2,9 2,9 - Fruits 11,9 28,4 38,8 4,5 7,5 7,5 1,5 - Cereals 8,6 17,7 38,8 22,4 2,0 5,3 5,2 - Olive oil 42,9 11,6 16,1 21,4 0,9 2,7 4,5Source: ISMEA, 20077Fabio M. Santucci, DSEEA Uni PG 13Consumers’ points of purchase• Organic specialized shop (individual, associated or franchisee) Æ Natura Si with 3,200 items• Traditional grocery with some organic items• Traditional health shop with some organic items• Supermarket chains with some organic items• Organic supermarket chains (Whole Foods)• Organic / zero miles restaurants• Canteens (at office, schools, hospitals) Æ public procurement• Any other place where organic food is proposed.Fabio M. Santucci, DSEEA Uni PG 14Marketing channels in EuropeCountry TotalsAustria 2,4 63 3 13 1 13 7 100Belgium 1 50 30 10 10 100Germany 2,1 35 7 27 9 17 2 3 100Denmark 3,5 80 1 5 8 6 100Spain 0,2 10 1 19 61 5 2 2 °° 100Finland 1 80 10 5 5 100France 0,7 55 2 30 10 3 100Greece 0,2 17 1 70 10 2 100Ireland 0,5 60 16 14 8 2 100Italy 0,7 55 2 31 9 3 100Luxemburg 1 50 3 40 3 3 1 100The Netherlands 1,2 42 10 41 7 100Portugal 0,1 20 30 20 30 100Sweden 1,7 90 1 1 5 3 100United Kingdom 0,9 82 8 2 8 100Tchek republic 0,1 55 25 20 100Switzerland 3,7 75 2 9 8 6 100Norway 0,2 50 5 30 15 100°=includes small shops and supermarkets, *= also called whole food, ^=includes open markets and dierct delivery°°= Consumers associations and cooperatives. Source: Hamm and Gronefeld 2004Organic Market Share Normal retail°Backers and butchersSpecialized Bio ShopsHealthy* foods shopsDirect sales^Restaurants and canteensOther8Fabio M. Santucci, DSEEA Uni PG 15Share of conventional retailOrganic Market Leader  Germany 55 Tegut  Switzerland 80 COOP  United Kingdom 76 Waitrose  Austria 65 Billa  Italy 39 Esselunga  Spain* 10  The Netherlands 43 Albert Heijn  Denmark 85 FDBSources: Richter 2007 and Garibay 2007, * 2003, Joensen 2004Country2005Organic Sales (%) via Conventional Retail The arrival of private labels: the “conventionalization of organic food?Fabio M. Santucci, DSEEA Uni PG 16Share of different channels in Italy, 2007  000 euro %Hypermarkets 145.816 42,7Supermerkets 162.876 47,7Superette 8.025 2,4Hard discount 4.053 1,2Traditional shops 9.167 2,7Other 11.545 3,4Total 341.481 100,0Note: Specialised organic shops not consideredSource: ISMEA (2007) on Nielsen scanner data - 9.000 familiesWhere2007NOTE: This study only includes products with bar code and covers only a fraction of total consumption9Fabio M. Santucci, DSEEA Uni PG 17Other Purchasing opportunities in Italy, 2009• Box schemes,• Supermarkets,• E sales not includedPurchasing opportunities no.Farms with selling point 2.176Farms with agrotourism 1.222Organic open air markets 225Consumers' purchasing groups  598Bio grocery shops 1.132Bio restaurants 228School canteens 837Purchasing Density no.   Italy 9.536   Marche 3.243   Campania 29.964Fabio M. Santucci, DSEEA Uni PG 18Natura Si in Italy2000 2010Piemonte 1 5Valle d'Aosta 0 0Liguria 1 3Lombardia 7 16Trentino Alto Adige0 1Veneto 5 15Friuli Venezia Giulia 1 3Emilia Romagna 5 16North 20 59Toscana 2 7Marche 0 2Umbria 0 2Lazio 4 12Centre 62 3Abruzzo 0 0Molise 0 0Campania 0 1Puglia 0 2Basilicata 0 0Calabria 0 0South 0 3Sicilia 0 2Sardegna 0 0Islands 0 2Italia 26 87RegionsNaturaSi• 10 more shops in 201110Fabio M. Santucci, DSEEA Uni PG 19Some conclusions• The market (=consumers’ final demand) is growing• Very few consumers are 100% organic• Most urban consumers buy at conventional supermarkets • Consumers also search for processed organic foods• Supermarkets and processors need large quantities, regular and sure supply, standardized qualities, “low” prices.• Risk of conventionalization? Æ price fights??• BUT… there is (there can be a plenty) of marketing channels• There is not ONE strategyFabio M. Santucci, DSEEA Uni PG 20Strategies depend on..• Farm – output size and composition (fresh? Processed?)• Labor and skills available (marketing attitudes included)• Proximity to consumers• Organizational capacity, in cooperation with other organic producers• Availability of processing units (at farm, cooperative)• Attitudes of local Authorities• Attitudes of local consumers groups• Etc..11Fabio M. Santucci, DSEEA Uni PG 21Good old and new marketing concepts……• Product• Price• Placement• Promotion• Consumer• Cost• Convenience• CommunicationFabio M. Santucci, DSEEA Uni PG 22Thanks for your attention 

Marketing issues in organic agriculture

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