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

1. GIs products, governance and price dynamics: Some evidence from Italy. Filippo Arfini Department of Economics, University of Parma, Italy Filippo.arfini@unipr.it FAO, Rome, May 24 2010

2. 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?

3. 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?

4. 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.

5. The PDO/PGI link with the territory of origin PDO per province PGI per province

6. The PDO/PGI link with the territory of origin Olive Oil Cheese Horticulture and cereal

7. The PDO/PGI link with the territory of origin 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.

8. The PDO/PGI link with the territory of origin

9. The PDO/PGI link with the territory of origin • 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;

10. The role of protection associations 76% 14% 6% 3% 1% 1%

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

12. The role of Consortia: remarks • 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. • 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.

13. Specific actions of Consortia and marketing problems In red: responsibility of collective action Marketing mix • Distribution • Retail channel • Retail strategies … • Product • Quality, • Name and brand, Packaging, • Certification, • Services, Market • Communication • Collective promotion • Retail promotion • Direct marketing • Price • Discounts • Payment conditions, • Etc.

14. The role of collective organisations: the marketing strategies collective brands versus firm brands

15. The economic aspects and marketing strategies

16. The economic aspects and marketing strategies

17. The economic aspects and marketing strategies The power on the role of collective brand

18. The economic aspects and marketing strategies collective brands versus firm brands

19. The economic aspects and marketing strategies • 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.

20. The economic aspects and marketing strategies Retail channel and product category. (Source: our elaboration of Qualivita data 2008)

21. The economic aspects and marketing strategies

22. The economic aspects and marketing strategies

23. The economic aspects and marketing strategies

24. The economic aspects and marketing strategies

25. 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.

26. A tentative of classification of Italian GI

27. A tentative of classification of Italian GI 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),.

28. A tentative of classification of Italian GI C2 Aceto Balsamico Tradizionale di Modena (balsamic vinegar), Asiago (cheese), Brisighella (olive oil), Caciocavallo Silano (cheese), Mozzarella di Bufala Campana (cheese),

29. A tentative of classification of Italian GI 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).

30. A tentative of classification of Italian GI 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

31. A tentative of classification of Italian GI 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). C2 Aceto Balsamico Tradizionale di Modena (balsamic vinegar), Asiago (cheese), Brisighella (olive oil), Caciocavallo Silano (cheese), Mozzarella di Bufala Campana (cheese), 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),. 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

32. 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?