gis products, governance and price dynamics: some evidence from italy

GIs products, governance and price dynamics: Some evidence from Italy.

FAO, Rome, May 24 2010

Filippo Arfini Department of Economics, University of Parma, Italy

[email protected]

Dop, Igp e Stg un lungo dibattito legislativo

- Wile “typical products” are the results of the interactions between people and their territory DO, GI and PDO / PGI are the results of legislative actions;

- Their function is to protect producers and consumers but also to promote rural development;

- The low systems that protect and make visible GI products to consumers can be considered a successful tool also for producers?

PDO / PGI products: a very hot debate …

- GI are the result of collective actions;

- GI reputation is related to quality, but … quality is the result of collective, corporate choice and coordination;

- Quality, commercial strategy and governance are key factor for reach efficiency on the market...

- Which typology of GI exist?

- Which Marketing problems arise?

- Which actor should take decisions?

Contents

- The PDO/PGI link with the territory of origin;

- The role of protection associations;

- The economic aspects and marketing strategies;

- A tentative of classification of Italian GI;

- Conclusion.

The PDO/PGI link with the territory of origin

PDO per province PGI per province


Olive Oil Horticulture and cereal

Cheese


The majority of Designations (89 PDO and 51 PGI) are based within a single Region.

There are also cases where the typical area cover more regions for …historical, economic and … political reasons.


PDO Products Category Numbers of regions

Regions involved

Asiago

Cheese

2 Prov. aut. di Trento, Veneto

Gorgonzola 2 Piemonte, Lombardia

Montasio 2 Veneto, Friuli Venezia Giulia

Parmigiano Reggiano 2 Emilia Romagna, Lombardia

Pecorino Romano 3 Toscana, Lazio, Sardegna

Pecorino Toscano 3 Toscana, Umbria, Lazio

Taleggio 3 Lombardia, Veneto, Piemonte

Mozzarella di Bufala Campana

4 Campania, Lazio, Molise e Puglia

Provolone Valpadana 4 Prov. aut. di Trento, Lombardia, Veneto, Emilia Romagna

Caciocavallo Silano 5 Calabria, Campania, Molise, Puglia, Basilicata

Grana Padano 5 Emilia Romagna, Lombardia, Piemonte, Prov. aut. di Trento, Veneto

Salamini italiani alla cacciatora

Based product meat

11 Abruzzo, Emilia Romagna, Friuli-Venezia Giulia, Lazio, Lombardia, Marche, Piemonte, Toscana, Umbria, Molise, Veneto


Which are the implications for:-Link whit the territory;-Link whit the agricultural phase; -Link whit the local production system;-Perceived quality and market destination;-Governance and marketing;

PGI Products Category Numbers of regions

Regions involved

Cotechino Modena

Based product meat

3 Emilia Romagna, Lombardia, Veneto,

Zampone Modena

3 Emilia Romagna, Lombardia, Veneto,

Salame Cremona

4 Lombardia, Emilia Romagna, Piemonte e Veneto

Mortadella Bologna

8Emilia Romagna, Piemonte, Lombardia, Veneto, Marche, Lazio, Prov. Aut. Trento, Toscana

Vitellone bianco dell’Appennino Centrale

Fresh meat 8Emilia Romagna, Toscana, Marche, Abruzzo, Molise, Campania, Lazio, Umbria

The role of protection associations

76%

14%

3%6%

1% 1%

Filippo

Chiedere a Michele per togliere la colonna totalemagari aggiungere la percentuale delle organizzazioni

Product category

Farms

Industries (dairies, factories,

etc...)

total supply chain

Firms registered

in Association

s

Incidence%

Firms with certified product

Incidence%

(a) (b) ( c ) (d) (d/c) (e) (e/c)PDO 84.259 4.667 88.926 8.310 9,3 8.337 9,4

Balsamic Vinegar

69 382 451 328 72,7 235 52,1

Other meat products

62 15 77 54 70,1 48 62,3

Processed meat

6.621 265 6.886 406 5,9 390 5,7

Cheese 37.111 2.297 39.408 3.045 7,7 1.977 5,0Olive Oils 33.704 1.618 35.322 4.109 11,6 1.086 3,1

Fruit, vegetables and cereals

6.583 76 6.659 246 3,7 4.520 67,9

Bread 3 13 16 20 125,0 13 81,3Spices 106 1 107 102 95,3 68 63,6PGI 28.197 1.912 30.109 24.295 80,7 6.268 20,8

Fresh meat 3.576 679 4.255 2.685 63,1 2.697 63,4Processed

meat38 188 226 128 56,6 127 56,2

Olive Oils 10.251 627 10.878 10.465 96,2 261 2,4

Fruit, veg. and cereals

14.332 418 14.750 11.017 74,7 3.183 21,6

Total 112.456 6.579 119.035 32.605 27,4 14.605 12,3

The role of collective organizations: the representativenes of the supply - chain

The role of Consortia: remarks

Consortia do not necessarily represent all the producers of the

primary sector.

Consortia represent only some part of the supply chain.

Consortia are not producer organisations.

Consortia are not inter-professional organisations.

Consortia cannot plan the production volumes.

Some PDO/PGI products refer to niche markets; some others are

“large-scale” productions.

The role of Consortia depends upon the characteristics of the

PDO/PGI supply chain.

Specific actions of Consortia and marketing problems

Marketing mix

Market

Product

•Quality,•Name and brand, Packaging,•Certification,•Services,

Price

•Discounts•Payment conditions,•Etc.

Distribution

•Retail channel•Retail strategies …

Communication

• Collective promotion• Retail promotion• Direct marketing

In red: responsibility of collective action

collective brands versus firm brands

The role of collective organisations: the marketing strategies

The economic aspects and marketing strategies

Gross Saleable Production at

production level (Euro)

GSP per firm (Euro)

(member of Consortia)

Standard deviation of GSP per firm (Euro)

PDO 4.207.291.547 1.011.323 1.786.041

Balsamic Vinegar 8.500.000 20.793 12.000

Other meat products 850.000 15.741 -

Processed meat 1.233.769.215 1.035.163 2.105.737

Cheese 2.767.630.411 1.529.089 1.623.137

Olive oils 36.468.822 16.692 22.790

Fruit, vegetables and cereals 157.943.100 1.852.137 4.127.318

Bread 1.800.000 90.000 -

Spices 330.000 4.722 2.750

PGI 728.021.623 1.062.003 2.324.591

Fresh meat 33.000.000 14.300 8.864

Processed meat 493.809.380 3.456.065 3.172.669

Olive Oil 37.553.152 3.588 -

Fruit, vegetables and cereals 163.659.091 43.086 100.138

Total 4.935.313.171 1.028.601 1.979.559


Designations

ProductVolume of sales

(€)% of Total Cumulative %

PDO Grana Padano (cheese) 950,000,000 19.2 19.2PDO Prosciutto di Parma (ham) 850,000,000 17.2 36.5PDO Parmigiano Reggiano (cheese) 827,300,000 16.8 53.2PDO Mozzarella di Bufala Campana

(cheese)300,000,000 6.1 59.3

PDO Prosciutto di S. Daniele (ham) 300,000,000 6.1 65.4PDO Gorgonzola (cheese) 200,000,000 4.1 69.4PGI Mortadella Bologna (processed meat) 200,000,000 4.1 73.5PGI Bresaola della Valtellina (processed

meat)165,000,000 3.3 76.8

PDO Mela Val di Non (apples) 157,000,000 3.2 80.0PGI Mela Alto Adige o Sudtiroler Apfel

(apples)120,000,000 2.4 82.5

PDO Pecorino Romano (cheese) 105,175,936 2.1 84.6PDO Asiago (cheese) 95,000,000 1.9 86.5PDO Fontina (cheese) 93,370,725 1.9 88.4PGI Speck dell’ Alto Adige (processed

meat)91,000,000 1.8 90.2

PDO Provolone Valpadana (cheese) 41,697,000 0.8 91.1Other Pdo products

287,747,886 5.8 6.7

Other Pgi products152,021,623 3.1 3.1

Total 4,935,313,171 100.0

The power on the role of collective brand


collective brands versus firm brands



Factors that contribute to influencing the adoption of a collective trademark policy “against” a company brand policy . The size of the companies compared to the competitors of the reference market and the presence of leader companies in the market segment. The level of homogeneity of the companies making up the Consortium. The added value of the product and the sector of the supply chain involved. Precise strategic choices and/or marketing policies.

The characteristics of reference market, supply chain and the capacity of the companies are influencing the Consortium strategies.


Direct selling

Traditional

Mod. dristribu

tion

Ho.Re.Ca

Domestic

MarketExport EU

Non EU.

PDO 26 25 39 10 86 15 52 48 Balsamic Vinegar 25 59 11 5 45 55 51 50 Other meat products 5 5 90 0 100 0 0 100 Processed meat 8 30 53 9 94 6 62 38 Cheese 24 29 39 8 87 13 52 48 Olive Oil 45 14 24 17 80 20 55 45 Fruit, vegetables and cereals 32 18 48 3 81 19 29 72 Bakery products 11 11 74 5 95 5 100 0 Spices 13 59 10 18 93 8 40 60

PGI 16 18 56 10 89 11 32 68 Fresh meat 0 24 71 6 100 0 0 0 Other meat products 20 19 47 14 89 12 68 33 Olive Oil 20 5 70 5 40 60 28 72 Fruit, vegetables and cereals 17 18 55 10 91 9 30 70

Total 23 23 44 10 87 13 45 55

Retail channel and product category. (Source: our elaboration of Qualivita data

2008)


Product Volume commercialized at Gdo (First 15 products per turnover)

Average Price of Production (€/kg-

l)

Average Price of Sale on the

prevailing channel(€/kg-l)

Increase (€)

Increase (%)

20-40% 0,85 1,33 0,5 55,9

Mela Alto Adige o Sudtiroler Apfel (apples) 0,60 0,90 0,3 50,0

Mela Val di Non (apples) 1,10 1,75 0,7 59,1

40-60 % 6,10 11,47 5,4 88,0

Asiago (cheese) 4,27 9,36 5,1 119,2

Bresaola della Valtellina (processed meat) 15,00 27,50 12,5 83,3

Gorgonzola (cheese) 4,05 9,37 5,3 131,4

Mozzarella di Bufala Campana (cheese) 7,50 13,00 5,5 73,3

Parmigiano Reggiano (cheese) 8,44 12,46 4,0 47,6

Pecorino Romano (cheese) 4,30 8,25 4,0 91,9

Provolone Valpadana (cheese) 4,60 9,95 5,4 116,3

60-80 % 9,96 23,46 13,5 135,6

Prosciutto di Parma (ham) 7,42 26,64 19,2 259,0

Prosciutto di San Daniele (ham) 12,50 25,75 13,3 106,0

Speck dell’Alto Adige (processed meat) n.a. 18,00 - -

80-100 % 5,52 10,19 4,7 84,6

Grana Padano (cheese) 5,52 10,19 4,7 84,6

Total 5,89 11,80 5,9 100,3


Product category (Niche productions)

Average Price of Production

(€/kg-l)


prevailing channel (€/kg-l)

Increase (€)

Increase (%)

PDO 10,5 18,6 8,0 76,3

Balsamic Vinegar (bott. 100 ml) 45,0 87,5 42,5 94,4

Other meat products (kg) 8,3 11,0 2,7 33,2

Processed meat (kg) 12,5 24,3 11,8 93,9

Cheese (kg) 7,0 11,9 4,9 70,9

Olive Oil (l.) 11,4 15,8 4,4 39,0

Fruit, vegetables and cereals (kg) 4,3 7,1 2,8 66,0

Bread (kg) 1,8 2,3 0,5 27,8

Spices (gr.) 7,5 9,0 1,5 20,3

PGI 4,6 8,5 3,9 83,9

Fresh meat (kg) 6,1 14,0 7,9 129,6

Processed meat (kg) 12,5 23,0 10,5 84,0

Olive Oil (l.) 10,4 12,0 1,6 15,4

Fruit, vegetables and cereals (kg) 3,6 7,4 3,8 105,8

Total 8,7 15,9 7,2 83,4


Product category / Volume of products trade by big retailers

(in %)

Average Price of Production (€/kg-

l)


prevailing channel (€/kg-l)

Increase (€)Increase

(%)

Dop 11,0 18,2 7,2 65,4 Processed meat 13,8 23,4 9,7 70,3 0-20 20,7 29,5 8,8 42,5 40-60 13,3 24,3 11,0 82,5 60-80 8,8 18,2 9,4 107,1 80-100 12,0 20,9 8,9 74,5 Cheese 8,2 12,8 4,6 56,2 0-20 8,5 12,1 3,6 42,3 20-40 8,3 10,1 1,9 22,4 40-60 8,4 13,9 5,5 64,9 60-80 6,3 12,9 6,6 103,4 80-100 6,9 9,2 2,3 33,6 Olive oil 10,1 14,6 4,5 44,6 0-20 10,7 14,8 4,1 37,8 20-40 9,8 14,8 5,0 50,7 40-60 9,4 14,7 5,2 55,3 60-80 12,0 15,9 3,9 32,4 80-100 7,2 8,0 0,8 11,4 Horticulture 3,7 6,0 2,3 62,2 0-20 5,5 6,5 1,0 18,2 40-60 4,2 9,5 5,3 126,2 80-100 1,4 2,0 0,6 42,9


Product category / Volume of products trade by big retailers (in %)

Production price

(€/kg - l)

Retail price (€/kg-l)

Margin (in euro )

Margin( in % )

PGI 5,1 9,3 4,2 81,8

Processed meat 10,3 21,5 11,2 109,3

0-20 18,0 50,0 32,0 177,8

60-80 11,0 21,0 10,0 90,9

Olive oil 10,0 12,0 2,0 20,0

80-100 10,0 12,0 2,0 20,0

Horticulture 4,3 7,7 3,5 81,1

0-20 7,9 12,8 4,9 62,1

20-40 12,3 18,2 5,8 47,3

40-60 1,7 2,7 1,0 56,1

60-80 2,2 4,3 2,0 91,1

80-100 2,6 5,3 2,7 102,9

Others products: total 9,0 15,2 6,2 68,8

A tentative of classification of Italian GI

By non-hierarchical methodology based on k-means five indices applied to 98 Designations were obtained (R2= 0.75): •Cluster 1) Ratio between the number of companies with certified product and the total companies registered with protection consortia or associations (in %); Coordination;

•Cluster 2) Ratio between the consumer price in the prevalent channel and the production price (in %); Market efficiency

•Cluster 3) Volume of certified product sold by direct sales channel (in %); Market channel;

•Cluster 4) Volume of certified product sold by traditional sales channel (in %); Market channel;

•Cluster 5) Volume of certified product sold by modern distribution sales channel (in %); Market channel.


1 High Value Chain

TOTAL CLUSTER 1Processed

meat Cheese

Fruit, vegetables and cereal

PDO PDO PDO PGI 13 3 2 2 6

2 Traditional retail

TOTAL CLUSTER 2Balsamic vinegar

Processed meat

Cheese Olive oilFruit, vegetables

and cerealSpices

PDO PDO PDO PDO PDO PGI PDO

32 2 6 10 5 2 6 1 3 Modern Distribution

TOTAL CLUSTER 3Others meat

products

Fresh meat

Processed meat Cheese Olive oilFruit, vegetables

and cerealBread

PDO PGI PDO PGI PDO PDO PGI PDO PGI PDO41 1 1 4 4 7 7 1 2 13 1

4 Direct sales

TOTAL CLUSTER 4 Cheese Olive oilFruit, vegetables

and cereal PDO PDO PDO PGI

11 2 5 1 3

5 Quality control and traditional retail

TOTAL CLUSTER 5Fruit, vegetables

and cereal

PDO 1 1


1 High Value Chain


meat Cheese





Processed meat


and cerealSpices




products

Fresh meat


and cerealBread


4 Direct sales



11 2 5 1 3



and cereal

PDO 1 1

C3 Bresaola della Valtellina (dried beef), Gorgonzola cheese, Grana Padano cheese, La Bella della Daunia (olives), Parmigiano Reggiano cheese, Pecorino Toscano cheese, Pomodoro di Pachino (tomatoes), Prosciutto di S. Daniele (ham), Riso Nano Vialone Veronese (rice), Salamini italiani alla cacciatora (mini salamis), Speck dell' Alto Adige (smoked ham), Uva da tavola di Canicattì (grapes),.


1 High Value Chain


meat Cheese





Processed meat


and cerealSpices




products

Fresh meat


and cerealBread


4 Direct sales



11 2 5 1 3



and cereal

PDO 1 1

C2 Aceto Balsamico Tradizionale di Modena (balsamic vinegar), Asiago (cheese), Brisighella (olive oil), Caciocavallo Silano (cheese), Mozzarella di Bufala Campana (cheese),


1 High Value Chain


meat Cheese





Processed meat


and cerealSpices




products

Fresh meat


and cerealBread


4 Direct sales



11 2 5 1 3



and cereal

PDO 1 1

C4 Alto Crotonese (olive oil), Canino (olive oil), Carciofo Romanesco del Lazio (artichokes), Collina di Brindisi (olive oil), Fagiolo di Lamon della Vallata Bellunese (beans), Formai de Mut dell' Alta Valle Brembana (cheese), Marrone di San Zeno (marron-chestnuts), Molise (olive oil), Murazzano (cheese), Scalogno di Romagna (shallots).


1 High Value Chain


meat Cheese





Processed meat


and cerealSpices




products

Fresh meat


and cerealBread


4 Direct sales



11 2 5 1 3



and cereal

PDO 1 1

C1. Fiore Sardo (cheese), Fungo di Borgotaro (mushrooms), Kiwi Latina, Limone Costa d'Amalfi (lemons), Prosciutto di Modena (ham), Prosciutto di Parma (ham), Prosciutto Toscano (ham).

C5 Mela Val di Non


1 High Value Chain


meat Cheese





Processed meat


and cerealSpices




products

Fresh meat


and cerealBread


4 Direct sales



11 2 5 1 3



and cereal

PDO 1 1

C3 Bresaola della Valtellina (dried beef), Gorgonzola cheese, Grana Padano cheese, La Bella della Daunia (olives), Parmigiano Reggiano cheese, Pecorino Toscano cheese, Pomodoro di Pachino (tomatoes), Prosciutto di S. Daniele (ham), Riso Nano Vialone Veronese (rice), Salamini italiani alla cacciatora (mini salamis), Speck dell' Alto Adige (smoked ham), Uva da tavola di Canicattì (grapes),.

C2 Aceto Balsamico Tradizionale di Modena (balsamic vinegar), Asiago (cheese), Brisighella (olive oil), Caciocavallo Silano (cheese), Mozzarella di Bufala Campana (cheese),

C1. Fiore Sardo (cheese), Fungo di Borgotaro (mushrooms), Kiwi Latina, Limone Costa d'Amalfi (lemons), Prosciutto di Modena (ham), Prosciutto di Parma (ham), Prosciutto Toscano (ham).

C4 Alto Crotonese (olive oil), Canino (olive oil), Carciofo Romanesco del Lazio (artichokes), Collina di Brindisi (olive oil), Fagiolo di Lamon della Vallata Bellunese (beans), Formai de Mut dell' Alta Valle Brembana (cheese), Marrone di San Zeno (marron-chestnuts), Molise (olive oil), Murazzano (cheese), Scalogno di Romagna (shallots).

C5 Mela Val di Non

Conclusion

• Do exist a rather varied picture of GI products, where designation of origin, as such, provides only partial information to consumers and is certainly not a guarantee of success;

• The distinction between PDO and PGI is not relevant in term of market efficiency, while is important product differentiation;

• PDO / PGI food chains need commercial strategy and coordination;

• Which organization should act in order to improve the market efficiency of GI producers on modern market?

gis products, governance and price dynamics: some evidence from italy

Documents

lombardia montasio

cerealcheesethe pdopgi

provincethe pdopgi link

veneto gorgonzola

contentsthe pdopgi link

lombardia pecorino romano

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visible gi products