Typical Food Products Marketing : Tales From the Italian Food and Beverages Industry 9781845441975, 9781845440336

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British Food Journal

ISSN 0007-070X

Typical food products marketing: tales from the Italian food and beverages industry: a case study approach

Volume 106 Number 10/11 2004

Guest Editors Professor Claudio Vignali and Professor Alberto Mattiacci

Access this journal online __________________________ 695 Editorial advisory board ___________________________ 696 Abstracts and keywords ___________________________ 697 Guest editorial ____________________________________ 701 INTRODUCTION The typical products within food ``glocalisation'': the makings of a twenty-first-century industry

Alberto Mattiacci and Claudio Vignali_______________________________

Pandoro cake: how to become a mass marketer from a local market

Paola Signori___________________________________________________

Balsamic vinegar of Modena: from product to market value: competitive strategy of a typical Italian product

Giovanni Mattia ________________________________________________

The effectiveness of meta-brands in the typical product industry: mozzarella cheese

Enrico Bonetti __________________________________________________

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CONTENTS

CONTENTS continued

Brunello di Montalcino: how a typical wine could revive a poor country-village

Alberto Mattiacci and Vincenzo Zampi ______________________________

Moving from ``typical products'' to ``food-related services'': the Slow Food case as a new business paradigm

Costanza Nosi and Lorenzo Zanni __________________________________

The enhancement of the typical products value: from commodity to experience: the case of Esperya.com

Augusto D'Amico _______________________________________________

REGULAR PAPERS Investigating safe egg use in the catering industry: a pilot study to estimate the nature and extent of adherence to government guidance

Eunice Taylor __________________________________________________

Globalisation: a study of the poultry-meat supply chain L. Manning and R.N. Baines ______________________________________

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Monitoring consumer confidence in food safety: an exploratory study

Janneke de Jonge, Lynn Frewer, Hans van Trijp, Reint Jan Renes, Willem de Wit and Joke Timmers __________________________________

What is the problem with sauvignon blanc? An investigation of expert dislike of an aesthetic product Steve Charters__________________________________________________

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EDITORIAL ADVISORY BOARD Paul Allen Lewes, East Sussex, UK Professor Tony Andrews Bramley, Nr Basingstoke, UK Mary Barasi Head of Centre, Nutrition and Dietetics, School of Health and Social Sciences, UWIC, Cardiff, UK Dr Alan Beardsworth Lecturer in Sociology, Loughborough University, Loughborough, UK Dr Roger Cook Programme Development Group, Wellington, New Zealand Professor Leo Paul Dana Management Department, University of Canterbury, Christchurch, New Zealand Dr Ruth Fairchild School of Applied Sciences, UWIC, Cardiff, UK Professor Christina FjellstroÈm Department of Domestic Sciences, Uppsala University, Uppsala, Sweden Professor Lynn Frewer Marketing and Consumer Behaviour Group, Social Sciences Department, University of Wageningen, The Netherlands Susan Gregory Research Fellow, Research Unit in Health, Behaviour and Change, University of Edinburgh Medical School, Edinburgh, UK Cathy Hart Senior Lecturer in Retailing and Operations Management, Loughborough University, Loughborough, UK Dr Adam Lindgreen Faculty of Technology Management, Eindhoven University of Technology, Eindhoven, The Netherlands

Howard Lyons SLM City Campus, Sheffield Hallam University, Sheffield, UK Dr Ingela Marklinder Department of Domestic Sciences, Uppsala University, Uppsala, Sweden Professor Alberto Mattiacci UniversitaÁ degli Studi di Siena, Siena, Italy Barry Michaels The Michaels Group, Palatka, Florida, USA Professor Bevan Moseley Blandford House, Reading, UK Dr Yasmine Motarjemi Food Safety Manager, Nestec Ltd, Vevey, Switzerland Dr Martin Palmer Head, Industry Consulting, Meat and Livestock Commission, Milton Keynes, UK Stephen Ridge Associate Director Quality Assurance, Somerfield Stores Ltd, Bristol, UK Claire Seaman Faculty of Business and Enterprise, Queen Margaret University College, Edinburgh, UK Dr Andrew Smith Nottingham University Business School, Nottingham, UK Richard Sprenger Highfield Publications, Sprotborough, Doncaster, UK Professor Alex Von Holy Roosevelt Park, Gauteng, South Africa Professor Tihomir Vranesevic Graduate School of Economics and Business, University of Zagreb, Croatia Professor Verner Wheelock Verner Wheelock Associates, Broughton Hall Business Park, Skipton, UK

The typical products within food “glocalisation”: the makings of a twenty-first-century industry Alberto Mattiacci and Claudio Vignali Keywords Globalization, Agriculture, Food technology, Tourism, Local economies, Italy The choice of typical products as an area of autonomous business with great potential comes from the development of a scenario of supply made up of important trends – within wealthy countries – that simultaneously invested in: the economy, the agricultural sector, the agro-food sector and, on the same level, in the tourist industry and (of consumption) in the cultural sector, in the broad sense. It is well-known that the more significant traits of the matter are connected to the following elements: globalisation; the increased use of technology in agricultural production; the renewed concept of territory; the “philosophical” change of agricultural policies; the great fragmentation of the tourist industry; the tensions generated by public opinion towards subjects like food safety, exacerbated by recent shocking events (mad cow disease, GMO, etc.); and new food consumption behaviour. The definition and background of typical food products are located in these varied elements.

Pandoro cake: how to become a mass marketer from a local market Paola Signori Keywords Confectionery, Italy, Internal markets, International marketing, Christmas, Easter This case study refers to the details of Bauli, one of the best-known Italian companies in the confectionery industry’s history. In particular, the analysis shows that, in this case, first of all, quality then specialisation and innovation for change have led the organisation to market leadership. The case is structured in three parts. The first sketches out market data about Bauli and direct competitors in different products. The second gives some information about the famous Pandoro cake to underline the typicalness of this traditional recipe. The

third introduces Bauli, giving trade information, describing vicissitudes of the firm from its very beginnings, and discussing different key factors of success. Concludes that the tale of this company is similar to many others that have now grown up and out from their local trade areas, and have increased their market share to achieve leadership in their sectors.

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Balsamic vinegar of Modena: from product to market value: competitive strategy of a typical Italian product Giovanni Mattia Keywords Product quality, Marketing, Competitive strategy, Wines, Italy, Food products This case study provides a brief historical background to the regulatory summary of the production and quality of vinegar, manufactured in Modena, Italy: the production method and the asset value of a vinegar cellar; quality controls; the comparative evaluation of balsamic vinegars; product and market specificity; the competitive environment; and the organisational structure and critical management areas in the productive chain. The study also looks at the growth pattern of traditional balsamic vinegar and the evaluation of the coherence of the current strategic assumptions for future business development.

The effectiveness of meta-brands in the typical product industry: mozzarella cheese Enrico Bonetti Keywords Dairy products, Italy, Small enterprises, Competitive strategy, Supply and demand The development and spread of protected denominations for typical products has been one of the most interesting phenomena recorded over the last ten years, in terms of both extent (there are more than 500 protected denominations in Europe, 20 per cent for Italian

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products) and the implications for the marketing of food products. The role played by these meta-brands is rather a complex one, as a number of different factors come into play, such as the commodity itself, the size and type of the company using the brand, the end consumers who actually buy the product, and so on. These assumptions are confirmed by the existence of a number of studies focusing on particular commodities and/or countries. While furnishing a few general considerations, which are common to several contexts, this work aims mainly at analysing the role of protected denominations for typical products both as marketing instruments and as a springboard for competition for small local producers. In particular, the study will concentrate on the dairy industry and “made-in-Campania” buffalo’s milk mozzarella cheese, an Italian product benefiting from the protected designation of origin (PDO) brand Mozzarella di Bufala Campana.

Brunello di Montalcino: how a typical wine could revive a poor country-village Alberto Mattiacci and Vincenzo Zampi Keywords Wines, Winemaking, Italy, Regional marketing, International marketing None of the numerous food products that comprise the Italian food tradition can boast of business revitalisation as much as that which involved the wine industry in Italy and in the rest of the world in the last decade. This is not the appropriate moment to consider the reasons for this change, nor is it the right place to compare the industrial situations of that time with those present today. Rapidly covering the field of the extensive history of the wine business, it is sufficient to cite certain simplified facts in order to show how the end user of the product – the consumer – has dramatically changed his consumption history, which initiated the process of regeneration of the business, a process never before seen, in the world of agricultural industries. The companies in the vine-growing and wine-making business have been both the driving force and the beneficiaries of this state of affairs. Indeed, to have a clearer picture, a hypothetical external

person, observing the wine business panorama today, would notice clear features and company models, that are unrelated to the historical past of the industry.

Moving from “typical products” to “food-related services”: the Slow Food case as a new business paradigm Costanza Nosi and Lorenzo Zanni Keywords Food industry, Supply and demand, Local authorities, Distribution channels, Markets, Italy In the last years the market of typical food products (TFP) has been characterized by many changes showing the rise of a new paradigm of consuming and offering. The object of this case study is to underline the nature of these changes and the implications in terms of marketing strategies. The Slow Food experience is quoted here as a good example of this modernization process. This paper attempts to underline the characteristics of an interpretative model of the TFP business in order to understand the changes within the supply- and the demand-side of the market. The proposed interpretation model is both contextualized and evolutionary.

The enhancement of the typical products value: from commodity to experience: the case of Esperya.com Augusto D’Amico Keywords Value chain, Production processes, Internet, Culture (sociology), Italy The profound transformations taking place in the world economy pose the need for all businesses, of whatever size and sector, to review their production processes and reorganise their value chain. Recently, competition has become much more intense and all-encompassing, particularly regarding commodities or other poorly differentiated goods, not only of an agricultural or agro-industrial nature. For such products, cost is a critical factor in their success, encouraging decentralisation to areas where production, and

especially labour conditions, allow the realisation of particularly strong economies. In particular, market globalisation is applying pressure to standardise the tastes of consumers, who are no longer used to the flavours of typical products, and to reduce biodiversity at a productive level. This globalisation is, thus, often experienced as a threat, which forces European agro-food producers and consumers to defend and protect those products and brands, which express the identity of their traditions. However, this process of market homogenisation may actually represent a factor of development for businesses producing typical products. In fact, the progressive unification of consumption models and the possibility of having typical products available on a global level will enable such products to rid themselves of the “provincial” image which often characterises them. In this context, also the businesses producing typical products should thus develop and implement strategies to improve their offer, which hinge not only on their products’ intrinsic features but, above all, on their extrinsic aspects.

Investigating safe egg use in the catering industry: a pilot study to estimate the nature and extent of adherence to government guidance Eunice Taylor Keywords Food safety, Catering industry, Government policy Despite a 1993 ACMSF Report on Salmonella in Eggs, which offered specific guidance for caterers, outbreaks of Salmonellosis still occur, are frequently associated with the catering industry, and in many cases eggs have been implicated as the source of infection. Using a case study approach and multiple sources of data collection to achieve reliable results, this study assessed a random sample of 100 catering managers for their understanding of and adherence to government guidance. Establishments were randomly selected from four “high-risk” sectors: function catering, nursing homes, restaurants, and sandwich outlets. Results indicated that there was little awareness of food safety risks associated with eggs and that recommended good practice was

not widespread. This was evident in all four sectors and especially in sandwich outlets. Possible reasons for and the implications of these findings are discussed, including the lack of specific advice on safe egg use in the current Basic Food Hygiene Certificate and recommendations for research into effective means of communicating safety messages to caterers.

Globalisation: a study of the poultry-meat supply chain L. Manning and R.N. Baines Keywords Food industry, Poultry, Integration, Risk management, Supply chain management Increasing globalisation of the poultry meat supply chain has led to consolidation and evolution of transnational companies, whether by vertical or horizontal integration, and the development of business clusters. There are significant benefits in these economies of scale, especially improved purchasing power and greater intellectual, technological and production resources for organizations to draw upon to provide products that meet differentiated customer needs. The consumer has seen the benefit of globalisation in lower commodity food prices, wider product choice and the advent of “convenience” food. Seeks to review the key factors that have led to the globalisation of the poultry supply chain and the impact of these changes. The poultry supply chain was chosen because it is highly integrated and the research includes a literature review and an evaluation to determine how it specifically relates to the poultry supply chain. Identifies the factors that affect current and future developments in food globalisation, including: relative strength of currencies; speed of technology transfer to developing countries; tax and regulatory burden in nation states or trading groups; cost of capital and labour and its effect on competitiveness; continuing production specialization and greater differentiation between domestic and international meat trade; and concerns over production methods, food safety and hygiene standards. Analyses the impact of globalisation of the food supply chain to all sectors and will

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be of interest to academics and those working in food supply.

Monitoring consumer confidence in food safety: an exploratory study Janneke de Jonge, Lynn Frewer, Hans van Trijp, Reint Jan Renes, Willem de Wit and Joke Timmers Keywords Food industry, Food safety, Consumer behaviour, Consumer risk, The Netherlands In response to the potential for negative economic and societal effects resulting from a low level of consumer confidence in food safety, it is important to know how confidence is potentially influenced by external events. The aim of this article is to describe the development of a monitor that enables changes in consumer confidence in food safety and consumer food choice behaviour to be assessed in conjunction with changes in institutional activities and food safety incidents. Results of the first assessment of longitudinal data on consumer perceptions of food safety will be presented to provide the basis for the development of such a monitor. A better understanding of the interrelationships between antecedents and behavioural consequences of changes in consumer confidence in food safety over time will improve understanding of the effectiveness of public policy, and allow the development of best practice in risk communication and risk management.

What is the problem with sauvignon blanc? An investigation of expert dislike of an aesthetic product Steve Charters Keywords Food and drink, Winemaking, White wine, Marketing, Consumer behaviour There is substantial anecdotal evidence that, whilst popular in current international consumer markets, the grape variety sauvignon blanc is viewed ambivalently by some wine industry professionals. This study examines evidence for that anecdotal perspective. It reports first the findings from a qualitative research project that provided some support for the proposition that wine industry attitudes to the grape variety are ambivalent. Further qualitative research, involving semi-structured interviews, was then carried out to examine precisely why that ambivalence exists, and to explore in depth the perspectives of Australian wine industry professionals towards sauvignon blanc. The findings suggested both physiological and social reasons for this dislike. The study has relevance in two areas. The first is in the development of a theoretical understanding of how those who are responsible for the production of aesthetic products may approach working with material that they may dislike, or have little regard for. The second is more practical, and informs how those marketing sauvignon blanc should view the product.

Guest editorial This special issue of the British Food Journal includes the contributions of a group of management researchers working in different Italian universities. Despite the geographical scatter of their head offices, they share a scientific interest in a particular category of food productions, whose increasing economic importance is under everybody’s eyes: the typical products. What is a typical food product? Which are the interesting cues about it? What does it express in terms of commercial values? Which are the related significant questions in terms of management? These are few questions the cases in this issue try to answer. The complex basic assumption, shared by all published works, is the following:

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Post-industrial and post-modern economies contrive their production and consumption models more and more similarly to a mosaic: along with the homogenization spurred by globalization new and variegated local realities are successfully overbearing. The global/local dichotomy renders productions and purchase/consumption behaviors complex businesses. While they seemed historically surpassed, they were only latent or simply restricted to invisible niche markets. The typical products’ category stands out in this scenario probably representing the most important example of “food glocalization”.

The cases assembled herewith, each with their own distinctive characteristics; show a strictly descriptive approach, based on the critical analysis of relevant research. The working method used provides an analysis focused on a business experience fulfilling the following conditions: . relevance – able to disclose one or more significant aspects of the question related to typical products; . contemporaneity – related to near at hand reality in order to give the cue for making remarks on the future development of the business; and . awareness – related to a well-known and successful product category or business. The results of this work show a significant outline of Italian typical productions representative of geographical realities very different from each other[1]: . north of Italy, with the Pandoro, in the cake category; . center of Italy, with the Aceto Balsamico di Modena and the Brunello di Montalcino; and . south of Italy, with the Mozzarella di Buffalo. Furthermore, this issue includes two contributions that we could define as “transversal” compared to the others. The analysis of the recent evolution of the typical foods Italian market has shown that third actors – outside the production system – had played a non-marginal role in spurring the development of sensitivities toward the consumption of these products, and of food in general, i.e.: . The cultural association, represented by the case of Slow Food, that, from a strictly cultural subject, has changed into an extraordinary business propeller in few years.

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The field of electronic commerce that finds in Esperya.com one of the few successful cases of e-commerce in Italy. It is also representative of a business model able to de-contextualize the character of typicality extending it from the mere product to related (restoration) and non-related business areas (oeno-gastronomic tourism).

Essentially, the scenario of the typical foods traced by the articles of this issue seems to be very rich and complex: . the business is the link between the local business (production) and its worldwide extent (consumption); . it can occupy both market niches (e.g. Aceto Balsamico) as well as configuring mass markets (e.g. Pandoro di Verona); . it creates new consumption models (e.g. Buffalo Mozzarella) as well as re-vitalizing new ones, once destined to decline (e.g. wine); . it characterizes geographical areas, turning them into real production districts (e.g. Capua, near Naples, for Buffalo Mozzarella) as well as defining the country’s image (e.g. pasta); and . finally, it provides continued existence for small and minor enterprises as well as diversification areas for major entrepreneurial realities. In conclusion, we ought not to underestimate the overall risk associated with the counterfeit phenomenon that is constantly increasing within the typical food system. Claudio Vignali and Alberto Mattiacci Note 1. Italy can be considered as a whole from only the political point of view owing to the huge variety in its social and economic aspects. Thus, any analyst is used to focusing separately on the three mentioned clusters in order to be able to work on a more representative basis than the aggregate one.

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The current issue and full text archive of this journal is available at www.emeraldinsight.com/0007-070X.htm

INTRODUCTION

“Glocalisation”

The typical products within food “glocalisation” The makings of a twenty-first-century industry

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Alberto Mattiacci University of Siena, Siena, Italy, and

Claudio Vignali Leeds Metropolitan University, Leeds, UK Keywords Globalization, Agriculture, Food technology, Tourism, Local economies, Italy Abstract The choice of typical products as an area of autonomous business with great potential comes from the development of a scenario of supply made up of important trends – within wealthy countries – that simultaneously invested in: the economy, the agricultural sector, the agro-food sector and, on the same level, in the tourist industry and (of consumption) in the cultural sector, in the broad sense. It is well-known that the more significant traits of the matter are connected to the following elements: globalisation; the increased use of technology in agricultural production; the renewed concept of territory; the “philosophical” change of agricultural policies; the great fragmentation of the tourist industry; the tensions generated by public opinion towards subjects like food safety, exacerbated by recent shocking events (mad cow disease, GMO, etc.); and new food consumption behaviour. The definition and background of typical food products are located in these varied elements.

A “typical” business system The choice of typical products as an area of autonomous business with great potential comes from the development of a scenario of supply made up of important trends – within wealthy countries – that simultaneously invested in: the economy, the agricultural sector, the agro-food sector and, on the same level, in the tourist industry and (of consumption) in the cultural sector, in the broad sense. It is well known that the more significant traits of the matter are connected to the following elements: . Globalisation. From a cultural standpoint, since Levitt launched his invitation “the markets globalisation is at hand” (Levitt, 1983), much has happened and there have been numerous effects that have cancelled themselves out and regenerated on new bases. Following alternating developments, today we notice that there is a move to redefine the international and local relations (Fabris, 2003; Ritzer, 1996; Ohmae, 2000) thereby rediscovering areas of economic vitality on a local dimension, and also culturally, in contrast to the threat of global homologation. . Increased use of technology in agricultural production. In advanced countries the traditional working models have progressively been replaced by adopting increasing amounts of technology and innovation and by experimenting with better transformation processes (see the Appendix). . The renewed concept of territory. Today it is seen as a resource to be creatively developped through production policies and eco-compatible[1]. This presupposes

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a high degree of interaction between the different subjects and projects that rotate around them. In this setting, agriculture occupies the central and multi-functional role that appears innovative with regards to the preservation and protection of the landscape, the cultural heritage and the bio-diversity (Cardinale, 1998). The “philosophical” change of agricultural policies. Since 1962, the year PAC was born, to the Conference of Cork in 1996 until today, we have witnessed a growing emphasis, in Europe, on the quality of production and the valorisation of companies through a number of productive activities that are really profitable. The political objectives of governments range from subjects related to production (Bollman and Bruden, 1997), to the environment and others (EEC Commission, 1996). The great fragmentation of the tourist industry. The world tourist industry, together with a mass market supply that is based on the industrial principles of “mass demand/standardisation of the components of supply”, present numerous niche supply formulae (Mattiacci, 2000; OECD, 1995). These are ever more fragmented and overlapped, and it is not difficult to identify a favourable trend in those that are strongly grouped around values like peace, relaxation, well-being, health, recovery of rationality, need for culture, intellectual discovery and use of food and historical sites (see Table I). The tensions generated by public opinion towards subjects like food safety, exacerbated by recent shocking events (mad cow disease, GMO, etc.). New food consumption behaviour. Especially from nouvelle cousine onwards, there has been a growing trend towards considering food as an intellectual experience, together with exploration and rediscovery, love for history and culture, search for traditional identity and, at the same time, for something new.

The definition and background of typical food products are located in these varied elements. The “typical” market power It is a fact today that the “typical” attribute given to products can be associated to an economic value in the market.

Table I. Agritourism in Italy (2003)

Number of enterprises With accommodation With accommodation and restaurant With restaurant only

11,500 10,000 6,000 2,500

Number of beds Average price for B&B accommodation

119,000 e28

Global revenue Only summer

e2 billion e450,000

Number of clients Not Italians

1,200,000 (+ 20%) 200,000

Average number of days spent

6

At closer examination, indeed, we notice that many of the people working in the food area try to strengthen their supply with the very material elements (labels, packaging, etc.) and the immaterial ones (brand image, advertising, etc.), which to them seem to create the idea of typicalness in their products. These marketing practices more often than not are truthful, however at times they do not coincide with the fundamental characteristics of the product, and they create a dressing up of the image by forcing a commercial point. Paradoxically, though, it is because of these latter cases that the power to increase value for customers is reinforced on the basis of the typical character contained. The consumer seems to appreciate the typical nature of the product and sees it as a distinctive attribute with superior quality to the other general products of its kind. So we get the speciality goods from the typical products, which, different to the commodity goods in whose category most products would “naturally” belong (think of, for example, cheese, one of the products of poor, faming culture), they actually facilitate the valorisation of the products (see Table II).

Business characteristics

Typical products

Generic food products

Demand

Originally concentrated on the territory, then spreading out (along globalization). Consumption models (rise) differentiated on the basis of the country (China vs Italy)

Homogeneously spread on the territaory. Uniform and known consumption models

Market approach

Mass market. The research for Niche market. The favourable differentiating from competitors evolution of the business may contribute to evolve from mass to may lead to a segmented market segmented market

Product

Constant quality in space and Quality standardization hard to achieve. Central role of production time. Product innovation is a codes. Innovation exclusively at critical tool to survive and succeed commercial level

Struttura d’impresa dominante

Small enterprises; high fragmentation of production; simple managerial models; frequent recourse to consortium formula

Prevalence of large dimensions, often multinational, concentration of market shares, complex managerial models

Branding and communication

Creates knowledge, awareness and desirability of products and consumption models. The brand is less important

The brand plays a major role in the effort to sustain the knowledge, awareness and desirability, sometimes also behind the product

Average sell-out prices

Prevalent positioning in the premium price range

Prevalent positioning in the standard range

Retailing

Prevalence of specialized outlets, locally situated in the production areas. Increasing interest in Gdo

Strongest prevalence of large outlets

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Table II. Typical vs generic

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The “typical” producer, therefore, can boast about a competitive element and brand positioning which is greater compared to the “generic” producer; calling the product “typical” will allow him to position his product in the premium price range, thereby gaining in the differentiation capability of the product, as well as, in a higher profit margin. Similar practices can be found among distributors, who, by sometimes acting on the merchandising, and by directly managing the assortments with the private labels, can exploit the practice mentioned above. An emblematic example of this, in Italy, is Conad – one of the most important retailers in the sector – that recently launched its own line of typical products with its own brand: Sapori & Dintorni, the umbrella-brand especially created. Owing to this clear role, many companies crowd the typical product area, often they provide products with all the characteristics of typicalness, other times they distort reality. Among these, there is a special imitation case in the typical product category – on the international market (Cozzi, 2003) – created to profit from its market position. This outstanding case concerns Parmigiano Reggiano: Parmesan Cheese in USA, Parmesao in Brasil, Regianito in Argentina[2]. For the reasons mentioned above, the problem of defining a strict category of typical products seems to be even more important and depends on the identification of a guide that will help to find a strict, meaningful definition (D’Amico, 2003). In any case, a close examination of the products available on the market, reveals that the food market has spontaneously come up with a division into two large informal categories: (1) those products covered with a recognised denomination, and defined by the community regulations (e.g. the Mozzarela cheese); and (2) those which are strongly connected to a certain territory, and are presented as “typical”, but do not have any formally printed recognition (e.g. the Pandoro). The “typical” product connotation We believe that nine typical attributes can be identified that can characterise the typical products, which we will comment briefly: (1) territory; (2) merceology; (3) legal regulation; (4) the industrial nature; (5) time; (6) tradition; (7) specificity; (8) identity; and (9) nutritional surplus Territory is an undeniable qualifying element of the products being examined, which makes the product “characteristic” for a given area and for none other (Antonioli Corigliano, 1996, 1999; Allaire, Sylvander, 1995). With typical products, people perceive an unbreakable link between the local image, places, history, itineraries and specific atmosphere: the product, therefore, “has immaterial historical and cultural

connotations that are rooted in the territory of origin” (Antonioli Corigliano, 1996). Similarly, the territory also develops a mixture of connotations based on natural and historical features, that, although very interesting, may be considered as part of the material and immaterial resources that generate value: this potential should be exploited by the local companies. Commodity research is another fundamental aspect of typical products. The product is made of raw materials, production processes, in addition to the learning of production techniques that are specific and locally based. All of this is part of a consolidation local production tradition, passed on from generation to generation, more often than not through informal means (“from father to son”). The commodity aspects in question are inextricably linked to the territory, that, in this case, should be intended as “an anthro-geographical setting”, comprehensive of the specific natural resources (e.g. saffron in Sicily) and cultural factors behind the production and manufacturing processes of the materials (e.g. the Limoncello of Sorrento). Regarding regulation, the typical product is made by following a set of production rules that govern and direct the commodity research. These rules involve a number of characteristics that make the products in question, identifiable, controllable and certifiable. Many of the half-brands that abound in the area of the typical products refer to these general principles: the DOP, the certification of origin, the collective brands, and so on. The European Union intervened through specific legislation in this field, as amply illustrated in this volume. Regarding the industrial nature, the typical manufactured product, until recently, was associated to a small company, r an unknown craftsman with little commercial potential or to a local specialised distribution. Today the industrial reality of the typical product can be, in some cases, markedly different from this stereotype, either because the manufactured product is produced in non-craftsman type of organisation (see the Banfi case), or because there has been a change in the concept of the typical product, that changed in pace with the changes in food styles. Similarly, the retail distribution system of typical products appears to have changed, which led to an enlargement of the geographical business area, thanks also to the growing interest for these commodities. Finally, in Italy there is a system of regulations and controls for hygiene and health matters that is so strict and far-reaching, that is often incompatible, due to the demands of the law, with small craft companies at both the production and commercial levels. By “time”, we mean that the formula of the product was created and consolidated in the distant past compared to our time. This connotation of the product is absolutely central, for at least two reasons. Firstly, it brings to mind a past in which today’s people like to imagine that the products were intrinsically more genuine (“made as it used to be”, “old recipe”): either because they were made using a process in which man was the central figure, or/and because there were no grave threats to health like those that are so worrying today. Secondly, such “historical” connotation of the typical product constitutes a link between the product and the principal motivational keys of the consumer: the intellectualistic consumption, that approach, that is, which interprets food not only (or no longer) merely as food, but as an instrument for historical narration and for cultural learning and exploration. Tradition is closely related to the aspect covered above. Tradition can be perceived as the “dynamical dimension of time”, that is, a number of activities which, over time, were divulged, perfected and varied without any interruption or revolution; activities

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that became models and a reference for certain local communities, which they acknowledge and unite around (e.g. the mozzarella cheese). The term “specificness” was so important that the European legislator[3] felt that specificness should be defined as “an element or a number of elements which clearly differentiate an agricultural product or a food product from other products, or similar food that belong to the same category”. This attribute is also reflected in the way the product is used, that is, often it is used according to traditional gastronomic recipes, that are also “typical” (e.g. il pesto alla genovese). Regarding identity, the typical character of a product aims to establish a precise identity, which is an innate identifiable and differentiating capability held by the product (Letablier, 1994). This identity gives the product a unique character, that make it incomparable to others, other than on a very general level (e.g. Brunello di Montalcino and Amarone, are both red wines, but they have nothing else in common). The identity of a product also has different aspects that make it a particularly unique item: . Geographical origin of the raw material: often it is the material being used to make the product that gives it its identity. For example, the Myrtle liquor of Sardinia is produced exclusively from the Sardinian myrtle berries that give it its character. . Consumption modality: the personality of the typical product is also connected to the way it was used over time which also becomes “one” with the product: the identity of spaghetti, for example, also depends on the fact that they should be eaten with a fork, rotating them around the prongs without cutting them. . Historical and technical origin: the character of a product is also given by its production history, which often becomes one of its most important aspects, to the extent that, the packaging makes this its central communication theme. Hence, Aceto Balsamico of Modena often gives a short history of the production process in the packaging. . Physical shape: the product can have a particular shape, which can be typical and exclusively used for that product and differentiates it from others. The Pandoro of Verona, for example, has the shape of a cone with the top cut off and an octagonal-shaped base, which is also used in the packaging with slight modifications. For the added nutritional value, the commodity characteristics of the typical product general give it a superior quality compared to other products in the same category. This quality can be seen in terms of genuineness, energetic properties, by providing components that respond best to the physiological needs of the individual and so on. The strong emphasis of communication on this aspect raises the overall consumer value. The typical product, therefore, becomes substantially defined as “a social economic and cultural result and therefore, the concrete result of interaction between a defined geographical area, the work of man, that is characterised in that territorial, human, time and cultural dimension” (Gonano, 1997). The issue of the correct definition (univocal, undisputable, certain, verifiable) of the typical food product is given important support by the community normative[4], which institutionalises the three important categories:

.

.

.

Denomination of protected origin (Dop). Acknowledges the product worthy of a certain denomination, by respecting production rules, connecting its production processes to a specific geographical area and to an acknowledged production know-how. Indication geographically protected (Igp). Acknowledges a product as being typical of an area, by virtue of the fact that at least one of the principal production phases is done in that area; the product also enjoys a certain, acclaimed, fame (aceto balsamico of Modena). Guaranteed traditional speciality (Stg). Does not refer to an origin, but aims to valorise the traditional composition of the product, or of the relative production method.

The specific objectives pursued by the EU through this disciplinary activity is outlined in three areas: encourage agricultural production; protect the names of products against imitations and abuses; and protect consumers through major transparent information. Does a “typical consumer” exist? Having analysed the numerous aspects connected to the supply system, the last query that should be considered concerns the end demand. For the producers of typical products, globalisation should appear an opportunity to get into a formidable market, rather than a threat. Indeed, globalisation increases the opportunities to broaden the market, by multiplying specific demand for a product on international scale: directly, by supporting the spread of favourable food behaviour to typical products outside the traditional geographical areas; and indirectly, through tourism, which stimulates the desire to discover products and modality of consumption by visiting the specific production sites. The consumption models of the typical products are, by nature, already consolidated (effect of tradition), they are spread through different channels to the general ones, (direct experience counts more than advertising), and they are characterised by the territorial uniqueness and specificness, often underlined by the name. Differently, the normal standardised food consumption processes (e.g. fast food) are often adapted to the different local country realities and are spread through the brands, with modalities and problems that are not much different to those of all other consumption products. In general terms, the experience had from a specific target can be summed up in a simple but strict reasoning: seeing there are specific products, whose strong identities clearly differentiate them from the bulk of general products, there should also be a sector of demand which, on the whole, has a special motivational mix that guides it in buying these products and that define them as being different compared to the general ones. In our view, they consist of two types (see also Figure 1): (1) Forward. Projects the individual to more advanced consumption models in line with post-modern style, comprising of emotional consumption with strong meaningful content. (2) Backward. Aims at recovering the value of more traditional consumption and, generally, reasserting the local differences in a setting of globalisation.

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Figure 1. Typical consumer motivations

In conclusion, the strong cultural connotation (and semiotically rich) that supports the typical products, creates a formidable factor which aggregated consumers. It appears there are favourable developmental factors that would consolidate and increase the demand for these products. Conclusions The outstanding significance of the typical product category can also be seen in the figures: Italy is the first European country in this area, with 132 products acknowledged Dop/Igp, equal to 20 per cent of the total (627, of which 353 Dop and 274 Igp) (see Table III). The business turnover generated by these products has increased, in the last five years and in Italy alone, on average above 20 per cent (Censis, 2002) and is estimated to be around 7.6 billion euros per year[5], of which 1.4 billion in exports. We are, therefore, facing a very interesting phenomenon that can potentially increase in size (Carboni and Quaglia, 2001; Pantini, 2000).

Quantities

Table III. Typical products dynamic in Italy

Cheeses Cold meats and salami Wines Olive oil

0.2 1.8 27.7 27

2001/2000 Values Average price 5.5 6.5 2.2 42.3

5.3 4.6 10.7 12.1

Source: ISMEA-AcNielsen Family Panel, internal data

Quantities 22.4 2.8 8.1 159.7

2000/1999 Values Average price 22.9 0.9 9.6 145.7

20.5 21.8 1.3 25.4

This business is capable of giving better results provided some key aspects as resolved: . the control of the filie´re, to guarantee that quality and typicalness are being respected according to the rules, in time and place; . the ability to govern the increasing complexity of the managerial problems of the “typical” firm; . success in the prevention and fight against imitation, which increasingly threatens the image of typical products: consider that, in the USA alone, where the sale of Italian products reaches about 17 billion dollars, meaning that 90 per cent of the products in question are produced there; . the local co-ordination of the different “typical” producers, that share the same geographical area; . the capability to adequately control distribution, in order to guarantee the typical products suitable commercial spaces; and . liberation from government assistance philosophy, whether local, national or other. It is our opinion, in fact, that the companies will be able to resolve the problems above, and they will enjoy interesting market opportunities as they present themselves: . guarantee to meet market gaps, by covering quality and high added value niches; . the diversification correlated to other productions (goods and services) that belong to the “typical” semantic universe; . the economic and competitive exploitation of higher values in quality connected to the typical in own brand image; . approaching globalisation as an opportunity to enlarge the market and leave a purely local market circuit; and . participation in territorial economic systems, that consist of numerous production organisations. In a scenario of globalisation where the traditional competitive advantage of nations is breaking down, typical products emerge because of their highly competitive potential, based largely on the non-exportable nature of many of the fundamental assets that characterise them. Their strong and undeniable links to tradition should also be seen as extremely favourable by those, like European policy makers, who hold dear the concept of globalisation and wish it to mean social wealth of people and not just low-cost production and business. Notes 1. The 1996 Cork Conference (EEC Commission, 1996) formalized a ten-point program to this regard: rural preferences, integrated approach, diversification, sustainability, subsidiarity, simplification, programs, finance, management, research. 2. Italy is third in the world, after China and Korea, for the imitation of manufacturing branded products. 3. Regolamento CEE no. 2082/92 article 1.

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4. Regolamento CEE no. 2081/92, “Protezione delle indicazioni geografiche” and Regolamento CEE no. 2082/92, “Attestazioni di specificita` dei prodotti agricoli e alimentari”. 5. Stima 2002, Coldiretti, internal data, 2002. References Antonioli Corigliano, M. (1996), Enoturismo Caratteristiche della Domanda, Strategie di Offerta e Aspetti Territoriali e Ambientali, Franco Angeli, Milan. Antonioli Corigliano, M. (1999), Le Strade del Vino ed Enoturismo Distretti Turistici e Vie di Comunicazione, Franco Angeli, Milan. Bollman, R.D. and Bruden, J.M. (1997), Rural Employment: An International Perspective, CAB International, Wallingford. Carboni, R. and Quaglia, G.B. (2001), “I prodotti tipici italiani: problematiche e prospettive di un settore in crescita”, Rivista di Economia Agro-alimentare, No. 6. Cardinale, M.G. (1998), “Le strategie di marketing dei prodotti agro-alimentari tipici”, Trade Marketing, No. 22. Censis (2002), “Il vivere bene made in Italy”, Rapporto sulla Situazione Sociale del Paese, Censis Servizi, Rome. Cozzi, G. (2003), “Un aspetto critico della globalizzazione dei mercati: l’imitazione illegale dei marchi del ‘Made in Italy’”, Economia e Politica Industriale, No. 30. D’Amico, A. (2003), Le Strategie di Marketing per la Valorizzazione dei Prodotti Tipici, Giappichelli, Turin. EEC Commission (1996), The Cork Declaration – A Living Countryside, EEC Commission, Cork, 7-8 November. Fabris, G. (2003), Il Nuovo Consumatore: Verso il Postmoderno, F. Angeli, Milan. Gonano, S. (1997), “The agro-industrial district of the Castelmagno cheese”, Proceedings of the 52nd EAAE Conference, Parma, Typical and Traditional Products: Rural Effect and Agro-industrial Problems. Letablier, M.T. (1994), “Qualite´ des produits et qualification des territoires”, La Lettre du CEE 32, April. Levitt, T. (1983), “The globalization of markets”, Harvard Business Review, May/June. Mattiacci, A. (2000), Il Marketing Strategico dei Business di Nicchia, Cedam, Padova. OECD (1995), Niche Markets as a Rural Development Strategy, OECD, Paris. Ohmae, K. (2000), The Invisible Continent: Global Strategy in the New Economy, HarperBusiness, New York, NY. Pantini, D. (2000), “Prodotti tipici e potenzialita` socio-economiche”, Agricoltura Nuova, Vol. 42. Ritzer, G. (1996), The McDonaldization of Society, revised ed., Pine Forge Press, Thousand Oaks, CA. Appendix. The new agriculture When we speak of agriculture in the present competitive market, it is important to outline three different types of business: (1) The old-fashioned countryside. Involves mainly elderly people, with small farms that are generally proprietor-owned, undertake low investment, show little inclination for innovation and project-design and whose economic return is almost exclusively dependent on European grants.

(2) The brand-new farmers. These include the new farms that aim to exploit their typical products, that combine business with tourism (agri-tourism), that have web sites, often produce biological foods, whose export accounts for most of their income and that do not rely on public support systems. (3) The commodity-makers. This sector consists of large animal farmers and big areas dedicated to farming, that produce large volumes, invest in machinery and are also partners in the GMO endangered food processing and distribution industry.

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The farms that are of interest here are those in the second category. These include workshops that interpret the typical products through food specialities (salt pork, cheeses, special fruit and vegetable products), and, above all, that rely on extended know-how, not only from the farmers, but enriched through company culture and studies undertaken by the younger generations. According to some estimates, much of the increase in the national agricultural income experienced in Europe in the last few years is owed to this company category. The variation in the national agricultural income is shown in Table AI. Country Portugal Sweden Spain Greece France Italy Germany Finland Average Euro zone Average UE Austria Denmark Ireland Belgium Luxembourg Holland UK Source: Eurostat (http://europa.eu.int/comm/eurostat)

1993-2003 (variation (%)) 64.1 31.9 31.5 26.9 26.8 25 22.2 21.9 18.4 16.2 15.7 10.9 2.7 22 2 6.5 2 7.5 2 20.3

Table AI. Variation in the national agricultural income

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The current issue and full text archive of this journal is available at www.emeraldinsight.com/0007-070X.htm

Pandoro cake: how to become a mass marketer from a local market Paola Signori Department of Business Economics, Faculty of Economics, University of Verona, Verona, Italy Keywords Confectionery, Italy, Internal markets, International marketing, Christmas, Easter Abstract This case study refers to the details of Bauli, one of the best-known Italian companies in the confectionery industry’s history. In particular, the analysis shows that, in this case, first of all, quality then specialisation and innovation for change have led the organisation to market leadership. The case is structured in three parts. The first sketches out market data about Bauli and direct competitors in different products. The second gives some information about the famous Pandoro cake to underline the typicalness of this traditional recipe. The third introduces Bauli, giving trade information, describing vicissitudes of the firm from its very beginnings, and discussing different key factors of success. Concludes that the tale of this company is similar to many others that have now grown up and out from their local trade areas, and have increased their market share to achieve leadership in their sectors.

Introduction This Case study refers to the details of Bauli, one of the best-known Italian companies in the confectionery industry’s history. In particular, the analysis shows that, in this case, first of all quality then specialisation and innovation for change has led the organisation to market leadership. The case is structured in three parts. The first sketches out market data about Bauli and direct competitors in different products. The second gives some information about the famous Pandoro cake, to underline the typicalness of this traditional recipe. The third introduces Bauli giving trade information, describing vicissitudes of the firm from its very beginnings, and discussing different key factors of success. We can conclude that the tale of this company is similar to many others that have now grown up and, from their local trade areas, and have increased their market share to reach the leadership in their sectors. This case study uses as its subject one of the leading companies in the Italian sector of naturally leavened products: Bauli. It describes how a small firm has become, in a period of 50 years, a well-known brand and leader of its market. The Pandoro product has been consumed for many years only in the local market. Now different factors have brought it to a very high level of awareness. The particular history of this product gives it an interesting image, but only specific and well-mixed marketing tools have given the company the strength to conquer a place in the mass market. British Food Journal Vol. 106 No. 10/11, 2004 pp. 714-721 q Emerald Group Publishing Limited 0007-070X DOI 10.1108/00070700410561342

Most of the information of this paper comes from Bauli Spa. Bauli Marketing Office provides data cited from AC Nielsen Homescan, AC Nielsen Scantrack, IRI Infoscan, ONM Simulation Intelligence, Abacus Research Institute.

The market The Italian market of naturally leavened products, with traditional recipes, is composed of particular cakes and confectionery most consumed on special occasions, like Christmas and Easter. In 2002 Italian consumption registered a light increase in volume (þ1:6 per cent), reaching 123,000 tons, and the market is rising by 2.5 per cent in value, reaching about 608 million euros (Databank, 2002a). The traditional products of this market are generally increasing, with however a decrease in specialty products (excepting the Colomba). The volumes of Christmas leavened products have been stable for several years, while Easter leavened products are on a slight increase. Exports, representing 10 per cent of national production, have risen by 5.4 per cent in 2002. The naturally leavened products sector shows a high degree of concentration, but with strong competition due to the maturity of the market, the seasonality, of course, and the trade’s below-cost sales phenomenon. The principal factors of success belong mainly to marketing and commercial efforts. Critical aspects are advertising, price, quality, distribution and the service to trade. Afterwards, the market can be analysed dividing data into segments of different periods of consumption. The Christmas’ products are Pandoro, Panettone, filled cakes, children’s Christmas confectionery (and pralines). The Easter’s products are Colomba, filled cakes, children’s Easter confectionery (and chocolate eggs). The Christmas market The main products sold in this market are Panettone and Pandoro. The total volumes measure is approx. 85,000 tons (source: AC Nielsen Scantrack, 2002). The estimated number of consumer households is 16,4 million (source: AC Nielsen Homescan, 2002). The Christmas 2002 sales pie chart is divisible as follows: . traditional Panettone – 45.7 per cent; . traditional Pandoro – 34.8 per cent; and . speciality – 19.5 per cent. Bauli is the market leader in this sector with a 28.1 per cent average market share (shares are expressed in value). Their major competitors are Motta with 17.5 per cent and Melegatti with 13.9 per cent (source: AC Nielsen Scantrack, 2002). This result has been achieved thanks to an intensive activity of product differentiation in the following directions: . Bauli’s Pandoro is the most popular product of its kind in Italy at Christmas, prized for its soft spongy lightness. Here Bauli is the market leader owning nearly 38 per cent market share. . Bauli is a leading brand also in the Panettone segment with more than a 22 per cent market share. . Filled cakes are Bauli’s current focus on innovative, high-quality confectionery. In this market Bauli is the leader with approx. 25 per cent market share. . Bauli first created children’s Christmas Confectionery with the traditional recipe in a special small size and the company is now leading this segment with a total market share of 33,9 per cent.

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Lastly, consider the praline market: 60 per cent of their whole consumption takes place in the period between October and January. In these months the most purchased product sizes are those between 150 and 300 g. Volumes during Christmas are approx. 15,000 tons (source: Ac Nielsen Retail, 2001) and the number of consumer households approx. is 13 million (source: AC Nielsen Homescan, 2001). Bauli entered the praline market with a proposal of its own, Chocolate for Christmas, which represents a novelty for its special and original products and its popularity is steadily increasing. The Easter market In volumes, the Easter market reaches approx. 30,000 tons, divided as follows: traditional Colomba 73 per cent, filled cakes 26.4 per cent; and children’s Easter confectionery 0.6 per cent (source: AC Nielsen Scantrack, 2003). The number of consumer households is approx. 12.2 million (source: AC Nielsen Homescan, 2003). Bauli is a market leader in this sector with a 26.4 per cent total market share and 3.6 million purchasing households. This has been achieved through innovative marketing initiatives in each segment. Their direct competitors are Melegatti 14.5 per cent, and Motta 10.9 per cent (source: AC Nielsen Scantrack, 2002). Bauli offers, together with the Traditional Colomba, which is a cake made with fragrant dough enriched with candied fruit and decorated with almonds and sugar crystals, the Colomba of Verona, a local variation from the traditional recipe but without the candied fruit and with the topping of confectioners’ sugar. With these product Bauli is the market leader with a share of 26 per cent. Bauli is a first-ranking brand in Colomba filled cakes with a 33.3 per cent market share and in other Easter cakes with 20.7 per cent. While for the children’s Easter confectionery Bauli is the leader with a market share of 55.2 per cent. The chocolate egg market is represented by 83 per cent milk chocolate eggs, product-symbol of Easter for Italian children, and has recently seen the entry of Bauli with a clear and distinctive proposal. This has enabled the company to become the second most purchased brand with a 10.8 per cent market share (source: AC Nielsen Scantrack, 2003). The everyday products market The Italian snack market has a volume of about 205,000 tons, excepting discounts retailing (source: IRI Infoscan, 2002) and approx. 17.5 million consumer households (source: AC Nielsen Homescan, 2001). The natural leavening products represent 28.2 per cent of the total amount, the chemical leavening products 46.3 per cent and croissanterie 25.5 per cent (source: IRI Infoscan, 2001). The natural leavened croissant segment is currently marked as the most attractive, growing at a rate of 5 per cent (Databank, 2002a). One reason for this development is partly due to an expansion of the breakfast products consumption, in which the croissant is the preferred snack. Other reasons are the high investment in communication from some firms, like Barilla, to give a specific positioning to this product and to stimulate the breakfast consumption; another is the creation of marketing stimuli, taking advantage of the fame reached in the confectionery industry, like Bauli, confirming product values like quality, simplicity and naturalness. We can also add that one of Bauli’s strength is to have created a positive relationship with their trade partners, with particular attention to just-in-time logistics service, and, in some

cases, setting itself as copacker. Bauli has, now, successfully entered this dynamic market of typical breakfast Italian product, reaching a market share of 17,6 per cent (source: IRI Infoscan, 2002) and an increased specific sales proceeds of 31.5 per cent in 2001 (from 12 to 15.8 million euros (Databank, 2002b). The snack market completes the picture of Bauli’s products portfolio, with the addition of the mini-snack market of and the assorted confectionery market. In the mini-snack market, Bauli characterised its presence with an original mini proposal, leading to a second position brand with a market share of 10.2 per cent (total volumes of the entire market 3,500 tons (source: IRI Infoscan, 2002)). Bauli has also introduced high value-added products in the assorted pastry market; gaining a significant position in this rather fragmented, competitive scenario and reaching a market share of 2.2 per cent (total volumes of the entire market 6,200 tons (source: IRI Infoscan, 2002)). The product The Pandoro recipe follows a time-honoured Italian confectionery tradition. The art of the Veronese confectioners is contained in the natural leavening process. Natural leavening springs from the “mother”, a nucleus of fermented dough to which water and flour are added little by little. This is a process repeated time after time, in exactly the same way, ever since the beginning of their history, yet this technique requires skill and attention. Most importantly and above all, it requires neither chemical additives nor preservatives whilst at the same time, an unusually long “life” of the product is guaranteed. Dough leavened in this totally natural way offers otherwise unachievable qualitative characteristics such as lightness and an incomparable fragrance. The history of Pandoro throughout the centuries Pandoro, the traditional Christmas cake of Verona, probably got its name from its characteristic golden colour, due to the eggs in its recipe. Its very name tells us that this refined, naturally leavened cake is the fruit of an ancient confectionery art. The first traces of its production in Italy date back to the end of the 1800s. However tradition sets its origins well before that time. The French, for example, think that the “brioche”, considered a forerunner of Pandoro, might date back to Pliny’s time, when, in the first century aC, they baked a kind of bread made with “delicate flour, eggs, butter and oil”. Virgil and Titus Livius write about the same kind of bread, calling it “libum”. In France, the “brioche” has always had a special place and was the Royal Court’s dessert for years. Some think that Pandoro is an all Italian cake, created in the Venetian Republic during the Renaissance, when the Serenissima was rich thanks to its trading with the Far East, so rich that food was covered with layers of pure gold, like a cone-shaped cake, called “pan de oro” - “golden bread”. So Pandoro seems to have been born in the kitchens of the Venetian aristocracy in the 18th century. Recently Pandoro has also been considered a creation of the Royal House of Hapsburg’s confectionery tradition, in its turn influenced by the gastronomic and confectionery tradition of the French Royal Court of King Louis XIV of France. Well before the reign of Franz Josef, the Viennese bakers knew exactly how to prepare the French “brioche”. They taught the French how to bake a new cake: “croissant”, originally called “Vienna bread”.

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The process used to prepare croissant and Vienna bread has been known since 700-800. Pandoro of Verona’s recipe has been based on this method since the end of the Second World War. The French brioche’s baking process consisted in alternating two or three mixing phases with leavening pauses. The Viennese bread dough contained more butter, and was prepared according to the puff pastry system, alternating layers of dough and layers of butter, so that, as it bakes, the cake grows in volume. These are Pandoro’s noble origins. However some think it comes from an ancient, more humble family cake that the Veronese used to bake for Christmas: “nadalin”, a star-shaped cake, decorated with sugar, pine-seeds and aniseed. The “real” history of Pandoro as we know it today starts in Verona towards the end of the 1800s. At the time the fashionable confectionery school was Viennese, and until a few decades ago the oldest pastry shops in Verona employed Austrian bakers, while bakers from Verona were sent to Vienna for their apprenticeships. The Panettone tale Once upon a time, illustrious guests gathered in Milan, invited by Ludovico IL Moro, Lord of the town, to take part to one of the most sumptuous banquets ever. The lunch began and waiters and cooks bustled around the superbly laid tables carrying wines, meat, delicious pies enriched by the best and rarest spices and herbs. In the kitchen, however, the head cook was having a nightmare: the cake he had so lovingly baked and decorated with cream and flowers was irremediably collapsing on the huge silver tray. Toni, a kitchen hand, didn’t loose heart and, rolling up his sleeves quickly mixed flour, yeast, butter, sugar, spices and candied fruit. Just moments before placing the dough in the oven, he saw a jar of raisins in the corner, and added them to the recipe. As in the dining room guests were still enjoying the banquet, in the oven the loaves baked by the kitchen hand were leavening and turning a beautiful golden colour. A sweet, delicious smell started spreading throughout the kitchen, attracting the head cook’s attention. He called Toni and after listening to his explanation, decided to serve the guests that strange cake...and the moment came to serve the dessert. The worried head cook stayed in the kitchen and spied into the room hiding behind the young Toni. The guests, after a long, endless moment of silence, began to enthusiastically praise the new and strange cake. Ludovico IL Moro asked the creator, whoever he was, to come into the room. A sudden shove and the young servant found himself in the middle of the dining room. A loud, spontaneous applause greeted him. “What is your name?”, asked Ludovico IL Moro. “My name’s Toni,” answered the shy and confused servant. In the ensuing enthusiasm someone shouted: “Evviva il pan de Toni!” And thus the name, “panettone” was born, and it has ever since accompanied that cake all around the world. The company Bauli’s factory produces bakery products for Christmas and Easter, such as Pandoro, Panettone, Colomba, and also industrially produces confectionery and snacks, pralines and chocolate eggs. Their trademarks are Bauli, Dal Forno and La Buona Croissanteria. Bauli’s production started with Pandoro, and shortly after came Panettone and the Easter Colomba. From the culture developed through experience, new products have been created, more sophisticated in appearance, richer and more luxurious in

ingredients: cakes enriched with creams and decorations, and covered with chocolate. In a more recent past Bauli introduced chocolate Easter eggs and “Il Cioccolato delle Feste”, The Holiday Chocolate, at Christmas. From traditional Christmas confectionery, surprisingly reduced into the “smaller” version, the Pandorino was born. The firm covers a total of 126,000 m2, of which 80,000 m2 are roofed-over (employees, average 720). Bauli is located in Verona, a city in the northeast of Italy. Italian distribution is organised from a central warehouse of 20,000 m2 with 35 distribution centres all connected to the centralised information system network (IBM series M 3000 mod. H 30 is used in all management applications: a local network of 10 “servers” and an Internet portal with 100 links to connect peripheral users). The sales structure in Italy is composed of two sales organisations. One formed by 60 sales agencies for seasonal items, the other with 70 sales agents for its all year-round lines. The main Italian distribution channel, 92 per cent, is via super and hyper markets chains (source: Bauli Sales Office, 2002). Total sales during the 2002/2003 financial years were over 38,000 tons, with a net income of 186 million euros. Company history The history of a company always led by entrepreneurs who have believed in the future. Bauli’s tale began in 1922, from one small workshop and one big dream, when Ruggero Bauli started his activity with the traditional recipe of the Pandoro of Verona. As the years went by, the realisation that there was an enormous potential for development led in the 1950s to start industrial production. Ruggero Bauli’s determination led him to set up the necessary structure for this kind of activity, which proved to be a success. His next step was then to define guidelines, to establish the company’s mission. The goal was to project an ancient art into the future, the art of Veronese confectioners, a unique heritage that Bauli carries with itself. The market had immediately showed its appreciation for this kind of product. Bauli soon covered the whole home market and the credibility of the brand began to be acknowledged. The recognition of this trademark was one of the powerful driving forces towards the company’s development and change. This became even more evident with the arrival of Ruggero Bauli’s three sons, Alberto, Carlo, and Adriano, who are still guiding the company today. During the 1960s, years of great transformation and unrest, the environment changed and a need was felt to establish those company values which were to become the company’s principle guide-lines, points to be referred to and acknowledged constantly: guarantee quality and innovation always. Another highlight could now be underlined: at Bauli the past became much more a tool than a memory. Insights to the future lie in its past, for it is there that Bauli’s visions of tomorrow originate. The actual mission is to go beyond perceptions of the past. Quality and commitment to excellence to obtain leadership Quality is a “reason for existence”, a choice Bauli has made; however, quality is a complex project to set into action, which demands close involvement from all collaborators. The concept of product quality exists and is commonly acknowledged, however another less tangible concept of quality also exists, linked to the sharing of company values. At Bauli both of these objectives are pursued: the perfecting of the

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product and the whole organisational structure throughout the company: from research to marketing, to technological development and to the professionalism of the staff. Analysing in details both sides of quality: . The quality that characterises Pandoro Bauli is a result of the careful and painstaking selection of ingredients and of the natural leavening process that requires neither chemical additives nor preservatives. (Pandoro is covered with icing sugar, after baking, to improve its quality: this process makes Pandoro Bauli unique and enables the preservation and enhances it of its fragrance and lightness till the moment of serving. The icing sugar could react with the butter in the dough and thus take a yellowish colour: this however doesn’t spoil the high quality of Pandoro Bauli.) Italian consumers attention to the ingredients controls is now increasing (44 per cent of respondents in Doxa, 2003). Bauli’s keys strength is their great experience acquired in the natural leavening phase, which precedes all the manufacturing processes of Bauli’s products. The application of this home-bakery procedure on an industrial scale, only achievable through technologic development, was a great challenge undertaken and accomplished by Bauli. Behind this major break-through lies a great amount of research work, a careful and painstaking selection of ingredients, and an improved implementation of industrial technology, the use of which has been determined by the practical knowledge drawn from the art of Italian and European confectionery tradition. At Bauli, production processes changed, quality never. . A company’s quality has a fundamental role in the relationship between suppliers and the large distribution that reach the final consumer. Bauli also thinks that the company’s main goal must be the quality perceived by the final consumer. Every single step forward is the fruit of high quality teamwork. Company values at Bauli are shared and it is, without doubt, true that the energy to make this company great springs from a unanimous commitment to quality. At Bauli, above all, there is always a strong urge to improve and to produce new items, believing that competencies achieved, automatically generate innovation. Marketing at Bauli Bauli’s product positioning calls in mind holidays and special occasions. For years Bauli has been one of the greatest investors in communications in the confectionery industry (15.8 million euros in 2001). A targeted communication strategy, together with many marketing-mix leverages has helped enhance the awareness of Bauli’s trademark, making it one of the best-known names in the Italian confectionery industry. Bauli mainly produces “special occasion confectionery”, cakes that reflect the happiest moods, and the communication has always been developed around these feelings of joy. These large advertising investments have strengthened Bauli’s image of reliability and credibility. The attention to special occasions, the production of cakes that reflect festive family moods, led to develop a distinctive and recognisable image: the Bauli trademark awareness is about 91.5 per cent (source: ONM Simulation Intelligence). The association between Bauli and holidays, is strong and clear, and has also been confirmed by a survey carried out by the Abacus Research Institute on the public’s awareness of Italian company names. A sample of 2000 respondents yielded the following results:

.

.

.

Bauli is among the three best-known Italian companies in the confectionery industry, with an index of 95.9 per cent. Bauli registers the highest index in the special Christmas and Easter confectionery segment with regard to: excellent company and modern company items. Bauli is the most trusted trade name by buyers in the special occasions’ confectionery segment with an index of 71 per cent (total awareness).

Bauli’s message is rendered beyond the traditional, giving, with a musical style, a particular emotional atmosphere: special occasions are remembered with happiness and the protagonists have deep communication abilities. Along with Christmas advertising, created specifically to Christmas products, other Bauli products can also live with this strong imagine of joy as if they were dedicated to different consumption occasions and made with totally different ingredients. The consumers in this way are subjected to a coherent, constantly repeated message of sympathy and simplicity. Bauli is one of the top ten best known and trusted Italian companies. The boundaries of his activity soon stretched well beyond Europe and filtered even further abroad. The transfer of know-how to countries such as Argentina, South Korea and Greece has accelerated the establishment of the trademark in other markets and has created the possibility of expansion of their products. New distribution channels and the development to new products were led by salient international partnership agreements. Bauli is present with its products in all the EU countries; it is furthermore present in North, Central and South America and Oceania. Conclusion This case study aimed to show the way to successfully conquer the mass market as experienced in a firm that has become a leader in its market with a traditional product. Bauli’s mission is to offer high quality confectionery products, selecting its businesses, maintaining a deep specialisation in its core competencies. The brand positioning, stresses the “high quality simplicity” of the special occasions confectionery product. The final goal is to become “special” to the consumer. This is made giving a special characteristic to the product and to the brand. A particular effort given to control all the manufacturing processes in order to obtain high quality products (also packaging is created to preserve fragrance and lightness) ensure the company to reach the first step of quality. The key winning factors are undoubtedly: solid manufacturing know-how and innovation capabilities. Bauli has never neglected to offer a high service to its trade retailers in terms of perfect order: delivery punctuality (date and time) beyond order conformity, volume and delivery flexibility, and order accuracy. The high brand awareness has been reached thanks to marketing skills: specialisation and innovation in change. References Databank (2002a), “Industry brief”, available at: www.databank.it (accessed summer 2003). Databank (2002b), “Company to watch”, available at: www.databank.it (accessed summer 2003). Doxa (2003), Monitor Alimentare Doxa, 5th ed., Doxa, Milan.

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Balsamic vinegar of Modena From product to market value: competitive strategy of a typical Italian product

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Giovanni Mattia The RomaTre University of Rome, Rome, Italy Keywords Product quality, Marketing, Competitive strategy, Wines, Italy, Food products Abstract This case study provides a brief historical background to the regulatory summary of the production and quality of vinegar, manufactured in Modena, Italy: the production method and the asset value of a vinegar cellar; quality controls; the comparative evaluation of balsamic vinegars; product and market specificity; the competitive environment; and the organisational structure and critical management areas in the productive chain. The study also looks at the growth pattern of traditional balsamic vinegar and the evaluation of the coherence of the current strategic assumptions for future business development.

1. Introduction Italy is famous for the large number of “typical” products in its agro-foodstuff sector. The term “typical” denotes the presence of a unique or uncommon series of material and immaterial elements (Carboni and Quaglia, 2001), which refer to: . the characteristics of a productive process which, in its turn, is the accretion of unaltered skills handed down from generation to generation; . the importance of the human factor in the production process; . the peculiarities of a climatic and learning environment that create the premises for virtually inimitable productive conditions; . the territorial specificity of the production; and . the importance of raw materials in the preparation of the product.

British Food Journal Vol. 106 No. 10/11, 2004 pp. 722-745 q Emerald Group Publishing Limited 0007-070X DOI 10.1108/00070700410561351

Emilia Romagna is one of the Italian regions with the highest number of products certified under the EU’s protected designation of origin (PDO) procedure. These products include cheese (Grana Padano, Parimigiano Reggiano, Provolone Valpadana), fruit, vegetables and cereals (Fungo di Borgotaro, Marrone di Castel del Rio, Pera dell’Emilia Romagna, Pesca Nettarina di Romagna), meat-based foods (Coppa Piacentina, Cotechino di Modena, Culatello di Zibello, Mortadella di Bologna, Pancetta Piacentina, Prosciutto di Modena, Prosciutto di Parma, Salame Piacentino, Zampone di Modena). The products in question are not only a remarkable agro-food patrimony, but also form part of a cultural heritage that also includes some industrial products with worldwide reputation for excellence and quality: the sports cars Ferrari, Maserati or Lamborghini, ceramics and clothing. The traditional balsamic vinegar of Modena is one of such typical agro-food products of the region, which has enjoyed PDO certification since 2000. The law defines it as a condiment and, in practice; it is mainly used as such on various dishes. It is not, however, an ordinary vinegar. Not only is it produced in a wholly different manner – with respect to other vinegars – it is also aged for at least 12 years with a unique process.

The method used to prepare the traditional balsamic vinegar is rooted in a centuries’ old productive tradition which is the exclusive heritage of a limited number of families in Modena. Thus for centuries the product was only consumed within its area of origin, but like many other products typical of Emilia Romagna, at present this specialty has gained an international distribution and heads of states and famous personalities are among its faithful and enthusiastic consumers[1]. The objective of this paper is to analyse the growth of this product in terms of strategy adopted – examining the coherence of the competitive conduct – and marketing prospects, by ascertaining how the strategy reflects upon the formulation of the product offering. A qualitative approach was used in setting out the structure of the analysis: in particular, an in-depth interview was conducted with Dr Claudio Biancardi, president of the Consortium[2] of the Producers of the Traditional Balsamic Vinegar of Modena, further enriched by the main publications on the subject matter. Although a prescriptive model could not be defined, an interpretive paradigm of the strategic and operating issues based on the resource-based view (Peteraf, 1993) was used to ascertain the congruence between the specific resources available and the arrangements put in place for achieving sustainable competitive advantages. In other words, the study sets out to verify to what extent the remarkable specificity of the product; even in relation to other typical agro-food products (limited production volumes, length of the aging process, accuracy of the control on the productive chain) are actually reflected in the entrepreneurial formula used. The paper is divided into the following conceptual parts, each made up of one or more paragraphs: . the first part concerns the details of the product and addresses the historical-regulatory, productive and quality control features of the product (sections 2-4); . the second part makes a comparative evaluation of the specificity of various vinegars (section 5); . the third part analyses the competition in the sector and critical management areas in relation to the productive chain’s organisation (sections 6 and 7); and . the fourth part analyses the arrangements introduced to develop the business and proposes a possible re-interpretation of the present strategy (section 8). In conclusion, I would like to thank Dr Biancardi for his courtesy in making his “historical archives” and profound knowledge of the product as well as of the market available to this author. And last, but not least, a word of gratitude for his kindness in presenting me with a bottle of the precious traditional balsamic vinegar, which I shall reserve for “special occasions”. 2. Brief historical – regulatory summary The production of the traditional balsamic vinegar was a consolidated tradition by the end of the sixteenth century. By this time the Dukes d’Este, who had moved from Ferrara to Modena, used the product as precious gift to nobles of the period as well as eating it themselves during their own banquettes. The first occurrence of the adjective “balsamic” in conjunction with “vinegar” is recorded in the register of the grape harvests and wine sales of the private ducal wine cellars in 1700. This also attests that the reinvigorating properties of the vinegar are

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the result of aging cooked must. Other documents refer to the topping up of barrels situated in attics, which indicates a further peculiarity of the product: the aging method. The requests received by Duke Francesco III from an English merchant and a Russian aristocrat also show that the balsamic vinegar’s fame had spread to Europe. However, the production of the balsamic vinegar was seriously menaced by the Napoleonic wars in Italy during which the French auctioned off Duke Ercole III’s reserves. But, by the middle of the nineteenth century balsamic vinegar production had fortunately fully recovered with the restoration of the ducal vinegar cellar, which was also visited by Vittorio Emanuele II and his Prime Minister Cavour. In 1862 a lawyer, Francesco Agazzotti in a letter to his friend Pio Fabriani, gave a detailed description of the technique used, and still in use, for the preparation of the traditional balsamic vinegar. From this time on, numerous documents were produced on the product. Their multiplication is an index of the product’s growing popularity (1863 Modena agricultural fair, 1888 Emilia Exhibition of Bologna) Modena families, especially patrician families, who regarded it as “the vinegar”, hand down the technique for the preparation of the balsamic vinegar from generation to generation. Moreover, they jealously guard the precious barrels earmarked for aging the vinegar. The oldest vinegar cellars, for example, still keep some of the barrels that were auctioned off by the French invaders over 200 years ago[3]. This meant that the producers regarded traditional balsamic vinegar was considered as a tradition rather than a business activity. Hence, Ottavio Ottavi, in his treatise on traditional balsamic vinegar dated 1919 stated that the product must not be put on sale but simply transmitted from father to son or given as a gift. In view of the aging process, any attempt to fix a price “would necessarily tend more towards fabulous than real evaluations and as such would be quite impracticable”. In 1965 ministerial decree 3 December 1965 laid down that the “balsamic nature” of the vinegar was the result of an (undefined) percentage of vinegar aged at least ten years and matured in wooden barrels using traditional technology. However, in practice the decree lost sight of the distinctive features of the traditional balsamic vinegar as these characteristics could be obtained also by chemically treated vinegars (disacidified), supplemented with caramel, i.e. an industrial product without any of its original characteristics. As the producers of this traditional product realised that their secular productive tradition was in jeopardy, they decided to stop selling the product rather than have it confused with a product that could not guarantee the same qualitative standards. In order to promote and sustain initiatives for building up the production and the product image by heightening awareness of it and encouraging respect for the productive details handed down from the old Este duchy, the Association of Traditional Balsamic Vinegar of Modena was founded in 1967 in Spilamberto, as the province of this town was considered the productive area par excellence. However, the association’s statute did not envisage the promotion of initiatives to obtain the regulatory protection of the product. In an attempt to remedy this shortcoming, the producers set up the Consortium of Producers of Traditional Balsamic Vinegar of Modena in 1979. After various vicissitudes that have, alternatively, enlarged and reduced the numbers of members, the Consortium of Producers at present consists of 112 members. Their productive capacity is extremely varied – the size of the vinegar

cellar can vary between 10 and 5,000 barrels – as also their legal status as they are not only companies but also private citizens. In 1983 the product received the certification of registered designation of origin (RDO)[4], which in 1987, was followed by production regulations, set out according to the provisions of law no. 93/86. In particular, traditional balsamic vinegar: . has to be obtained from must, produced from Trebbiano vines (together with some other types) cultivated in a limited geographic area[5], cooked over an open fire in a cauldron; . production, maturing and aging must take place in the same area above so as to confer unique characteristics to the product, and which no other area can provide; . maturing cannot last for less than 12 years, and no substance may be added to the product, with the exception of “madre”[6]; . production and maturing must proceed by means of successive racking in the barrels within the loft of a vinegar cellar in the production area; and . in order to be marketed the product must be: dark brown, intense and shiny, possessing a notable density and a syrup-like texture as well as a characteristic bouquet and taste. The European Union gave the product PDO certification in 2000. In this manner it has been added to a list of about 100 typical Italian agro-food products, “. . . [w]hose production process complies with a regulated productive procedure. These characteristics are essentially or exclusively the result of the geographical environment, including natural and human factors” (Regulation: EEC 2081/92). The product is, therefore, now legally certified as guaranteeing quality to consumers and recognised as a specialty, unknown in other areas, prepared and aged with a procedure that has remained constant over time. 3. The production method In order to specify what this product represents today on the world market and what are its distinctive characteristics, it is necessary to make some preliminary considerations on what it is and how it is produced. The traditional balsamic vinegar of Modena “possesses a sweet and sour taste and a delicious aroma, especially when aged for a number of years, and it can also be consumed as a liquor” (Sacchetti, 1991). Although they have the same name, traditional balsamic vinegar should not be confused with ordinary vinegar, with respect to which it differs in a number of substantial ways: organoleptic characteristics, production procedure and the process of transforming the raw materials (maturation and aging). A rapid, double fermentation process, for example, produces vinegar. Commencing as a sugary liquid (i.e. grape must or apple juice) the raw material is turned into an alcoholic liquid, which through oxidation acquires the properties of an acetic acid. The traditional balsamic product, on the contrary, is obtained from the slow fermentation of cooked grape must. This implies that the acetic liquid is formed without passing through an alcoholic phase (with the exception of a negligible amount of alcohol). In addition, while vinegar can be defined as the side-product of another type of processing

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(winemaking), insofar as it is practically “failed” wine (or cider in the event that apples are used), traditional balsamic vinegar can be regarded as the product of a primary transformation in which all the phases of the productive sequence are exclusively designed for its production. This difference was sanctioned by the Italian Parliament in the form of a law giving RDO certification (registered designation of origin) which defined the product as a “aged condiment obtained from cooked must” (law 93/86), and therefore with its own properties that cannot be likened to “vinegars”. Similarly, traditional balsamic vinegar should not be confused with the balsamic vinegar of Modena (the commonly known industrial product, with a wide consumer base), with respect to which there is the formal difference of a single adjective “traditional”. However, in this case too we are dealing with two very different products, in both commercial and production terms. Non-traditional balsamic vinegar is a blend of wine vinegar and concentrated musts, produced in the province of Modena and Reggio Emilia, and aged at the producer’s discretion. There is, in fact, a wide qualitative range of non-traditional balsamic vinegars. The cheapest varieties have limited aging and are sometimes supplemented by a percentage of caramel to lend darkness and sweetness to the product. Better quality vinegars, instead, are characterised by a higher density, a pleasant fragrance and a less aggressive acidity. The traditional balsamic product of Modena is principally made from white Trebbiano and Lambrusco grapes, ideal for their bouquet and cultivated in the province of Modena, namely in the area of the territory of the small county council of Castelvetro. The grapes are harvested only when they are fully mature and lightly pressed to minimise the release of oils and tannins from the grape seeds and skins. The resulting must, after removal from the graspe (the special containers where it is kept) is filtered within the following 24 hours to stop the sugars turning into alcohol. The must is then cooked in open copper or stainless steel cauldrons over open fires[7]. The cooking phase is relatively long (20-30 hours) and finishes when the liquid has been reduced to between 30-70 per cent of its original volume, according to the sugar content of the grapes used. After filtration the cooked must is first stored in special carboys (metal or plastic) where it is left to decant during the winter in specially chosen cold, dry places, thus preventing from mould attacks. The following spring the must is placed in special barrels (termed botticelle or vaselli), where the maturation of the product will be completed[8]. The barrels are filled to about three-quarters capacity and a gauze sheet to promote the exchange of oxygen and procure the best processing of the acetic-acid-producing ferments only covers the bunghole. Barrels made from different woods are used for aging the product (mainly oak and chestnut but also mulberry, ash and cherry) and come in different sizes. Altogether they are referred to as a “battery” and, as such, represent the productive unit of the traditional balsamic product. A typical battery is made up of at least five barrels, whose capacity is usually between 20 and 60 litres, to which the so-called “mother-barrel” (or badessa) should be added. The latter has a greater capacity than the others, usually double the capacity of the largest barrel, and is used to process a number of traditional balsamic batteries. Much of the biochemical processes (fermentation and acetic bioxidation) that transform the cooked must into a balsamic product take place in the badessa.

The use of different woods is designed to confer a complex aroma to the product by increasing the structure and persistence of the fragrance. Generally speaking the largest barrels are in mulberry as they afford good permeability to the air. The intermediate barrels are usually chestnut, which donates colour to the balsamic vinegar, while the smallest are in oak, as this guarantees the best preservation of the aged product. It is worthwhile mentioning that at the commencement of production new barrels must be sterilised with salt water and boiling vinegar and subsequently filled with Trebbiano wine vinegar (the procedure is called acetification) to impregnate the wood. Only after this procedure is the wood deemed ready to accept the cooked must. The racking of the product from a larger to a smaller barrel is one of the salient phases of the aging process and also the principal element of uniqueness in the traditional balsamic vinegar production method. The procedure is long and costly in terms of the raw materials used and the quantity of product that evaporates from the barrels. The purpose of racking the product into a series of smaller barrels is to maintain the right proportions between the volumes of the product and the surfaces of the barrel so as to facilitate the correct completion of the chemical and biological exchanges necessary for optimal refining. Every year an operation termed topping-up is conducted, whose purpose is to make up for the amount of product lost through evaporation (up to 15-20 per cent) as well for that removed after having aged for at least 12 years. The procedure adopted is quite simple: the mature balsamic vinegar, taken from the smallest barrel, is replaced by the product kept in the next largest barrel, which in its turn is replenished by the barrel next largest to it. This sequence – always transferring product to the next smallest barrel – is rigorously applied to the other barrels in the battery. In this manner the product is continually regenerated as well as prolonging the useful life of the battery. The older the barrel the higher its value. Thus in the case of barrels with dozens or even hundreds of years of life we can speak of values of over tens of thousands of euros (e) per barrel, without taking its content into account[9]. During aging the product is kept at room temperature, by an appropriate air-venting system, in the lofts of the vinegar producers. This is the traditional place used for refining insofar as the magnitude of the thermal changes in the loft causes the barrels to undergo the maximum degree of expansion and contraction, which, in turns, helps the liquid acquire the aromas of the wood and its traditional syrupy consistency. In particular, the final barrels perform natural maturation reactions in which the substances released from the wood participate thus contributing to the creation of its characteristic bouquet. 3.1 The asset value of a vinegar cellar The investment required for a vinegar cellar is characterised by its very slow turnover. Thus the capital invested will not produce a return before 12 years insofar as this is the shortest period that must elapse from date on which the barrels were prepared. Table I sets out the principal cost items involved in the production of a vinegar cellar assuming that it is sufficiently large to absorb the grapes produced from one hectare of vineyard (purchase and depreciation of the premises, manpower and maintenance are not quantified because they are highly variable). At the expiry of the 12-year period, 4,200 litres of matured product are potentially marketable (7 per cent of the refined stock): assuming an average sales price of about

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Table I. Hypothetical cost structure for setting up a vinegar cellar

Operation Purchase 1,000 new barrelsa (capacity ranging from 25 to 100 litres) Acetification of the barrels Cooked must to place in the barrels: 60,000 litresb Sub total Financial cost of initial capitalc Annual top-upsd: 6,000 litres £ 12 years ¼ 72,000 litres Capital cost for topping upe Total investment

Unit cost (e)

Total cost (e)

100 10 3

100,000 10,000 180,000 290,000 230,800 216,000 10,800 747,600

3

Notes: a The coopers in Modena who make barrels for the traditional balsamic vinegar constitute a flourishing side-industry. Actually Sicilian barrels are the best but the factories producing them are gradually disappearing. As an alternative, many producers use disused winemaking casks. b Assuming an average capacity per barrel of about 60 litres. c Hypothesising a 5 per cent real and constant interest rate for 12 years. d Assumed to be 10 per cent of the annual stock and that the price remains constant over the 12-year aging period. e Taking account of an annual, real and constant capital cost of 5 per cent. Source: Dr C. Biancardi, President of the Consortium of Producers

e200 per litre, the earnings obtained exceed e800,000. As from the first sales of the product the investment can, therefore, be fully reimbursed. However, the fact remains that a would-be producer must possess a large amount of capital and much patience before his financial investments produce any returns. On the other hand the acquisition of a functioning vinegar cellar is a much more difficult matter. The investment in terms of the number of barrels and the age of the product contained therein can amount to a few million euros[10] because historical producers are strongly averse to selling their activities. A vinegar cellar is not only a source of income but also a family tradition to be handed down from generation to generation.

4. Quality controls The traditional balsamic vinegar of Modena is currently marketed under the Consortium of Producers’ trademark, testifying that the product underwent quality control. As the regulatory authority, the Consortium has the task of organising and coordinating certification activity, ensuring that the consumer only be presented with a product whose visual, olfactory and gustatory standards are in line with the approved ones. Such evaluating procedure takes place according to the following steps. Every year the producers must declare their stocks of product aged 12 years and over to the Consortium of Producers so that it can be tested and approved. The product drawn from the barrels is sealed and taken to the offices of the Consortium. A sample taken from this is divided into three parts: one is kept in the archives of the Consortium of Producers, one sent to the panel of expert tasters and one held back as an element of additional evidence in the event of objections. In order to evaluate its quality the product is “sampled” by a panel of five expert tasters[11]. They do not belong to the Consortium of Producers and are convened only 48 hours before the tasting session. Thanks to a system that assigns two numerals to the samples, the origin of the samples is never disclosed to them.

If the product is approved by the panel of tasters, the Consortium bottles it with its own trademark, specifying the vinegar cellar of origin and placing the quality seal on the capsule on each bottle so that the content cannot be extracted without breaking the seal. If the panel does not approve the product, the producer must withdraw it in bulk and return it to the vinegar cellar, without being able to put it on the market. The entire product placed in bottles is fully documented and traceable in terms of both quality and quantity. Through the lot number on the seal of each bottle it is possible to identify: . the origin of the product; . the bottling date; . the number of bottles making up the product batch; . the quality points assigned to the product; and . the names of the expert tasters making up the panel of experts.

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In order to enhance the public recognition of the product and protect it from counterfeiting, a specially shaped bottle, with a capacity of 100 ml, came into use at the end of the 1990s[12], sealed with the quality seal and a PDO label (see Figure 1). In addition, there is a quality guarantee for the entire productive process in the shape of an external certifying authority, appointed by the Ministry of Agriculture that supervises the vineyards and vinegar cellars. Furthermore, in order to conduct chemical and bacteriological tests on the quality of the product, the Consortium of Producers avails itself of the expertise of the Universities of Modena, Pescara and

Figure 1. The traditional balsamic vinegar of Modena bottle

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Trieste, whose laboratories periodically receive samples of intermediate and finished products. Finally, each barrel used for the aging of the traditional balsamic vinegar is fire-branded and catalogued in the register of traditional balsamic vinegar barrels. 5. The comparative evaluation of balsamic vinegars: product and market specificity While the use of the term “balsamic” with reference to vinegar is widely used, the number of consumers able to distinguish between industrial balsamic vinegars and the traditional balsamic vinegar is still limited. However, the differences between these two types of product are considerable and concern not only taste and aromatic properties but also the specific nature of the product offering. Non-traditional balsamic vinegars, by virtue of their relatively low price and their more delicate and adaptable taste with respect to wine vinegars, have become very popular and usually used as a condiment for side-plates. But it is also necessary to make distinctions between non-traditional balsamic vinegars in terms of quality and price: There are low-priced (e1 for a 250-ml bottle) and mass distribution (mainly through chain-distribution outlets) down-market products as well as products that boast a more artisan origin (usually agricultural companies that complete the entire sequence of the productive operations) recognised for their quality and exclusiveness. Thus it is not rare to find packagings of this product alongside traditional balsamic vinegars on the shelves of specialized retailers, especially when the more sophisticated products are being promoted in points of sale. Traditional balsamic vinegar, on the contrary, is characterised by a higher degree of versatility. It can be consumed “by the spoonful”, or as an end-of-meal “digestive” as well as accompanying a variety of dishes, includes deserts. However, on account of its rarity the product is normally used more sparingly (the aficionados term this “the devout use”). The potential market of the traditional balsamic vinegar is limited to a type of consumer whom we can define as “e´lite”, insofar as he has refined culinary tastes and considerable knowledge and discrimination as regards his consumption habits. He or she belongs to a category of persons who use food as a means for “all-round satisfaction” (cultural, ethical-social) and not just for its nutritional and sense connotation (Barberis, 1985). The venues for consumption also reflect this orientation: besides the home, it is customary to find the traditional balsamic vinegar on the tables of renowned Italian and international restaurants. The sales outlet comprise either traditional and experienced up-market grocery points of sale or direct sales from the vinegar cellars – which merits a separate comment – that allows consumers to establish a relationship of trust with the producer as well as representing an element that helps to further differentiate the product. Table II sets forth the differences between the three types of product (vinegar, balsamic vinegar and the traditional balsamic vinegar of Modena) in relation to an “array” of 22 variables, which summarise the points discussed in this and the previous paragraphs. In order to enable the reader to grasp the comparisons involved, these variables are grouped into three homogeneous sets in terms of the following specific themes: . organoleptic and productive; . qualitative control; and . the market.

Elsewhere Not aged

Not aged Water, colouring matter (oenocyanin, thiamine)

Place for the preparation of the product Geographic place of aging Aging method

Aging time

Substances used as principal additives

Method for preparing the product

Aspect

Taste

Raw material

Vinegar

Balsamic vinegar

Traditional balsamic vinegar of Modena

(continued)

Modena Progressive racking in decreasingly smaller barrels in different woods, situated in garrets and termed vinegar cellars Not defined Minimum of 12 years for “refined” type, minimum of 25 years for “extravecchio” type Water, concentrated musts, caramel, None, excepting the “madre” in the colouring matter barrels

Emilia Romagna Various types of method and duration

Condiment obtained from cooked must Wines of various origin Wines of various origin Modenese grapes (above all Trebbiani and Lambruschi) Acid Variable degrees of acidity, a fruitier Low acidity, bouquet characteristic and sweeter taste than wine vinegar of aging woods Low density, white or red colour Significant level of density, dark High density, dark brown colour according to the type of grape used brown colour Rapid acetification of the wine Blend of wine vinegar and Slow acetification of cooked must concentrated musts Elsewhere Mainly Emilia Romagna Modena

Productive and organoleptic specificity Nature of the product Vinegar

Vinegar

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Table II. Comparative evaluation of vinegars (our study)

Table II.

Frequency of use Price usually practiced Distribution channel

Quantity produced Scale of producers Principal uses

Bottle used

Market specificity Bottling procedure

Performed by the producers with their own labels

Internal

No

PDO Consortium of Producers of Traditional Balsamic Vinegar of Modena. The industrial vinegar producers have set up a consortium called the Consortium for the protection of traditional Balsamic Vinegar of Modena Yes, in the case of the Consortium of Producers External Independent panel of expert tasters Control and traceability of the production sequence with an independent body appointed by the Ministry of Agriculture

Traditional balsamic vinegar of Modena

Performed by the Consortium of Producers with its own trade mark and with the label of the vinegar cellar producer Various forms, usually 250 ml or Various forms, usually 250 ml or Single 100 ml format (approved by greater greater law) with the quality seal High Average Limited Large Small/medium Small Dressing salads Dressing salads Condiment for salads, meat or fish dishes, desserts. Isolated use as a digestive Recurrent Recurrent Used sparingly Low Average High Chain stores and traditional retailers Chain stores, traditional retailers and Delicatessen, restaurants, direct delicatessen sales from vinegar cellars

Performed by the producers with own their labels

Ministerial recognition of the bodies n.a. of development and control Quality control of the product and Internal the productive sequence

None None. For a limited number of producers the Consortium of Balsamic Vinegar of Modena has been set up

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Quality control specificity Recognition of typical features None Development and control authorities None

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6. The competitive environment While exhibiting some features of a niche production[13] (a value that justifies a premium price, originality with respect to competitive offers, the possession of distinctive attributes, a limited production with respect to the volume of trade of the sector), it cannot be held that traditional balsamic vinegar enjoys monopoly conditions insofar as its present market condition is not characterised by competitive isolation (Mattiacci, 2000). The industrial vinegar producers, aware of consumers’ growing awareness of quality products, have therefore increased their product mix by adding products with the appeal of typical production and requested that protected designation of origin be extended to include non-traditional balsamic vinegars[14]. The impact upon the product attributable to the behaviour of some producers has not been negligible, especially as regards attacks designed to weaken the product’s prerogatives of uniqueness. This illustrates that qualitative leadership and the non-reproducibility of the method of preparation are insufficient, by themselves, to sustain a competitive advantage, even with institutional recognition such as PDO[15]. Moreover, there are some additional conditions that may impact directly on the competitive performance of traditional balsamic vinegar and undermine its stability. In detail: . Traditional balsamic vinegar is affected by an “informational asymmetry” as regards the least expert consumers. These consumers can be persuaded to liken it to the more generic types of balsamic vinegar, especially in view of the fact that the only lexical difference between the two products is represented by the adjective “traditional”. This complicates the possibility of making an effective comparison, reduces the competitive distance in the eyes of the consumer and alters the genuiness of the choice criteria. The understanding of distinctive elements lies at the heart of perception of the value-added component incorporated in a product and can constitute a sunken cost type barrier (Bureau et al., 1998). Therefore, the consumer who is unable to recognise distinctive elements either through observation or direct contact will tend either not to make purchase or become more price sensitive (Belliggiano, 1999). This negative conduct adversely affects high-quality products when their excellence cannot be communicated effectively. . At the moment there are three consortiums alongside the Consortium of Producers of traditional balsamic vinegar of Modena: the Consortium of traditional balsamic vinegar of Reggio Emilia, the Consortium for the protection of traditional balsamic vinegar of Modena and the Consortium of balsamic vinegar of Modena. The most immediate consequence of such is that various products, other than the traditional balsamic vinegar of Modena, are marketed with guarantee marks. This circumstance makes it much harder to identify different kind of products and prevents consumers from immediately understanding “what they are actually” buying. Furthermore, it has to be taken into account that resolute attacks in the form of legal action are put in place by various subjects for the purpose of undermining the barriers created to defend the uniqueness of traditional balsamic vinegar of Modena[16].

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In addition to industrial balsamic vinegar there is also a multitude of products, mainly made by small and medium-sized agricultural concerns, mainly in the area of Modena, which market their products as typical, albeit not certified, relying on an accurate packaging presentation (primary and secondary) and on the exploitation of product varieties (for example biologically-cultivated balsamic vinegar). Finally, as far as the recently created Consortium of the balsamic vinegar of Modena is concerned, the product’s appeal is enhanced by distinctive elements of quality and productive tradition, even if not institutionally certified. No direct correlation can be envisaged between pricing and product quality. It is not infrequent to find non-traditional balsamic vinegars sold, for the same volume, at higher prices than traditional one (as indicated by empirical research conducted on websites for online sales). This determines a deterioration in the image of the traditional product, and its principal distinctive element, quality, tends to be forgotten. On the shelves of points of sale traditional balsamic vinegar is often placed alongside the industrial products.

These considerations indicate the appropriateness of interpreting the competitive framework in a more extensive manner by including among potential competitors of traditional balsamic vinegar, non-traditional balsamic vinegar as substituting products. 7. The organisational structure and critical management areas in the productive chain The production and distribution of the traditional balsamic vinegar are managed by an organisational system based on two types of actor: the productive units (vinegar cellars) and the Consortium of Producers. The vinegar cellars, in their turn, can be classified into two types: those that form part of an agricultural concern, within which the complete productive cycle takes place – from the cultivation of the raw materials to its transformation and aging – and those which, instead, purchase the crude or even the cooked must from third parties[17], and who only possess the assets necessary for refining the product (premises and barrels). The Consortium of Producers guarantees that the bottled product conforms to the qualitative characteristics defined by the production regulations, as well as building-up brand value and promoting the product. The Consortium of Producers not only on behalf of its own members but also for other producers conducts this task. The reason is that non-members are guaranteed the right to obtain quality certification and benefit from designation of origin. The distinction between these two actors corresponds to a division in the management of marketing operations, a phenomenon found in most typical agro-food products (Giacomini, 1998). The producers are concerned with fixing prices and choosing distributive arrangements. The Consortium of Producers, on the other hand, is responsible for the protection and development of the image of the collective trademark. This organisational arrangement implies a certain degree of complexity in the marketing operations and runs the risk, in the absence of an appropriate coordination, of causing conflicts between the development lines chosen.

The reasons are as follows: . The difficulties of reconciling the needs and commercial objectives of all members within a single organisation[18]. A collective trademark has undisputable advantages on condition that individual strategic objectives are in harmony one with another. However, it represents a constraint whenever, as in the case in question, the producers are completely heterogeneous in terms of size, financial capacity and market outlets. . The regulatory production mechanisms in the form of production quotas given by the Consortium of Producers to its members that may, in the long run, be regarded as a constraint upon individual development. . The propensity on the part of both actors to be more orientated towards the product than towards the market with direct repercussions on the efficiency and effectiveness of the strategic policy adopted. As will be argued in detail in the eighth section, a managerial logic of this type leads to passivity with respect to the market and makes the product more vulnerable to attacks from competitors who are quicker at seizing new market opportunities. . The need to intensify the manner in which network potentialities (Rossi and Rovai, 1999) are exploited in order to build up the brand value of the product. The insufficient exchange of information between productive units, the Consortium of Producers and the institutions generates negative consequences on product visibility, making more difficult the accumulation of useful know-how. 8. The growth pattern of traditional balsamic vinegar The possibility of obtaining designation of origin for traditional balsamic vinegar was recognised for the first time towards the end of the 1970s. This coincided with the decision of some industrialists from the province of Modena, principally concerned with light engineering, ceramics and clothing, to diversify their activities and investing in thousands of barrels for the purposes of producing vinegar cellars. At the same time, agricultural entrepreneurs who already owned a vineyard began to earmark part of their quality grape harvest for balsamic vinegar production. Therefore, a favourable conjunction of forces came into being that created the basis for the increase in the productive base of traditional balsamic vinegar[19]. The Consortium of Producers had the task of accompanying the product during its growth by rolling out a development programme based on a number of fundamentals, which by the way are enshrined in its mission: . the safeguarding and building-up of brand value by protected designation of origin and defence from external attacks that could undermine the product’s integrity; and . the promotion activities, aimed at obtaining a heightening awareness of the product. Until the mid-1980s the knowledge and use of the traditional balsamic vinegar of Modena was virtually only limited to the territory in which it was produced. However, from 1987 to 2002, annual sales shot up from 3,000 to 100,000 bottles a year and in the course of 15 years 500,000 packages of the product were sold. Bearing in mind the

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substantial virginity of the market, today 70 per cent of the production is exported. The Consortium of Producers has played a key role in this development activity by achieving two main objectives: (1) The first, which was achieved shortly after the setting up of the Consortium of Producers, was to have given “brand value” to the sales by means of an awareness campaign conducted vis-a`-vis the producers. Hitherto, a large amount of the production was earmarked for the industry, which used the product as a basic ingredient, along with “ordinary” vinegar, for the preparation of non-traditional balsamic vinegar. The product was sold in bulk and this had obvious repercussions in terms of price and the loss of the product’s visibility with regard to the end-user market. (2) The second objective regarded the protection of the product. This was achieved by acquiring the certification of protected designation of origin – first at a national level (RDO) and later at a community level (PDO) – the adoption of a single bottle format and, finally, the introduction of major quality controls, in the form of analytical and tasting controls, at all stages of the production process. Given the high priority attached to quality control the Consortium of Producers dedicates most of its resources to this objective. And as the protected designation of origin is a distinguishing element for the entire productive sequence, this choice is quite understandable. However, the concentration upon this aspect has inevitably entailed that the development of the business was the result of a series of spontaneous successes for the product in new markets, rather than the application of a logical and structured strategic plan and a reference for consequent operating decisions. As often happens in ineluctable conditions of urgency, the Consortium of Producers overcame the lack of a fully-thought out strategic plan with opportunistic behaviour by adapting itself to the market of passionate consumers gradually building up around the product through the adoption of product oriented approach. 8.1 The evaluation of the coherence of the current strategic assumptions for the future business development We can distinguish signs of an entrepreneurial model, namely the structure of environmental interactions whereby the companies pursue a clear idea of entrepreneurial success (Coda, 1988), in the present competitive position acquired by traditional balsamic vinegar. The descending strategic array, coherent with the mission assigned to the Consortium of Producers, can be summarised by the following issues: . ensuring controlled growth for the product, within the limits laid down for the maintenance of the highest qualitative standards, by keeping the product within the context of niche goods; . insisting upon a complex core competence system for the product as an element of distinction for the product’s competitive positioning; and . relying on promotional operations to give leverage to the “rarity” and the e´lite connotations of the product.

In line with a resource-based paradigm, envisaging the exploitation of the characterising capacity of a company to create competitive advantage (Porter, 1991), the issues above are aimed at emphasising product differentiation. This value generation path is mainly concentrated on the setting up of a core competence system based upon production and aging procedures, of which the designation of protected origin and the unique bottle format represent the epitome; the remaining decisions cooperate to reinforce such peculiarities: control on volumes growth is aimed at ensuring the maintenance of quality standards, whilst promotional activities at emphasising uniqueness and rarity of the product. It is now necessary to understand whether, and if so to what extent, future strategy represents an ideal extension of the present one, or whether, on the contrary, it will have to be substantially reformulated. To answer this question the single strategic decisions discussed above will be analysed in the following pages in terms of their future practicability. 8.1.1 First strategic decision: ensuring controlled growth for the product within the limits represented by the need to maintain high quality standards by keeping the product within a product niche. In the framework of typical agro-food products considerable difference are found in terms of productive volumes and distribution arrangements. While in some cases it is not inappropriate to speak of mass production for these specialties (for example in the case of Parmigiano Reggiano or Parma ham) given their widespread nature and intensive use made of the largest distribution channels, the hallmark of traditional balsamic vinegar is, on the other hand, its rarity. Such a peculiarity represents a constraint, making a significant and long lasting offer growth poorly feasible, as production level is influenced by the limited availability of raw materials as well as of the barrels and premises. But, on the other hand, it can be considered a robust protection from the decay of product quality, which an uncontrolled growth of sales volume may threaten. It is therefore desirable that the product be maintained under progressive, but limited growth, thus ensuring to benefit of a constant penetration of the market in absence of pressure on price level. Under this respect, it seems to be confirmed the validity of the competitive behaviour put in place by the Consortium of Producers. Notwithstanding a 25-fold increase in production over a ten year-period, the price of traditional balsamic vinegar has continued to rise[20] even in today’s depressed economic scenario, and which has seen the prices of other agro-food products fall (Biancardi, 2003). 8.1.2 Second strategic decision: insisting upon a complex core competence system for the product (including protected designation of origin and resale in a special bottle format) as the distinguishing element for the product’s competitive positioning. The productive chain for traditional balsamic vinegar has obvious peculiarities in terms of distinctive competences disclosed. The situation refers to a stock of resources that are not easily procured externally, and difficult to replicate outside the original context (Rullani, 1994). They are mainly immaterial resources and insofar as they are formed in a non-codified context constitute “practical know-how”. The corresponding specific capacities generated enable producers to create positions of advantage and defend their product from competitive attacks. Such distinctive competences can be summarised under the term “product culture”. It refers exclusively to producers not to consumers, and comprehends a set of values that has enabled this productive tradition to take root and prosper in the territory. In particular, it deals with:

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The passion for the product – but the term devotion would be more fitting – which goes beyond its perception as a means of gainful employment. The producers of traditional balsamic vinegar are its leading devotees. The meticulous attention to quality. The obsessive respect for production and aging procedures. The pride in belonging to such a culture, which gave raise to first the Association and later the Consortium of Producers, has enabled the product to become a mutually advantageous asset.

Therefore, the choice of insisting upon a system of core competences intrinsic to the product as the cardinal element of the differentiation advantage, with the regulatory support of protected designation of origin and the exclusive bottle format, seems to be correct. Consequently, it is believed that the management of the characterising elements in terms of a value system (both immaterial and material) can represent the best means of defending the product. In fact, protected designation of origin is a necessary but not a sufficient condition for sustaining the competitive advantage of the product because it cannot stop imitations whose objective is to steal the identity of the original product, or make misleading insinuations about the company or even the geographical identity of the typical products[21]. 8.1.3 Third strategic decision: relying on promotional operations to give leverage to the aspect of “rarity” and the e´lite connotations of the product. In order to achieve a strategic fit as between resources, capacity and competitive conduct, it is necessary that distinctive competences become a competitive advantage (Grant, 1998). But this can only take place if such competences correspond to an increase in value for consumers and, subsequently, if the added value generated is correctly and fully perceived. In practice, the best possible fit must be reached between the tangible and intangible benefits sought by purchasers, on the one hand, and the product’s capacity to satisfy them, on the other. When the planned and perceived value of the product offering only exists as a potential but is not fully grasped by the consumers in all its aspects, usually communication measures are called for. Given the qualitative primacy of a product and the uniqueness of its characteristics, communication is a crucial element for underlining the positioning of the traditional balsamic vinegar. In our case, the promotion policy is highly focused both as regards the means used and the target consumers: In 1989 we were awarded the “Platinum Plate”, the USA’s most prestigious recognition for a food product. . . . We have recently reached a partnership agreement with the Duse theatre in Bologna, which enables us to present the product to various actors appearing during the theatrical season. . . . A large number of bottles are earmarked as gifts, as we believe this to be the most effective form of promotion and customer retention. . . . The product is often found on the table on the occasion of dinners and luncheons given for international political delegations. . . . Advertising is only used for particular occasions when we want to renew the bond between quality and territory. For example a special number of the Resto del Carlino, a Bologna newspaper, presented the trademarks of the Ferrari and Consortium of Producers, two of Modena’s most important products of excellence . . .

. . . We must, above all, thank some Italian and foreign journalists, who share our own enthusiasm and often write, without solicitation, about our product and help us to make it known to the public at large (Dr C. Biancardi, President of the Consortium of Producers).

The foregoing declarations dwell primarily upon three principal channels: (1) public relations and product advocacy by opinion leaders (moreover, it has to be highlighted that the product is the theme of an annual meeting held in Modena, called “Balsamica”); (2) the distribution of gifts to outstanding personalities in politics, culture, sport and the performing arts; and (3) forming partnerships with cultural events, usually within a local ambit. These initiatives have the advantage of not requiring significant financial outlays while offering greater flexibility to the Consortium of Producers in choosing its communication means and thus avoiding rigid media programming. Moreover, this operating scheme enables three additional objectives to be attained: . the reinforcement of the bond between the product and the territory; . soft communication, by disseminating favourable news on the product mainly by word of mouth; and . reinforcing the product’s aura of rarity and nobility. In this case too it is believed that an appropriate fit can be discerned as between the positioning choices taken, the characteristics of the target consumer and the communication means used. However, without prejudicing the attributes of distinctiveness at the base of the positioning choices, it would be appropriate to consider the validity of this communication policy from the standpoint of future sales expansion as hypothesised earlier. In this context it is necessary to bear in mind that there will always be a certain cultural resistance to a product’s use whenever it is “extraneous” to the culinary customs (Cardinali, 1998). And to this, we should also add the competitive pressure exercised by non-traditional balsamic vinegar, whenever the traditional product addresses consumers who do not form the core base of loyal consumers, and hence with a reduced capacity to perceive differences between the two types of product. In this framework, the communication tools must revert to their capacity to satisfy a dual set of objectives: on the one hand heightening awareness of the product, which would promote primary demand; on the other, information on the uses of the product (both as regards primary and secondary demand) aimed at multiplying the occasions for using the product as well as its range of uses. As the communication policy adopted represents a critical skill for increasing demand, it would seem that a more integrated management of the communication tool would be the key to enhancing product awareness and underlining the distinctive nature of its positioning. Nevertheless, there is the awareness that the validity of communication policy cannot escape the logic of costs/benefits. Advertising pressure, therefore, depends on two variables: the effectiveness of communication (impact, strategy function and persuasiveness) and the size of the investment earmarked for the media campaign (Pratesi and Mattia, 2002). Given that there is an evident disproportion between the industrial producers, the Consortium is faced with the need to reinterpret its

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communication policy by taking account of the limited, if not zero, pertinence of mass communication means with respect to other less expensive but more focused means such as, for example: . participation in “made in Italy” promotion events; . the sponsorship of cultural events with an international appeal; and . the production of information brochures. Furthermore, it is held that the use of greater value-added distribution channels in terms of the dissemination of the product should be boosted. Such channels refer to restaurants or direct sales from the vinegar cellar. Vinegar cellars are already visited by thousands of enthusiasts from all over the world, which bear witness to the fact that traditional balsamic vinegar is now part of the international gastronomic circuit. The attraction of potential purchasers for the actual production sites is itself a commercial opportunity as well as bringing into being an important mechanism of communication. This aspect could, therefore, benefit from a comprehensive development programme based on a synergetic interaction between local tourist boards, the vinegar cellars and tour operators. In conclusion, the concept of a form of communication that directly involves the product deserves to be mentioned for its originality (in Italy this is probably the only one such case). In one of the messages contained in its latest advertising campaign, ENEL, the Italian electricity board, and to be published in some specialized magazines (Slow Food, Italy & Italy, Ulisse, Alitalia’s on-board magazine), there is a light bulb, at the top of the image, illuminating a bottle of traditional balsamic vinegar. The pay-off, “This is more than a simple likeness”, metaphorically indicates not only a certain morphological similarity between the two objects (a light bulb can look like an upside-down bottle of traditional balsamic vinegar, and vice versa), but also an identify of fundamental values, such as the respect for and the value of traditions and Italian skills, of which ENEL is the “illuminating medium”. In this manner the product benefits from the opportunity to communicate free-of-charge, thereby overcoming the investment barrier typical of mass media and, at the same time, obtaining a reinforcement of the product through the awareness and the accreditation of the image ensured by the principle advertiser, which by having chosen to juxtapose it next to its own trademark, implicitly guarantees it. We should ask ourselves whether or not the foregoing constitutes a mechanism that could be repeated. 9. Conclusions In the last 20 years the traditional balsamic vinegar of Modena has gradually ceased to be only a locally consumed product and has become an internationally famous product. The merit for this development should be mainly attributed to the Consortium of Producers, which acquired PDO certification and contributed to the development of growth strategy that is in line with its own institutional mission of safeguarding and promoting the product. It appears that today’s strategies, with some corrective measure to optimise their effects, will remain applicable in the future. In this regard a final question still remains unanswered: can a passive marketing interpretation be pursued in the future (Lambin, 2000) as a method for managing markets. Hitherto this approach has been successful thanks to the concomitance of favourable conditions such as the size of the potential market, a certain degree of

supply scarcity and the highly distinctive nature of the product. However, it also seems to lose its force as the more immediately reachable nucleus of demand reaches saturation: purchasers with the greatest level of culinary culture. As competitive conditions change along with the purchasing behaviour of various markets, market-sensing operations become critical (Day, 1992). And this calls for an investment in resources and the acquisition of managerial skills, besides the preparation of instruments of analysis (marketing intelligence, consumer research, etc.). In this author’s opinion such an investment is a critical factor for the successful multiplication of the sources of competitive advantage and hence the ulterior strengthening of the product. The proposition is advanced that correctly positioned traditional balsamic vinegar, marketed in markets chosen for their attractiveness, can achieve all the conditions necessary for a niche business and, therefore, benefit from a monopolistic income. In operating terms it would, therefore, be necessary to: . attain the best fit between product offering and consumer needs; and . bring the marketing mix (product, brand, price, promotion, distributive channels) into line with the target market in order to maximise the effectiveness of the positioning. However, in the preceding pages mention was also briefly made of an aspect that while having little to do with the competitive strategy adopted may in future constitute the most serious threat to the existence of the traditional balsamic vinegar. This menace refers to the attacks from various parties designed to weaken the value of the product by trying to undermine the legitimacy of the collective trademark. These attempts, thanks to the defensive legal action taken by the Consortium of Producers have, so far, been ineffectual. But if they were repeated in the future and crowned with success they could lead to the disappearance of the product, by removing all possibilities of defending its distinctive prerogatives. In this manner the traditional balsamic vinegar would not be defeated in the market by product competition but cut down by regulatory provisions. The loss of the protected designation of origin would lead to the possibility that the title of “traditional” could be adopted by lower quality balsamic vinegars, produced industrially without observing the traditional productive method. Were this to take place, traditional balsamic vinegar would return to being a product limited to its immediate area of production. In consequence, consumers would be deprived of the privilege of acquiring and appreciating a product that constitutes part of Emilia’s agro-food heritage while the producers would lose a product representing a significant source of income. They would, therefore, once again return to being merely members of an association held together by the love of tradition.

Notes 1. The Emperor of Japan and the opera singer from Modena Luciano Pavarotti, to mention but two names, are habitual consumers. 2. A consortium consists in an agreement among entrepreneurs/producers to coordinate their economic activity by means of an apposite organisation designed to increase and improve production.

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3. For many years these barrels were used as dowries so that a family could demonstrate its wealth to the bridegroom’s family, as well as for handing down and spreading the balsamic vinegar tradition. 4. The registered designation of origin (RDO) is a quality certification that at present is only valid for wines. It is attributed to products made in limited areas characterised by the unique nature of the raw materials and the production method, which are such as to produce a product of superior and controlled quality that cannot be replicated outside the area of production. 5. The territorial area specified in the designation of origin, as defined by law, refers only to the province of Modena and Reggio Emilia. 6. This refers to a bacterial culture placed in the barrels to enhance the acidification process. 7. The liquid must never reach boiling point, as the sugars would turn into caramel, which would give the must an unpleasant taste. 8. The aging period ranges from a minimum of 12 years (in this case the product is called “refined”) to 25 years and more for the “extravecchio” (extra old) type. 9. Today 50-year-old, 50-litre capacity barrels, containing a uniformly aged product has a market value of about e30,000, especially in relation to the aromas and colours, not otherwise reproducible, that it endows the product. 10. In view of the fact, as mentioned before, that a 50-year-old barrel containing an aged product costs about e30,000, acquisition of an operating vinegar cellar with 1,000 barrels would cost the intending purchaser, assuming he can find someone willing to sell, about e30,000,000. 11. The panel of experts requested to evaluate the product batches are usually made up of connoisseurs and/or producers who have undergone a very severe and selective preparation before being given the status of tasters. They are obliged to conduct a minimum number of annual tasting. 12. The bottle was designed by Giugiaro Design and is sold in a secondary packaging together with an illustrated brochure that explains the peculiarity of the product and includes the recipes of an internationally famous chef for balsamic-based dishes. Formerly the product was sold in a rectangular bottle called “Pesa”, as well as in bottles with different forms that varied according to the aesthetic tastes and functional needs of the individual producers. Two sizes were prescribed: 75 ml and 250 ml, but both caused inconveniences in terms of the marketability of the product. The first was too small, leading to an excessively rapid consumption of the product, while the second had the identical volume of the industrial acetic balsamic vinegars, which led to a substantial loss of product identify. Due to this reasons, it was decided to only use a 100 ml bottle, with an immediately identifiable shape and label. 13. A niche business presupposes a reference to a highly focused consumer segment, the appeal of whose products can depend upon either a special relation between the needs of such consumers and the capacity of the company’s products to satisfy them or upon a limited degree of competitive pressure that can turn into a monopoly situation in the event that no other competitors are present. 14. The willingness of the EU to attribute PDO certification to the balsamic vinegar inaugurated such an intense conflict between the consortium of producers and the industrial vinegar producers for recognition of its trademark that the Modena press spoke about a “vinegar war”. 15. In point of fact, the advantages accruing from designation of origin in terms of increased competitiveness can sometimes be a double-edged weapon even for producers, as shown by research conducted on Parma ham (Cerretti, 1999). Many of the producers interviewed stated

16.

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18.

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that they are unable to quantify the advantages and disadvantages of the recognition, while those who recognised the advantages also pointed out the potential risks implicit in PDO. In particular, producers complained of the risk that the products in this sector become indistinguishable one from another, as consumers are led to believe, especially non-Italians, that they all have the same level of quality. The industrial producers are working to obtain the designation of origin for their product, and received a first official acceptance with the proposal for a reorganisation of the regulations as published in the Official Gazette on 26 January 1994. However, thanks to the opposition of the Consortium of Producers this never becomes an official measure. Very recently (July 2003) the court of Modena threw out the application advanced by the Consortium for the Protection of the Traditional Balsamic Vinegar of Modena to distribute the traditional balsamic vinegar with its own container, rather than with that approved by law. Grapes, crude and cooked must can be purchased from cellars with an appropriate authorisation to sell raw materials for the preparation of traditional balsamic vinegar. The producer must, in conformity to the regulations, declare their quantity, quality and origin to the Consortium of Producers. The member-Consortium of Producers relationship implies that various product-marketing choices can be taken (the collective trademark of the Consortium is managed as company trademark, with the trademark of the single producers alongside that of the Consortium). Producers who wish to avail themselves of the right to use protected designation of origin have to use Consortium trademark as well as the approved bottle. Moreover, given the need to reach a critical membership mass in order to be become a more incisive tool for the product’s diffusion, the Consortium of Producers favoured the increase in production. Today the “capsule blanca”, (white capsule bottle) of 12-year-old vinegar is sold in the vinegar cellars at a wholesale price of about e20. Again in terms of direct sales from vinegar cellar, it would be very difficult to find a retail price of less than e30. The “capsule oro” (gold capsule bottle) is sold to wholesalers at e30 while the retail price would be at least e40. In retail outlets, on the other hand, the price continually oscillates: with respect to an average price of e75 it can exceed e400. The price spread depends on the commercial policies adopted by the individual outlets. For example, up-market delicatessens whose customers are not usually very pricing sensitive often distribute the product. This means that two different sales outlets in two different cities can practice very different prices. Such major oscillations are obviously accompanied by drawbacks, especially when consumers begin to make comparisons, because it leads to believe that the price differences relate to quality differences, which reflects negatively on the Consortium of Producers trademark. At a more serious level, there is the phenomenon of agro-piracy, i.e. the counterfeiting of a food product that is conducted by exploiting the original’s reputation and fame, by imitating names, trademarks or characteristics. This phenomenon is demonstrated by the fact that numerous typical products enjoying protected designation of origin have initiated lawsuits to protect themselves from imitations. For example, Parmigiano reggiano against parmigiano USA, Parma ham registered in Canada, gorgonzola and “camobozola”.

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Biancardi, C. (2003), “Fattori di posizionamento e difesa del prezzo di vendita dei prodotti a denominazione d’origine”, Atti del Convegno Annuale “Balsamica”, Modena. Bureau, J.C., Marette, S. and Schiavina, A. (1998), “Le barriere non tariffarie e l’informazione dei consumatori sulla qualita` dei prodotti: il caso delle controversie commerciali tra l’UE e gli USA sui prodotti alimentari”, La Questione Agraria, No. 69. Carboni, R. and Quaglia, G.B. (2001), “I prodotti tipici italiani: problematiche e prospettive di un settore in crescita”, Rivista di Economia Agro-alimentare, Vol. 6. Cardinali, M.G. (1998), “Le strategie di marketing dei prodotti agro-alimentari tipici”, Trade Marketing, No. 22. Cerretti, R. (1999), “Il prosciutto di Parma: opportunita` e potenziali pericoli che i produttori attribuiscono alla DOP”, Parma Economica, Vol. 131. Coda, V. (1988), L’Orientamento Strategico dell’Impresa, UTET, Turin. Day, G.S. (1992), Strategie per i Mercati: Processi per la Creazione di Valore, Etas Libri, Rome. Giacomini, C. (1998), “La disciplina delle denominazioni tutelate: i Regolamenti CEE 2081/92 e 2082/92 come parte integrante della politica comunitaria della qualita`”, Rapporto 1997 sull Agricoltura, CNEL, Rome. Grant, R.M. (1998), Contemporary Strategy Analysis: Concepts, Techniques, Applications, Blackwell, Oxford. Lambin, J.J. (2000), Marketing Strategico e Operativo, McGraw-Hill, Milan. Mattiacci, A. (2000), Il Marketing Strategico dei Business di Nicchia, CEDAM, Padova. Peteraf, M.A. (1993), “The cornerstone of competitive advantage: a resource based view”, Strategic Management Journal, Vol. 14. Porter, M. (1991), “Towards a dynamic theory of strategy”, Strategic Management Journal, Vol. 12. Pratesi, C.A. and Mattia, G. (2002), Piano Marketing dei Nuovi Prodotti, McGraw-Hill, Milan. Rossi, A. and Rovai, M. (1999), “La valorizzazione dei prodotti tipici: un’ analisi secondo l’approccio di network”, Rivista di Economia Agraria, Vol. 54. Rullani, E. (1994), “Il valore della conoscenza”, Economia e Politica Industriale, Vol. 82. Sacchetti, M. (1991), L’Aceto Balsamico Modenese, Edagricole, Bologna.

Further reading Antonelli, G. (2000), “Volumi di offerta e marketing: il caso dei prodotti agroalimentari tipici”, Rivista di Economia Agro-alimentare, Vol. 5. Arfini, F. (1996), “Il problema della valutazione economica delle materie prime nei prodotti tipici: il caso del Parmigiano Reggiano”, Rivista di Politica Agraria, Vol. 14. Biancardi, C. (1994), “Aceto balsamico di Modena: una tradizione in pericolo”, Terra e Vita, Vol. 24. Biancardi, C. (1996), “Regolamento CE 2081, obiettivo mancato?”, Terra e Vita, Vol. 11. Camilla, V. (1993), “La strada per la tutela dell’aceto balsamico di Modena”, Il Corriere Vinicolo, Vol. 27. Cantarelli, F. (1999), “La competitivita` dei prodotti tipici nell’Europa dell’Euro”, Rivista di Economia Agro-alimentare, Vol. 4. Cantarelli, F. (2002), “Aceto balsamico, sviluppo agroalimentare e territorio”, Rivista di Economia Agro-alimentare, Vol. 7.

Capelli, F. (2001), “La protezione giuridica dei prodotti agroalimentari di qualita` e tipici in Italia e nell’Unione Europea”, Rivista di Diritto Comunitario e Degli Scambi Internazionali, Vol. 40. D’Amico, A. (2003), Le Strategie di Marketing per la Valorizzazione dei Prodotti Tipici, Giappichelli, Turin. Day, G.S. (1990), Market Driver Strategy: Processes for Creating Values, The Free Press, New York, NY. Giorgi, M.G. (2003), “Le norme dell’Unione a tutela di DOP e IGP”, Largo Consumo, Vol. 23. Grant, R.M. (1999), L’Analisi Strategica per le Decisioni Aziendali, Il Mulino, Bologna. Greci, R. (2002), “Aceto e aceto balsamico tra antichita` e medioevo”, Rivista di Economia Agro-alimentare, Vol. 7. Kotler, P. (1992), Marketing Management, Isedi, Milan. Percivale, F., Varese, E. and Peira, G. (2002), “Lo sviluppo economico e l’impatto della globalizzazione nel settore dei prodotti agroalimentari tradizionali e tipici”, De Qualitate, Vol. 2. Sicca, L. (1998), La Gestione Strategica dell’Impresa, CEDAM, Padova. Winer, R.S. (2002), Marketing Management, Apogeo, Milan.

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The effectiveness of meta-brands in the typical product industry: mozzarella cheese Enrico Bonetti Seconda Universita` di Napoli, Naples, Italy Keywords Dairy products, Italy, Small enterprises, Competitive strategy, Supply and demand Abstract The development and spread of protected denominations for typical products has been one of the most interesting phenomena recorded over the last ten years, in terms of both extent (there are more than 500 protected denominations in Europe, 20 per cent for Italian products) and the implications for the marketing of food products. The role played by these meta-brands is rather a complex one, as a number of different factors come into play, such as the commodity itself, the size and type of the company using the brand, the end consumers who actually buy the product, and so on. These assumptions are confirmed by the existence of a number of studies focusing on particular commodities and/or countries. While furnishing a few general considerations, which are common to several contexts, this work aims mainly at analysing the role of protected denominations for typical products both as marketing instruments and as a springboard for competition for small local producers. In particular, the study will concentrate on the dairy industry and “made-in-Campania” buffalo’s milk mozzarella cheese, an Italian product benefiting from the protected designation of origin (PDO) brand Mozzarella di Bufala Campana.

British Food Journal Vol. 106 No. 10/11, 2004 pp. 746-766 q Emerald Group Publishing Limited 0007-070X DOI 10.1108/00070700410561360

Introduction The development and spread of protected denominations for typical products has been one of the most interesting phenomena recorded over the last ten years, both in terms of extent (there are more than 500 protected denominations in Europe, 20 per cent of which for Italian products) and the implications for the marketing of food products. The role played by these meta-brands is rather a complex one, as a number of different factors come into play, such as the commodity itself, the size and type of the company using the brand, the end consumers who actually buy the product, and so on. These assumptions are confirmed by the existence of a number of studies focussing on particular commodities and/or countries (Gonza`lez-Dı`az et al., 2002; Antonelli and Pierleoni, 2001, Mariojous, 2000). While furnishing a few general considerations, which are common to several contexts, this work aims mainly at analysing the role of protected denominations for typical products both as marketing instruments and as a springboard for competition for small local producers. In particular, the study will concentrate on the dairy industry and “made-in-Campania” buffalo’s milk mozzarella cheese, an Italian product benefiting from the protected designation of origin (PDO) brand Mozzarella di Bufala Campana. This CASE is divided into five sections: the first is mainly an introduction; the second analyses the ongoing changes in the meta-industry of typical food products in order to identify its risks and opportunities; the third provides a qualitative-quantitative analysis of the dairy industry in Italy, the sub-industry of mozzarella cheese, and the sub-industry of buffalo’s milk mozzarella. The fourth

section compares the marketing strategies adopted by large national producers of buffalo’s milk mozzarella with those of small local producers. Lastly, in the light of the analysis, the fifth section presents some strategic, organisational and branding alternatives, highlighting local producers’ weak points and the main problems, which may be connected with community trademarks. Ongoing changes in the competitive context of the typical product industry Current trends indicate the constant growth of protected denominations for typical products, which means greater support for these brands[1] from the European Union and a more frequent use of these instruments by producers. These trends can be explained by a few significant changes, which are being recorded in the European food industry and can be grouped into three main areas: competition, demand and the supply system. As far as competition is concerned, recent years have shown an increasing competitiveness, both at the European and national (Italian) level. The European market is marked, on the one hand, by a massive amount of undifferentiated, low added-value agricultural products from Eastern Europe, the non-European Mediterranean basin and South-East Asia and, on the other hand, by an upward trend towards a greater concentration of European and North-American producers. Therefore, whereas the former (low added-value producers) can benefit from widely available low wage costs, the latter (large industrial producers) profit from economies of scale as well as of production and distribution synergies. Consequently, both can have more competitive offers (in terms of costs) than domestic and, to a greater extent, typical products. In Italy, typical products also suffer from “domestic” competition, which tends to reduce the available market slots even further. As a matter of fact, although – in absolute terms – typical products seem to be a rather small sub-industry[2], they often have to look for new outlets on foreign markets[3], as a consequence of close control over distribution channels by different categories of competitors. The most significant change in demand is consumers’ increased interest in, and preference for typical products. The analyses and studies carried out on the subject of demand evolution highlight different trends, all of which show this positive attitude towards typical products: an increased interest in trying out new products or varieties, but also in discovering (or re-discovering) local and traditional dishes; the search for healthier and safer products; a growing concern for environmental issues connected with food production methods; the demand for better guarantees and protection for consumers’ choices; the greater importance attached to the symbolic, cultural and hedonistic value of food, which is no longer considered only for its nutritional value, but acquires prominent social value (Endrighi, 1995; Boccaletti and Canali, 1998; Magni and Santuccio, 1999). In particular, the reason why consumers seem to be particularly enthusiastic about typical products is that not only is their link with the territory seen as the expression of food quality and tradition, but also guarantees the area of origin, the ingredients used, processing methods and the individual sensory features of the product (Arfini, 1999; Nomisma, 2001). In quantitative terms, this trend has translated into a 2.9 per cent growth in the demand for typical products. If we consider the data for individual product groups, we notice an impressive growth for extra virgin olive oil (þ76:3 per cent). Demand for

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wine is also increasing (þ8:7 per cent), while cheese is decreasing (20:8 per cent and 2 2.1 per cent respectively)[4,5]. As far as the third part of this analysis is concerned, it is important to point out some of the main weak points and potential risks of the supply system both in the industry of typical products as a whole and in the individual companies it includes. If we look at the structure of this industry, we see that it is mainly made up of smalland medium-sized, often family-run enterprises, often with ageing entrepreneurs. As a consequence, the successful performance of the chain as a whole is increasingly determined by the joint efforts of the different companies involved. However, this positive trend is thwarted by the difficulty encountered in defining efficient organisational models which can be applied to the whole chain and by the weak efforts at integration and co-operation by some of the companies involved in the production of typical products. This situation often leads to competition between companies belonging to the same Consortium and may also impact the overall quality of the product reaching the end consumer if the companies along the chain do not all use the same quality standards. As far as management is concerned, most companies have proven not to be able to meet consumers’ unexpressed needs, that is, innovating products while maintaining their original configuration and “typical” characteristics[6]. Actually, many companies use the “typical” nature of their products as an excuse to maintain the company management unchanged. They do not introduce new technologies compatible with typicality or adopt quality systems, and thus perpetuate the company’s know-how that has been passed on by word of mouth from generation to generation. By adopting such an inappropriate approach to the market, though, companies reduce their competition and growth potential remarkably. Among the reasons that help explain the weak competitiveness of these businesses are the high production costs due to the need for specialised labour, the localisation in limited geographical areas and the average size of the companies themselves – all conditions which prevent these companies from accessing larger-scale markets. Finally, as far as products are concerned, one of the main critical points is represented by the discontinuous quality of typical products both within the same company and between different companies. This problem stems from the difficult process of quality standardisation for farm products (both vegetables and meat), which is also affected by hardly controllable climatic factors. Because of such instability in “objective quality” (Crosby, 1979), consumers feel disoriented and may consider the quality guarantee given by the companies or the collective trade mark no longer sufficient, and thus end up deciding not to buy a particular product anymore. The analysis of the context presented above and summarised in Table I, allows us to identify the main needs typical products must meet in order to protect themselves from the existing threats and to exploit the opportunities available to them. An industry overview The analysis presented here starts from the dairy macro-industry, then it focuses on mozzarella cheese and, finally, on Mozzarella di Bufala Campana (buffalo’s milk cheese from the Campania region), trying to highlight the opportunities and critical points of this product in order to find out if – and to what extent – meta-brands can contribute to support it.

Threats/weak points Competition

New competitors entering the international scene Increased domestic competition

Demand

Unbalanced information

Supply system Small enterprises Lack of chain organisational models Little willingness to co-operation Poor innovation of products and processes High costs Lack of economies of scale Changing product quality

Opportunities

Needs Competitiveness recovery in the cost/revenue ratio

Customers’ availability to experiment Consumers’ positive attitude towards typical products

Improved access to the market and better relationship with customers

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Systematisation of the network of producers

Table I.

The dairy industry The dairy industry, with an overall turnover of e13 billion in 2002, constitutes the largest share of the Italian food industry. Over the last few years, despite suffering on account of the gradual economic integration of the EU more than other farming industries, the dairy industry’s production value growth rates have always been positive (see Figure 1). Although not extremely high, they have always been higher than the average for the food industry in general (between 1996 and 1997, the value of production of the dairy industry increased by 1.8 per cent as compared to 0.1 per cent recorded in the food industry as a whole).

Figure 1. Value of production in the dairy industry (million euros)

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The export rate has risen constantly over the years, showing a growing competitiveness of national products abroad and a good competence of Italian operators acting on foreign markets. A closer look at the butter and cheese industry highlights that the value of exports increased by 3 per cent between 1996 and 1997 as compared to a 1.6 per cent overall average in the food industry. Furthermore, if we compare these figures with those of imports (214:8 per cent for butter and cheese, þ8:4 per cent for the overall food industry) we can have yet another proof of the greater competitiveness Italian dairy products are attaining on the international markets. When we move on to the analysis of the cheese industry, it is interesting to remark that cheeses are quite abundant on the Italian market; in particular, 93 per cent of the Italian population eat cheese at least once a year. Out of these, 33 per cent is represented by frequent consumers, who account for 60 per cent of the value of overall purchases. As these figures show, Italians are among the world’s greatest consumers of cheese (second only to the French in fact), with an average per capita consumption of about 17 kg/year. As far as the demand for cheese is concerned, consumers can be divided into five macro-segments, defined on the basis of a combination of variables: . consumption frequency; . willingness to use different products and brands; and . attitude towards cheese (taste vs lightness). The segments that have been identified are: . advanced (21 per cent): they tend to buy mostly light cheeses and are particularly keen on low-fat content; . cheese-eaters (25 per cent): heavy cheese consumers, they are not willing to drop taste and tradition in favour of lightness; they buy many different cheeses and are always very concerned about taste; . traditional (18 per cent): methodical consumers, they tend to buy always the same cheeses, and are particularly keen on ripe/traditional cheeses because they view cheese in general as a non-light food anyway; . the “little but fresh” consumers (24 per cent): they consider cheese as a heavy, hard to digest food, which cannot be eaten every day; therefore, they prefer fresh, light cheeses to eat only from time to time; and . anti-cheese (12 per cent): they have a negative attitude towards a food they basically do not enjoy. In Italy, cheeses are traditionally divided into five commodity categories, defined on the basis of the product’s organoleptic characteristics and appearance. Figure 2 shows the distribution of consumption among these categories, and highlights the major role played by fresh cheeses and – among these – mozzarella cheeses, which reach an average per-capita consumption of 3 kg per year. If we consider domestic cheese consumption alone, Figure 3 shows the role played by mozzarella, which, in terms of both quantity and value, is confirmed as one of the two leading cheeses in Italy. Indeed, with a production of over 161,000 tons worth over 2,000 billion lire (about e1 billion), mozzarella is second only to Grana cheese,

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Figure 2. Consumption per production category

leaving other fresh cheeses far behind and standing out as a major market in the food industry. These figures take on an even more important role within the section of fresh cheeses, where the market share of mozzarella is 58.6 per cent, almost four times the share of the first competitor (ricotta cheese with 15.5 per cent) (see Table II and Figure 4).

Figure 3. Cheese consumption in Italy (1996)

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The sub-industry of mozzarella cheese The mozzarella sub-industry can be further divided according to different criteria, all of which can, however, be ascribed to consumers’ tastes, regulating choice, purchase and consumption. One criterion divides the industry into two parts: (1) Fixed weight, including those products, which are sold in compliance with pre-determined, weights standards and whose main characteristic is their use as an ingredient. These products may have a shelf life of up to ten days, and are retailed in plastic containers that allow also for higher-level service; they are distributed mainly in northern Italy. (2) Varying weight, including those products, which are sold by weight and are generally creamier with a more intense flavour. These products have a very short shelf life and are generally displayed soaked in a liquid, which preserves its original appearance and characteristics. They are distributed mainly in the southern regions of Italy. The supply systems in the two groups are quite different; the first sector, which accounts for 60 per cent of the market, is characterised by a high degree of concentration, since only three brands hold 70 per cent of the market. On the other hand, the second sector, which accounts for the remaining 40 per cent, shows a very fragmented supply, in which small dairies control 80 per cent of the market. Although

Total market (tonnes) Mozzarella (%) Crescenza cheese (%) Fresh moderna (%) Other (%) Table II.

Figure 4. Market share

1998

1999

2000

270,800 58.2 13.0 7.1 21.7

272,400 57.9 13.0 7.8 21.3

286,600 58.6 12.5 8.2 20.7

Note: a Cream cheese and cottage cheese Source: Kraft Foods

they can offer better products in terms of organoleptic characteristics and taste, these dairies lack the ability to develop marketing strategies, which could give a boost to sales (see Figure 5). A second criterion for sub-dividing this industry is based on organoleptic characteristics and identifies four sections: (1) buffalo’s-milk mozzarella (25 per cent); (2) cow’s-milk mozzarella – fiordilatte (25 per cent); (3) common mozzarella (35 per cent)[7]; and (4) vacuum packed mozzarella pieces (15 per cent).

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The first two types of product show a greater characterisation in taste. They are fresh and have no preservatives, while the second two offers a higher service content, since they are sold pre-packed on the fresh foods counter or for self-service (see Figure 6). As far as the demand for mozzarella cheese is concerned, it is interesting to note that consumption rate is particularly abundant on the Italian market (88.6 per cent) and this percentage increases further if looking at central and southern Italy (93 per cent), towns with a population of over 100,000 and to consumers with more “innovative” eating habits (99 per cent).

Figure 5. Market share for fixed weight and varying weight mozzarella

Figure 6. Service level/taste and freshness

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If we also look at the frequency of mozzarella consumption, it can quickly be deduced that this product is strongly entrenched in the eating habits of Italians, and is bound to increase particularly among the younger generation (see Figure 7). If we create a profile for a typical mozzarella consumer, he or she lives predominantly in central or southern Italy, with a concentration between small communities (up to 10,000 inhabitants) and larger cities (over 500,000 inhabitants). He is aged between 25 and 34, with middle/upper-middle class social status, has practical, modern eating habits and, above all, limited time for preparing food. As regards buying habits and the criteria adopted in making choices, Table III shows the results of market research study on the association between the main factors affecting consumer choices and the typical characteristics the consumer is looking for. From the point of view of marketing levers, it is obvious that familiarity with a brand is a decisive factor in choice, and all the other relevant attributes of the product are associated with this; secondary to this factor, packaging takes on an important role for those who are looking for authenticity and those who give importance to nutritional features; thirdly, the geographical origin of the product is significant for consumers who look for flavour and consistency. Obviously these results do not imply that the other marketing levers – distribution, price and communication – are not relevant, but rather that they are simply not considered factors that allow discrimination of the relevant attributes of the product. In practical terms, this simply means that consumers do not associate a specific attribute to a particular channel or to any given price level. Additionally, it should be stressed that it is the changing buying habits of consumers themselves, and in particular the kind of retail outlet used, that are causing considerable shifts in marketing logic and in the competitive structure of the industry; indeed, the retail distribution system of food products is rapidly changing, even for fresh products, with a shift away from smaller retail outlets in favour of supermarkets and hypermarkets (see Figure 8).

Figure 7. Mozzarella consumption (frequency)

Well-known brand Pre-packed product Has an information label Sold at supermarkets Sold in shops Sold loose Geographic origin High price Advertising/special offers Table III.

Source: Eurisko

Authenticity

Flavour/taste

Nutritional features

Consistency

47 40 27 12 7 12 11 11 3

49 11 12 8 7 20 39 7 3

22 8 67 6 6 8 13 6 4

36 17 8 8 6 19 27 6 2

This transformation heightens the critical situation of small, local producers, due to their lack of bargaining power compared with large-scale retail trade, and creates the need for a review of distribution policies in order to counter the large dairy producers. This review needs, in particular, to involve greater coverage of large-scale retail trade, (apart from traditional retail, which provides widespread coverage of the local market) and a change in storage and logistic processes. Furthermore, as far as the purchasing process is concerned, it is worth noting that the purchaser is mainly female (88 per cent). Lastly, as regards occasions and consumption habits, almost 45 per cent is eaten at the evening meal, as a main course. This indicates the important role of indirect competition, in which mozzarella is not simply an alternative to other cheeses, but more importantly, to other foods that perform the same function, either on their own or with a side dish (see Figure 9).

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Buffalo’s-milk mozzarella Mozzarella di Bufala plays a significant role in the more general mozzarella cheese industry, both in terms of reputation and image. This product is obtained by using solely full fat buffalo’s milk, from local purebred Mediterranean buffaloes, reared in specific areas of production. Mozzarella di Bufala Campana, which represents approximately 12 per cent of overall mozzarella production, is today one of more than 30 Italian dairy products that have the typical product brand, and of these it is the one that has enjoyed the fastest growth rate in volumes of sales, even though in absolute terms it is in fifth place (see Figure 10). At the chain level (Flora, 2002), the most significant aspect for the production of protected denomination brand (DPO) mozzarella is the breeding of the buffaloes, which

Figure 8. Where mozzarella is purchased

Figure 9. Mozzarella consumption (usage)

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Figure 10. Average rainfall variation rate (1991-1999)

provide the main raw material. The breeding area is concentrated in two adjoining regions: Campania and Lazier, although in recent years new farms have sprung up both in northern Italy and abroad, in countries such as Great Britain, Holland, Spain and the USA (see Table IV). Buffalo’s milk production and the number of breeding farms have increased considerably over the last decade, at a rate of 3 per cent per year, in line with the positive trend in mozzarella consumption. As regards the transformation process, there are about 400 cheese factories dedicated to mozzarella production, of which a quarter produce DPO “made-in-Campania” buffalo’s-milk mozzarella, which means they have authorisation to use its logo and denomination. Production of DPO mozzarella is concentrated mainly in the province of Caserta (70 per cent) and the remaining share between the province of Salerno (24 per cent) and the Lazio region (6 per cent). As far as geographical market are concerned, however, the context is quite mixed; roughly a third of produce is sold within the province of production, 15 per cent reaches a regional market, 47 per cent a national market, while only 5 per cent is exported. As previously mentioned, the province of Caserta in particular carries the greatest weight in absolute terms, and has the highest percentage of sales of its produce at national and

Table IV.

Region

Province

Campania Campania Campania Campania Total Campania Lazio Lazio Lazio Total Lazio Overall total

Caserta Salerno Naples Benevento Latina Frosinone Rome

Businesses (n)

Businesses (%)

1,002 325 28 3 1,358 350 456 3 809 2,167

46.2 15.0 1.3 0.2 62.7 16.1 21.0 0.2 37.3 100

Source: Consorzio di Tutela della Mozzarella di Bufala Campana, 2001

international level (66.5 per cent) compared with the other two provinces whose market outlets are mainly local (Salerno) or equally distributed between local and national/international markets (Latina) (see Table V). The USA are the main destination of exports (25 per cent), followed by Germany (19 per cent), France (18 per cent) and the UK (13 per cent); the European Union absorbs over 70 per cent of total exports. Moving on to an analysis of demand, the most significant phenomenon is the seasonal nature of consumption, which is mainly concentrated in the summer months, thus generating problems for the producers in procuring raw materials and managing production and distribution. Despite its seasonal nature, there has been a notable increase in consumption in recent years, due to both an increase in the average amount purchased (which has risen from 250 to 300 grams) and to an increase in the average rate of purchase. Traditional sales channels (farm outlets, retail outlets, wholesalers) still carry considerable weight, although the share held by modern sales outlets is growing (see Table VI). Furthermore, despite accounting for 68.4 per cent, sales on the delicatessen counter dropped by 4.3 per cent from 1999 to 2000, while sales on the self-service counters are increasing. This tendency also seems likely to rise over the next few years as the producers break down the barriers to the use of these channels; indeed, on the one hand, improvement of transport and communication systems has made it possible for medium-large cheese factories to develop direct contact with the major dairy distribution companies and with the large distribution chains. On the other hand, the introduction of new technology in the production cycle has lengthened the product’s shelf life to up to 20 days.

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Marketing strategies The analysis of the dairy industry, and in particular the mozzarella industry, can be summarised in such a way as to show the most significant tendencies regarding

Province of producer Salerno Caserta Latina Total

Province of producer Salerno Caserta Latina Total

Provincial 69.8 19.9 20.0 32.0

Reference market (%) Regional National International 14.5 14.6 30.0 15.5

Factory outlets

Traditional retailers

51.1 16.5 18.7 24.9

21.8 15.4 0.0 16.0

14.6 59.0 40.0 47.2

Sales channel (%) Large scale Wholesalers retail trade 21.9 48.5 50.8 42.2

0.0 13.8 30.5 11.4

1.0 6.5 10.0 5.4

Total 100.0 100.0 100.0 100.0

Restaurants

Total

5.2 5.9 0.0 5.4

100 100 100 100

Table V.

Table VI.

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challenges and threats. In particular, indications of the emergence of business opportunities for local mozzarella producers can be attributed to: . an increase in dairy production; . an increase in exports of cheeses (and in particular of DPO cheeses); . an increase in the production of made-in-Campania buffalo’s-milk mozzarella; . the establishment of mozzarella in modern eating habits; and . the power to cover local traditional retail trade. In contrast, threats can be linked to: . the saturation of large-scale retail trade; . the emergence of mozzarella production in other countries; . the high cost of logistic development; and . barriers to communications access. As far as competitiveness is concerned, a reduction in the number of barriers to local producers in both financial and technological terms has encouraged the emergence of numerous traditional production units. However, it has also lowered the level of professionalism and led too much smaller sized buffalo’s-milk mozzarella producers compared with cow’s- milk mozzarella ones. This situation has had a number of negative consequences in terms of the competitiveness of individual companies and of the product in general. Strategically speaking, these consequences can be attributed to: . A limited tendency towards concentration, which is symptomatic of a lack of horizontal collaboration; in this way, there is an absence of shared strategies and support services liked to the development of local production. . A reduced level of technological innovation, which places many companies in the category of traditional production as opposed to industrial, with obvious effects in terms of absence of economies of scale and lower levels of productive efficiency. . The absence of resources and skills to dedicate to logistic problems, which increases the difficulty in widening its target market beyond regional boundaries. From a marketing point of view, the following points can also be noted: . Extremely limited distribution, which frequently consists merely of sale through an outlet within the factory itself. . A high level of competition between businesses on the local market, which often shows through in price wars. Prices therefore fluctuate considerably, and in this way the consumer becomes confused and loses faith. . Inadequate investment in marketing, which prevents the adoption of strong branding policies and effective communication strategies. This means that there is no basis for publicising individual producers or building solid customer loyalty. . The quality of the product is often variable, even though it is almost always sold by variable weight, and consequently the level of service provided is lower, and practically no changes are made to packaging or formats, which are, however, the major areas of innovation in the European dairy industry.

Table VII compares the different uses of levers in the marketing mix made by the major national producers and local companies, highlighting some of the main weaknesses of the latter. Branding strategies In such a context it is important to evaluate whether and to what extent the community “typical product” brands can be really effective tools of competition and marketing. In order to establish this, our starting point has to be the consumer. Recent surveys (Nomisma, 2001) show that even amongst those who purchase DPO and PGI. products, there is insufficient information made available on these brands; as many as 80 per cent of Italians do not know what these brands mean, and only 35 per cent of them understand the “typical” concept as referring to its geographical origin. A mass-produced product, which has been launched with a message conveying the idea of “typical ness”, can therefore easily confuse the consumer using an effective marketing strategy. There are a number of reasons behind the consumer’s limited awareness. Firstly, a lack of adequate information from producers (or protection Consortium) as regards the intrinsic and symbolic qualities of the product, which distinguish a specific product from one that is similar. Another aspect, which could be a significant obstacle to the development of customer awareness, is the geographical distribution of consumption. A substantial part of the consumption of typical production is concentrated in the areas surrounding that where production takes place. The further one moves away from this area, the less the customer is informed on or accustomed to the product (for cultural and historical reasons and also due to local variations in eating habits), and for this reason the level of appreciation of its intrinsic value tends to lead to a cultural gap between origin and end outlet (Gandolfi, 1992)[8]. This phenomenon is particularly evident in countries whose legislation creates conditions that favour consumer confusion – their objective being to favour local companies; let us take Australia, for example, where an olive oil is produced and sold Product Distribution Variable Fixed weight weight Traditional Modern

Price

Communication Very high

Galbani

Yes

Yes

Very widespread and at national level

Widespread and at national level

Medium

Locatelli

No

Yes

Widespread and at national level

Very widespread and at national level

Medium-high High

Invernizzi No

Yes

Widespread and at national level

Very widespread and at national level

Medium-high High

Local firms

No

Widespread and at local level

Scarce and at local level

From low to high

Yes

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None Table VII.

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under an “extra-virgin olive oil of Tuscany” label, and one can find “Parma ham” in Canada, produced by a North-American company. Moreover, particularly in the case of made-in-Campania buffalo-milk mozzarella, companies that produce using the DPO meta-brand often also produce mozzarella made from combined cow’s milk and buffalo’s milk, thus associating the company brand not only with products given the protected denomination, but also with those not in possession of the necessary requirements. In addition, despite numerous controls, there are still many dairies that use the DPO meta-brand illegally, and in this way products that do not reach the required standard of quality are able to reach the market. It is also important not to forget that from a management viewpoint, respecting the constraints imposed on production also means higher production costs, due to both supply of raw materials (which must reach certain quality standards and come from specific geographical sources), and also to the processing/manufacturing process and to administration and inspection costs, which are often very high. A producer’s decision to apply for a protected denomination can therefore be risky, not only in terms of not increasing sales, but also of backfiring on the company itself by placing a heavier burden on its cost structure. However, it seems clear that we should not simply stop at a simple evaluation of alternative branding strategies. Such an evaluation needs to be combined with an analysis of organisational alternatives that could be adopted in order to implement and manage these strategies. These alternatives are essentially concerned with a redistribution of roles between individual local producers and the associations of producers, notably the Consorzi di Volontari Tutela[9]. The main organisational and branding strategies adopted for typical Italian production are considered as follows[10]: . Emphasis on the community meta-brand (DPO or other similar): this strategy puts the community meta-brand in the limelight, leaving a marginal role, if any, to the company’s own brands (e.g. Parma ham); the Consorzio di Tutela takes care of all marketing activities, and for this reason it has to be considered as representative of the individual companies, and must have adequate managerial and commercial skills. From the producer’s viewpoint, such a strategy helps develop synergy in production and creates an admission barrier; on the other hand, it generates inflexibility in the production system and consequently slows down the natural evolution that less consolidated production with wide growth margins is prone to. For this reason, this strategy seems more suited to production that has already reached commercial maturity and is interested in maintaining its market position. . Creation of secondary consortia: this is an organisation variation on the previous strategy in which, through inter-company agreements between companies associated to the consortium, a further body is created in addition to the consortium (so-called secondary consortium). This consortium is given the task of sales and marketing administration. In this way, the structure assigned to promoting the value of the common brand is ensured a greater degree of flexibility and operational independence. Consortia comprising a particularly large number of small enterprises, which are, however, united in their aim to create a group identity, adopt such a solution.

.

.

Development of a collective brand: this solution is similar to the first, in that the Consortium has a central role in the administration of marketing and alliances between the various components, but without all the formal and economic constraints and costs associated with the adoption of a community meta-brand, such as DPO (e.g. Melinda apples). This sort of solution is used by consortia with a limited number of small enterprises that are similar from a cultural, economic and technological point of view, and in terms of product-type. In practical terms, contexts with a minimal risk of opportunist behaviour by individual enterprises. Company brand and community meta-brand combination: in this case the community meta-brand has the function of strengthening the companies own brand name, which takes on a primary role as far as the consumer is concerned. Such a solution involves a separation of the marketing activities that the consortium performs and those carried out by the individual companies. The former monitors the product and manages all communication relating to the collective brand; the latter manages the packaging, distribution, pricing, and obviously endeavours to promote its own brand name. This strategy is naturally employed by large-scale enterprises, which have the resources and skills necessary to allow them to do without the “strength” of the protected denomination.

As regards marketing, there has been a separation in the administration of the marketing mix levers as far as the Consorzio di Tutela of Mozzarella di Bufala Campana is concerned. On the one hand there is the actual Consortium, which deals with the product (definition of characteristics of quality) and communication (essentially through its participation in trade fairs and advertising campaigns); on the other, there are the individual companies who make decisions regarding price and distribution. This separation of the administration of the marketing mix leads to a lack of coordination in the product’s commercial management, with the consequent risks of competition between associate companies, price wars and deterioration of product quality, which can ultimately reflect negatively on the production of the consortium as a whole. The reasons behind the commercial and marketing weakness of the Mozzarella di Bufala Campana meta-brand can therefore be attributed to individual producers and the Consorzio di Tutela alike. As far as the companies are concerned, much has already been said about their weak points, mainly represented by a strategic and commercial focus that is extremely localised, and by short-sightedness in their marketing strategy that causes them to look upon other producers of Mozzarella di Bufala Campana – and in particular those closest to them geographically – as competitors, rather than as partners in the development of joint initiatives. The consortium is certainly affected by its limited managerial autonomy on the one hand; on the other, however, it pays the price for its shortcomings in skills that are crucial nowadays to allow it to compete in this business, and to exploit financial incentives offered to the area[11]. These skills range from the management of complex systems to the administration of the potential offered by e-commerce, to relationship marketing and integrated logistics. Weaknesses such as these can be seen in the impromptu and inconsistent nature of activities aiming to promote the product’s worth, as well as in possible contradictions

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Figure 11. Objective quality/subjective quality

between marketing activities carried out by the consortium and the actual behaviour of individual companies. In prospective terms, and more specifically as far as branding is concerned, the strategies of companies holding a DPO, are obviously different depending on whether they are large-scale producers or local ones. This is due to the fact that these two categories of producers have different aims behind their branding policies. It has indeed been noted (Gonza`lez-Dı`az et al., 2002) that, as regards problems associated with product quality, governance mechanisms adopted vary according to whether emphasis is placed on the product’s homogeneity (objective quality) or on its superior organoleptic quality (subjective quality) (Edwards, 1968). The first case occurs when consumers try to minimise variation in a given product’s characteristics and are willing to pay a “homogeneity premium” in order to achieve this. In such a hypothesis, the main objective is therefore the coordination of activities. According to the transaction costs theory, it is more costly to carry out such coordination using market mechanisms than through hierarchy, since in this case, the information needed to allow coordination is available to those who have a central position in relation to the agents and producers (e.g. the consortium). The second case occurs when consumers attach greater importance to the presence of specific features in the product, and are willing to pay a “quality premium” for these. In this scenario, the aim is to motivate producers to provide their products with these qualities and to avoid opportunistic behaviour; in such cases the necessary information (as regards how to obtain these characteristics) is distributed amongst the various agents and it therefore seems less costly to use market transactions for leverage to stimulate producers to maintain a certain kind of behaviour, rather than resorting to control and hierarchy (see Figure 11). With regards to large-scale producers’ future strategies, they envisage that the market will reward a high degree of objective quality, reinforced by the company’s brand and a discreet subjective quality, provided by the community meta-brand, but which is partly “diluted” by the product’s mass-produced image. As a consequence, on

the one hand it is presumed that they will continue to adopt strategies whereby their own brands are presented side-by-side with community meta-brands (obviously promoting the former); on the other, that the marketing efforts made will have a positive effect on the common brand, in terms of reputation and perceived value, even if this is minimal[12]. Conversely, small local producers of DPO Mozzarella di Bufala Campana suffer a low degree of homogeneity, but receive a quality premium for the organoleptic superiority of the product. As we have seen, however, consumers attribute this superiority to the fact that the product originates from a specific geographical area, rather than to it having a particular brand name, with the consequence that DPO mozzarella producers share the quality premium with all the other producers in the same area, regardless of whether they have the community meta-brand or not. For this type of company, it therefore seems necessary to take a double-sided approach. On the one hand, to fill the existing homogeneity gap (working on the raw materials and manufacturing process); on the other, to stand out from local producers who do not have the DPO (working on marketing levers) (see Figure 12). In order to make this possible, it seems that producers need to improve their professionalism, which would allow them to understand the real potential of a common brand that is properly managed and which induces them to adopt strategies based on the development of cooperation with other companies (Marchini, 1998). This can be achieved by investing in the consortium and providing it with the resources and skills needed to enhance the value of the brand itself, through proper communications management, the acquisition of bargaining power regarding the distribution channels (and in particular the large scale retail trade) and the guarantee of stable pricing policies. To carry out this transformation, the existence of a DPO meta-brand is certainly not enough (as its limited results over its ten-year existence have proven). Other types of deeper, more direct action are needed to accomplish a transformation that is first and foremost cultural (Antonelli and Pierleoni, 2001). The existence of a common brand

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Figure 12. Objective quality/subjective quality

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should therefore be the destination point on the path of business expansion for the grouping and coordination of the producers in a given territory, rather than the starting point on which to build such a partnership. Notes 1. At the community level, three different categories of typical products have been defined. First, PDO products (protected designation of origin). For these products, all the production-phases are carried out in one particular geographical area. The relationship between the very existence of the product and the place of origin is therefore fundamental, because the “typical” characteristics (of both the product and the raw materials from which it is made) derive directly from the geographical area involved. Such a close relationship between the PDO product and its place of origin creates a sort of monopoly for the companies located in the area of origin having all the production stages in the same area. Second, PGI products (protected geographical indication). In order to obtain this category, at least one production and processing stage take place in the geographic area of origin of the involved product, whereas the other stages can be carried out in other places or even countries. Third, TSG products (traditional speciality guaranteed). This denomination protects those products, which are different from others of the same kind in that they are produced using special techniques; in this case, therefore, protection does not apply to the connection with the area of origin, but rather to the procedure used to make the products. Unlike PDO and PGI products, here there is no exclusive right to use the product’s name, which means that any producer in any country of the European Union has the right to use the name and the TSG name and logo, provided that the specific production techniques are followed. National legislation – which exists alongside community legislation – provides for other, different forms of protection and trademarks for typical products. Italy, in particular, has introduced the “traditional product” denomination, protecting the commodities which are produced using long-established techniques and are characterised by a close connection with a particular area but do not meet all the requirements needed to obtain community brands. A product that has been given the “traditional product” label can benefit from some dispensations from the application of legislation on risk and critical point control (HACCP – hazard analysis critical control point). 2. Consumption is estimated to be worth around e7 million (Nomisma, 2001). 3. Among typical products, “typical” ham and cold meats account for 77 per cent of total ham and cold meat exports and “typical” cheeses for 76 per cent of total cheeses exports. 4. ISMEA – AC Nielsen. 5. Among cheeses, however, Mozzarella di Bufala Campana consumption has recorded a 5.8 per cent increase. 6. A good example showing how much consumers appreciate the ability to innovate typical products is represented by Gorgonzola cheese. Since the end of World War II, the production of Gorgonzola has undergone an important diversification, which has led to two different products: sweet Gorgonzola (the innovation) and sharp Gorgonzola (the tradition). The former, creamier, fresh and delicate, was derived from the latter, so as to meet the changing tastes of consumers. Today sweet Gorgonzola represents about 90 per cent of overall production. 7. Fiordilatte is distinguished from common mozzarella cheese by the addition to the latter of citric acid, which gives it a longer shelf life. 8. This aspect is closely linked to that of information asymmetries (Williamson, 1985), or rather to the often-incomplete awareness that consumers have of the qualities of goods they intend to purchase. This is even truer for food processing, in that consumers are unable to judge the

9.

10. 11.

12.

intensity or truthfulness of certain intrinsic or assigned parameters (such as geographical origin, for example), even by observing or experimenting. If we then add the fact that the distance (physical and cultural) between producer and client tends to increase this information asymmetry, thereby breaking down traditional points of reference, it is easy to see how the consumer is heavily influenced by a product’s exterior and aesthetic features, such as brand, packaging, image and price (Akerlof, 1970). Information asymmetry has negative effects on the producer too: companies offering goods of superior quality are penalised in favour of those producing lower quality produce. There can also be problems of unfair competition or dishonest behaviour (moral hazard) in cases where low quality raw materials are used in the preparation of produce sold at high prices. The Consorzi di Tutela are consortia of producers that are usually established with the aim of guaranteeing the quality of their products and (if necessary) making them more identifiable by the customer, by using collective private brand names. In Italy these consortia can also perform a monitoring role on DPO and PGI products, an administrative role regarding production, ensuring correct use of the meta-brand, and also promoting the meta-brand and providing the customer with information. See also Giacomini (1998) on the role of Consorzi di Tutela. On this subject, see also Cardinali (1997). The area of production of Mozzarella di Bufala Campana is considered to be “objective 1” by the European Union and as such can qualify for various types of public funding and contributions. On the relationships between private brands and geographical indication meta-brands see the application to branding policies in Fama and Jensen’s (1983) model carried out by Gonza`lez-Dı`az et al. (2002)

References Akerlof, G. (1970), “The market for lemons: qualitative uncertainty and the market mechanism”, Quarterly Journal of Economics, Vol. 84. Antonelli, G. and Pierleoni, S. (2001), “Le produzioni agro-alimentari tipiche delle marche, l’organizzazione delle imprese e il comportamento del consumatore”, in Antonelli, G. (Ed.), Unione Europea, Qualita` Agro-alimentare e Commercio Mondiale: Opportunita` e Minacce per i Prodotti Tipici delle Marche, QuattroVenti, Urbino. Arfini, F. (1999), “The value of typical products: the case of ‘Prosciutto di Parma’ and ‘Parmigiano Reggiano Cheese’”, Atti del 67mo Seminario EAAE: The Socio-Economics of Origin Labelled Products in Agro-Food Supply Chains: Spatial, Institutional and Co-ordination Aspect, Le Mans. Boccaletti, S. and Canali, G. (1998), “The antitrust policy in Italy: learning from some food cases”, 6th Joint Conference on Food Agriculture and the Environment, Minneapolis, MN. Cardinali, M.G. (1997), “Le strategie di marketing dei prodotti agroalimentari tipici”, Trade Marketing, No. 22. Crosby, P.B. (1979), Quality Is Free, New American Library, New York, NY. Edwards, C.D. (1968), “The meaning of qualita`”, Qualita` Progress, October. Endrighi, E. (1995), “Produzioni agro-alimentari tipiche e sistemi qualita`”, Rivista di Politica Agraria. Fama, E.F. and Jensen, M.C. (1983), “Separation of ownership and control”, Journal of Law & Economics, Vol. 26. Flora, A. (2002), “La filiera della mozzarella di bufala: un laboratorio dello sviluppo locale”, La Questione Agraria, No. 1.

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Giacomini, C. (1998), “La disciplina delle denominazioni tutelate: i regolamenti (CEE) 2081/92 e 2082/92 come parte integrante della politica comunitaria della qualita`”, Trade Marketing, No. 22. Gonza`lez-Dı`az, M., Ferna`ndez Barcala, M. and Arrun˜ada, B. (2002), “Performance, efficiency and the logic of multi-branding: the case of fresh beef”, International Society for New Institutional Economics – 6th Annual Meeting – Institutions and Economic Performance, Cambridge, MA. Magni, C. and Santuccio, F. (1999), “La competitivita` dei prodotti agro-alimentari tipici Italiani”, Rivista di Economia Agraria, No. 2. Marchini, I. (1998), Il Governo della Piccola Impresa – La Gestione Strategica, ASPI, Genova. Mariojous, C. (2000), “Introduction to quality: quality concepts; quality perception by producers, clients and consumers; quality signs (geographic origin, eco-labelling, etc.); translation of quality concepts into products, procedures and services”, Global Quality Assessment in Mediterranean Aquaculture Zaragoza, Workshop of the CIHEAM Networks on Technology of Aquaculture in the Mediterranean (TECAM) and Socio-Economic and Legal Aspects of Aquaculture in the Mediterranean, CIHEAM-IAMZ. Nomisma (2001), Prodotti Tipici e Sviluppo Locale: Il Ruolo delle Produzioni di Qualita` nel Futuro dell’Agricoltura Italiana, VIII rapporto Nomisma, Il Sole 24 Ore, Milan. Williamson, O.E. (1985), The Economic Institutions of Capitalism, Macmillan, London.

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Brunello di Montalcino: how a typical wine could revive a poor country-village Alberto Mattiacci

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University of Siena, Siena, Italy, and

Vincenzo Zampi University of Florence, Florence, Italy Keywords Wines, Winemaking, Italy, Regional marketing, International marketing Abstract None of the numerous food products that comprise the Italian food tradition can boast of business revitalisation as much as that which involved the wine industry in Italy and in the rest of the world in the last decade. This is not the appropriate moment to consider the reasons for this change, nor is it the right place to compare the industrial situations of that time with those present today. Rapidly covering the field of the extensive history of the wine business, it is sufficient to cite certain simplified facts in order to show how the end user of the product – the consumer – has dramatically changed his consumption history, which initiated the process of regeneration of the business, a process never before seen, in the world of agricultural industries. The companies in the vine-growing and wine-making business have been both the driving force and the beneficiaries of this state of affairs. Indeed, to have a clearer picture, a hypothetical external person, observing the wine business panorama today, would notice clear features and company models, that are unrelated to the historical past of the industry.

Introduction None of the numerous food products that comprise the Italian food tradition can boast of business revitalisation, as much as that which involved the wine industry in Italy and in the rest of the world in the last decade. This is not the appropriate moment to consider the reasons for this change, nor is it the right place to compare the industrial situations of that moment, to those present today. To rapidly clear the field of so much history of the wine business, it is sufficient to cite certain simplified facts, in order to show how the end user of the product – the consumer – has dramatically changed his consumption history, which initiated the process of regeneration of the business, a process never before seen, in the world of agricultural industries: (1) In ancient times, wine used to be: . a distinctive feature, typical of the richest people and/or the most advanced societies; . a “holy nectar” and a divinatory device within religious rituals, such as celebrations and festivities; . a sort of medicament; and . one of the irreplaceable items within human diets, that is, a food. Although the work is the result of the joint reflections (and responsibility) of the authors, the recognition for the development of paragraph 2 goes to Alberto Mattiacci and paragraph 3 goes to Vincenso Zampi.

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(2) Later, and especially during the twentieth century (till the 1980s), wine used to be: . at least, an old-fashioned beverage; . a beverage whose image was a sort of alcoholism synonymous; and . a sort of “number-one enemy” of diet, wellness and hedonistic lifestyles. (3) From the very last decade of the past century to today, wine used to be (and it is right now): . an international status symbol; . a formidable factor of cultural enhancement, such as of social aggregation and distinction; . a sort of medicament (again! But now on a scientific base), e.g. an anti-cancer; and . an asset of a country’s image (Italy and France, above all). The companies in the vine growing and wine making business have been both the driving force and the beneficiaries of this state of affairs: these firms, seen as a system, deserve the credit for their ability to reinterpret the business, and for being able to carry out a real “cultural re-conversion”. Indeed, to have a clearer picture, a hypothetical external person, looking “on to” the wine business panorama today, would notice clear features and company models, that are unrelated to the historical past of the industry (Arsia, Irpet, Regione Toscana, 2002, p. 6). In particular, among these new business models of the industry we can identify some which, by linking their own supply structure to the dual-name territory-product, they generate systems of complex values, that are extended to other connected activities, that in turn, act as a school of modern typicalness. Within this framework, it appears that the case of Brunello di Montalcino, one of the best known and appreciated Italian wines in the world, could be interpreted – in a paradigmatic sense of the modern view of wine – as the successful vine and wine making company, in short, the typicalness. What emerges is a business model that uses the typicalness of the production as a lever to multiply the economically valuable settings, which succeeded to raise itself to the position of leader at national level and beyond. The aim of this paper, is therefore, to describe the particular experience of Brunello as a typical product, drawing from the experience to develop ideas for a more extensive interpretation of wine marketing today. Building up a local business on a global culture The business environment: region, town and country village For the Tuscan economy, agriculture is a sector of significant strategic importance, which is capable of generating an important flow of resources, from the financial ones, to the no less important ones today, of reputation and image. Specifically speaking, the vine growing and wine making industry represents an important component of the agricultural sector and, hence, of the whole regional economic system, to the extent that it is one of the principal drivers for the international notoriety of Tuscany (OECD, 2002; Arsia, Irpet, Regione Toscana, 2002). Some related facts will help to outline the picture of the vital connection that exists between the territory and this business area:

.

.

.

.

.

The vine cultivating companies in Tuscany constitute 37.5 per cent of the total number of agricultural companies in the region and a good 6.9 per cent of the overall vine growing and wine making companies in Italy. The wine industry accounts for 38 per cent of the region’s exports (year 2000), with a constant increase for the last five years (Arsia, Irpet, Regione Toscana, 2002, p. 25). The progressive certification of the vine growing and wine making output is revealed in the increase of about 16 per cent, for the ten-year period 1990-2000, in the number of tickets label led “v.q.p.r.d.”, for a total of approximately 8,850 active companies (Arsia, Irpet, Regione Toscana, 2002), whose average size also appears to be noticeable greater than the companies operating in the production of table wines. Tuscany, with its 34 Doc, 5 Docg as many IGT labels, is the Italian region with the greatest number of protected denomination labels. The fame of the wine production of the region is indirectly confirmed by the its international market success achieved by the wines made from Tuscan wine-making plants, which were created especially, but that do not belong to the regional tradition: the so-called “Supertuscan”.

The connection between the quality of the territory and the value of the agro-industrial productions in Tuscany, is felt strongly: practically all the companies use the geographical localisation as a distinctive feature in their communication instruments, that range from the labels to the Web sites. In so doing, they take over the value of regional brand and contribute to support and regenerate it over time. The end result of all this, according to the findings of a survey done in 2000, is that, today, Tuscany, like Piedmont, is the best known Italian region abroad that is associated with the production of quality Italian wine (www.vin.it), which places it in a leading role in attracting specific influx of tourists in ever growing numbers. Among the towns in the Tuscan province, Siena seems to be the more renowned owing to the quality factor of wines, if none other than for the reason that 12 of the 39 Doc Tuscan wines and all five of the Docg wines are found there: all this with just 9 per cent of the total vineyard surface of the region (approximately 17,000 hectares located in the Chianti area). The production of quality wines (over 400,000 hectolitres) constitutes approximately 80 per cent of the overall wine production of the province: most of these wines are red, while the white wines account for one-tenth of the Doc production (denomination of origin controlled). The local wines have, therefore, contributed considerably to the creation of the territorial brand equity, basing their own positioning on a broad concept of territorial quality, which includes food, drinks, art and culture and daily living. The businessmen in the vine growing and wine making industry certainly deserve part of the merit for this result: just consider that 20 per cent of the wine making firms around Siena are enrolled in the Registry for the denomination of origin. This done, the positioning on the quality market was soon extended to other less valued typical products, like agricultural (oil, honey, etc.) and crafts (pottery, woodwork), all of which contributed to create an overall original model of rural development, that recently obtained important international recognition from the OECD.

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In the province of Siena, wine and territory have an image relationship that changes from area to area. A particular example of this, and not an isolated one, is the case of the town of Montalcino, which in a short time, owing to the commercial success of its wine, has become an example for business and an important tourist stop at provincial level. The territory of Montalcino (just 16 km in diameter) is located on the boundary between the province of Siena (at approximately 40 km away) and that of Grosseto. Until recently this area was among those considered economically depressed in Italy. Today, instead, this area has virtually reversed its socio-economic position thanks to its wine business and all the connected activities, thereby becoming a very wealthy area. Once again, it is useful to mention a few facts which can help to represent the reality being examined[1]: . Out of a total of 24,000 hectares of surface, 21,540 hectares are occupied by agricultural businesses. . Of these, less that three thousand hectares (16.4 per cent of the total surface cultivated in vineyard in the province of Siena) are cultivated in vineyard: nearly a half of which is occupied by the Brunello vines (13 per cent of the total output of the denomination of origin wine for the province). . About 85 per cent of the territory benefit from the protection of the denomination of origin label for their wine production: Brunello di Montalcino (DOCG), Rosso di Montalcino, Moscadello di Montalcino, Sant’Antimo and Chianti dei Colli Senesi (DOC). This constitutes an important value asset for all the businesses in the area. . Until today there are 275 vine and wine making businesses (equal to 4.2 per cent of the total for the province), of which 210 produce the well-known Brunello di Montalcino, with an increase, in the last ten-year period, of almost 100 per cent. . The average size of the vineyard in Montalcino is 10.74 hectares compared to 2.75 hectares of the whole Siena territory. . Montalcino is at the top of the land rates classification: a hectare of vineyard of Brunello has reached a value of 210 thousand euros. . The wine produced (over 600,000 hectolitres) principally comes from the businesses registered in the consortium (98 per cent) and, in two out of three cases, they are marketed with their own trademark. . For a population of about five thousand people, with one of the highest number of aged persons, the area has an extraordinary ability to attract tourism: it is estimated, that for the year 2000 alone nearly one million tourists visited the town, with an average stay of 3.2 days for a total annual turnover of over 80 million euros[2]. . In less than ten years, between 1992 and 2000, the accommodation facilities have increased from 2.5 per cent to 4.0 per cent compared to the total for the province. All the ingredients are present in the Brunello di Montalcino case, for it to generate a circular process for the creation of territorial value, that has as its protagonist a general product (red wine), a typical one that acts as a locomotive for the local industry (Brunello) and a specific business fabric (see Table I).

The product The production of local wine remained faithful to the well affirmed Tuscan tradition until the end of the last century, when the first experiments began which aimed at the valorisation and exploitation of the particular characteristics of the agricultural product and the production environment. Introduced by the well-known producer Biondi Santi, the birth of Brunello di Montalcino met with such great success that it started the culture of the single-variety wine in the sector. Biondi Santi was the first to introduce on the market wine which, contrary to the production trends of the times, was matured according to a two-phase process, the first, based on ageing in oak vats and the second phase based on ageing in the bottle (see Table II). In 1996 Brunello was one of the first Italian wines to receive a Doc denomination; the following year a Consortium was set up among the producers, whose main objective was to maintain the qualitative standard of the product, and in 1980, it became the first Italian wine to receive the DOCG denomination, that certified the success of the operation. The figures that reflect the success of the product can be found in the history of its sales: the Consortium recalls that, in 1975 some 800,000 bottles were produced by about 25 wine producers, while in 1995 this figure rose to 3,500,000 bottles for about 120

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Per cent Tuscany sell-out Direct selling Ho.re.ca. and wine shops Rest of Italy Foreign markets

10 10 15 65

Source: OECD (2002, p. 181)

Product concept Grape variety Maximum yield of grapes Yield of wine from grapes Training system Minimum alcohol content Packaging

100 per cent Sangiovese. It becomes Brunello after processing 80 quintals per hectare 68 per cent Cordon trained/spur pruned Archetto (modified Guyot system) 12,5 per cent vol. Brunello di Montalcino can be put on sale only in Bordeaux type bottles

Production process Obligatory ageing in wood Obligatory ageing in bottles Bottling Available for sale

Two years in oak casks Four months (6 months for the Reserve) Allowed only in the production area Five years after harvest (six years for the reserve)

Product performance Color Odor Flavor

Intense ruby red, tending to garnet with ageing Characteristic and intense perfume Dry, warm, a bit tannic, robust and harmonic

Source: www.consorziobrunellodimontalcino.it

Table I. Brunello di Montalcino sales

Table II. Brunello di Montalcino’s ID card

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producers. Going by the last figures, the total business turnover for Brunello wine is around an annual average of more than 4 million bottles, equal to approximately 150 million euros, a third generated by the Italian market, and the rest by the foreign market (the USA is the first market, followed by Switzerland, Germany, Canada and Austria). From Tables III and IV, the following significant points become evident: . The average quantity per producer has increased constantly, although there has been an increase in the number of producers. This clearly indicates the rate of growth of the market: at least until 1999 (the last official figures available). . The number of producers that also bottled their own wine has risen in a greater measure compared to the producers of unbottled wine. This figure indicates that the Brunello market has maintained a high level of profitability, to the extent that it encourages an increasing number of producers to sell wine with their own trademark. . There have been clear improvements in the cultivation and production techniques of Brunello in the last ten years, as can be seen from the average quality value (four stars), that is constantly superior when compared to the previous ten-year period (see Table IV). The extraordinary commercial success of Brunello di Montalcino was further helped by a producer whose history is rather unique, from both the managerial standpoint and

Table III. Brunello di Montalcino – production’s evolution

Table IV. Vintage quality evaluation of Brunello di Montalcino

Years

Number of wine producers

Not loose wine producer (%)

Vineyards (ha)

Production (hl)

Hl for producer

1969 1979 1989 1999

41 83 118 192

32 49 74 70

53.6 624.2 910.9 1,344.1

2,302 28,418 41,178 68,751

56 342 349 358

Source: Consorzio Brunello di Montalcino, 2002 (www.consorziobrunellodimontalcino.it/)

1945***** 1946**** 1947**** 1948** 1949*** 1950**** 1951**** 1952*** 1953*** 1954** 1955***** 1956** 1957****

1958**** 1959*** 1960*** 1961***** 1962**** 1963*** 1964***** 1965**** 1966**** 1967**** 1968*** 1969** 1970*****

1971*** 1972* 1973*** 1974** 1975***** 1976* 1977**** 1978**** 1979**** 1980**** 1981*** 1982**** 1983****

1984* 1985***** 1986*** 1987*** 1988***** 1989** 1990***** 1991**** 1992** 1993**** 1994**** 1995***** 1996***

1997***** 1998**** 1999**** (2000)*** (2001)**** (2002)**

Notes: The vintages in brackets are in the process of aging. * Insufficient vintage; ** fair vintage; *** good vintage, **** excellent vintage; ***** outstanding vintage Source: Consorzio Brunello, 2003 (www.consorziobrunellodimontalcino.it/)

from the entrepreneurial: Castello Banfi. In 1978, the Mariani family, Italian American importers, who established their success in the importation of bulk Italian wines (mainly Lambrusco) at the beginning of the nineteen-hundreds, and who later invested substantial capital in Brunello, hence, providing a technically innovative product that was market-oriented and supported by a professional managerial organisation (www.castellobanfi.com). The Banfi vineyard occupies 2,830 hectares – 850 of which is vineyard, all located near Montalcino, which in itself, makes the business a unique one in the fragmented reality of Italian vineyards. This is not the right place to delve into the profile of this company, but it is important to recall the principal innovation brought to the territory by this player, which benefited all the local producers by providing them with an exceptional advantage ready at hand for the using. The innovation developed in two distinct areas, both of which are highly relevant and real breakthroughs due to the impact they had on the historical method of the local industry: (1) From the production standpoint: the fermentation takes place in steel silos, which is a novelty for the area, where an experimental process and clone selection is carried out (something which has never been done in the past) especially due to the quantity involved and results obtained (the Poggio all’Oro vineyard, 14 hectares, has obtained wide national and international recognition). (2) From the marketing standpoint: it has been acknowledged as playing an important role as business guide, which is separate and accessory to the commercial aspect, influential in the choice of product as well as in the commercial and promotional side. Pursuing the line of the more consolidated models of the French tradition and of the Napa Valley in the United States, direct selling channels and welcoming cellars are being used. The companies in the area, in fact, were the first to set up appropriate signs in the territory about ten years ago. In concluding this necessarily brief survey of the case, it is important to emphasise that Brunello became a protagonist over the years which followed an interesting path that led to increase the consumer value, and this can also be used as a model for food products that have a local tradition. This path, in our view, involved (Mattiacci, 2003): . The functional aspect of the product: in the size of consumption, by increasing the product performance (see Table III) constantly and substantially over the years (not an easy thing to do for a product that is connected to the cycles of nature); in the size of purchase, by supporting the retail distribution through appropriate logistics (rigorous support of selective distribution); in the amount of relational activities, by creating events and occasions for meetings (cellars, etc.) to foster the specific skills of consumers. . The symbolic aspect of the product: as part of the consumption setting, create new gratifying consumption experiences, with high social value (for example, tasting in the open); in the purchase, by investing in the territory/product general/producer (the role of the label, for example, is decisive); in the relational aspect, by emphasising positively the emotional side of consumers (building a positive tension towards the producer).

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From all the reasons mentioned above, we believe that Brunello can constitute -even if with a huge businesses disomogeneity – an archetype of an advanced wine business management model, as is illustrated better in the following pages. Learning from Brunello di Montalcino As stated at the beginning, wine does represent an absolutely extraordinary case of revitalization of a traditional food product that seemed to be destined to a slow but unavoidable decline, incapable to adapt to new living habits. Indeed, the changes the business has gone through in the last 20-30 years have radically modified the scenario under both the supply and demand perspective. In the following, we will try to understand the role of Brunello di Montalcino alongside the renewal process of the wine business considering it as a paradigmatic case. First of all, we have to consider the roots of wine sector revitalization started during the 1960s. This process may be read as the extension to a larger scale – although reviewed and adapted – of the production and marketing model worked out by the French between the 1700 and the 1800. This was the model of great wines, destined to an e´lite of consumers, whose referring products were the wines of Bordeaux and the Champagne (Zampi, 2003). The rise of great Bordeaux wines represents the first case of a deliberate strategy adopted to produce “brand wines”, destined to fine consumers and able to reach high prices. This is a reference case in which main characters can be illustrated as follows: . specialization in high quality wines through the exploitation of the territorial potentials; . innovation and improvement of production techniques to obtain products encountering the taste of fine consumers; . capability to identify the referring markets and adapting the product to the attitudes and preferences of potential consumers; and . capability to build up a prestigious and exclusive image based on both the territory and the producer’s brand. Under these conditions, Bordeaux producers succeeded in working out a wine production and marketing model, combining the search of high organoleptic qualities with systematic promotional actions based on the symbolic components of the products. The “creation” of the Chaˆteau has represented the focus of such a strategy. Quality wine, prestigious buildings, accurate maintenance of landscapes, refined label are all components of a symbolic system, able to evoke the exclusiveness and the best aspects of the territories in which the image of the chaˆteau has represented the core of what we could today define the business corporate identity (Johnson, 1989, Roudie´, 1991, Pijassou, 1991, Zampi, 2003). We could then affirm that between the end of 1600 and the half of 1800, the archetype of the great brand wine was created. The meaning of this event goes far behind the boundaries of the wine business, since the great French wines represent one of the worldwide first cases – perhaps absolutely the first one – of a “brand product” and of a luxury good of “global” kind. To be more precise wine is a “glocal” product, destined to a global market but, at the same time, embodying the values of a specific territory (in other words “local” values).

The renewal involving the wine world in the last 25 years of 1900, mainly on the part of Californian, Italian, and more recently Australian producers may be read as an evolution the model we have just described. Among the similarities we can list: . the focalization on quality segments, even if not necessarily only on highest price segments; not only icon and super premium wines but also premium (Aa Vv, 2000); . the ability to create products combining – quite flexibly – tradition and innovation; and . the awareness of the importance to build up a prestigious image of the territory and of the business brand, and more generally the importance to have a distinctive own identity. Among the differences, better the innovative traits in comparison with the classical model: (1) The adoption of a more consumer-oriented approach. This factor emerges at three main levels: . the development of grape variety wines (varietals), more easily understandable and comparable also by unexperienced consumers compared to blended wines whose character was almost exclusively based on the territory (Cabernet, Chardonnay, Sangiovese, etc. versus Bordeaux, Chablis, Chianti, etc.); . a greater propensity to product innovation according to a strict market-oriented approach, even at risk to go against the consolidated traditions (the case of Supertuscans or of garage-wines) and to adopt an “international” taste model; and . the giving up of an exclusive – often “esoteric” – approach to wine, in favor of a more informal and young approach (Johnson, 1989; Zampi, 2003). (2) The growing role of the media and particularly of the opinion makers mainly represented by the specialized press (Wine Spectator, Robert Parker, Decanter, in Italy Gambero Rosso etc.). We then have moved from a situation in which quality wine was destined to a restricted niche (reachable mainly through direct communication methods) to a new one in which the market – even though not a mass market – seems to be certainly wider and more diffused. (3) The different relation with the world of commercial distribution. While the great French wines had more than a hundred years to create their own myth and have used distribution in order to exploit their positioning (sales en primeur, ne´gociants), in the emerging countries the adoption of selective distribution channels has been used to build up the positioning of the products. We will try now to understand the characters of the case of Brunello di Montalcino. There is no doubt that, according to a strategic approach, the product can be included in the model of grand vin destined to a qualified consumption. But, under a more specific analysis, the model of Brunello seems to be a unique combination between a traditional and a modern approach. For these reasons it can be interpreted as an example of excellence within the re-emergence of the Italian and the global oenological

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business, considering the similarities and the differences in comparison to both the classical model of French grand vins, and the model of “modern” quality wines. First of all, this dual nature of the Brunello emerges from the connection between tradition and innovation. It is fundamental to point out that. if it’s true that the origins of Brunello di Montalcino can be traced back to the second half of the nineteenth century (the first bottling of a Brunello dates back to 1888 on the part of the Biondi-Santi family), it is also true that the real commercial history of this wine begun only in the 1960s. In particular, according to reliable sources, the modern history of the Italian wine starts in 1964 with the production of Brunello Biondi-Santi (Aa Vv, 2001). In addition to this, we cannot ignore the – totally modern – role that the specialized press has played contributing to enhance the product as a great prestigious wine. Under this perspective, the history of Brunello is linked to the personal history of the most famous Italian wine writer, Luigi Veronelli. However, the most evident aspect revealing the nature of Brunello as an extraordinary synthesis between the traditional and the modern model of a great wine is related to the defining characters of its identity. Under the perspecitve of the production “formula” the Brunello di Montalcino can be considered a “modern” product, since: . it is a single-grape variety wine (sangiovese grapes only); . its grape variety represents the major identifying character; and . this fact is usually deeply emphasized at communication level, and the grape variety (sangiovese) itself has been – at least at mediatic level – object of a differentiation process (known as sangiovese grosso). Having said this, Brunello does not represent a product purely and explcitly identifiable with a varietal wine but according to a more traditional approach is rather associable to a name evoking both a territory (Montalcino) and a word related to traditional elements (Brunello). Brunello represents a wine that has tried to keep its own identity at substantial level, i.e. at a tasting level. Even if the production methods and techniques of Brunello have gone through a (cautious) evolution process, it’s still a wine not conformed to the so called international taste. Secondly, the dual nature of the Brunello emerges analyzing the few enterprises that have played a major role influencing the business strategies of all Brunello producers. We have already stressed the decisive role played by the Biondi-Santi family in the period – between 1800 and 1900 – in which Brunello has been conceived. In a more recent period the same family, together with few other pioneers, has again contributed to the blossoming of the commercial development of Brunello, both on national and international markets. We can add that this group of pioneers was mainly constituted by family members strictly rooted to the local territory, often owners of enterprises of small or indeed a very small reality. Having enjoyed a strong growing phase between the 1960s and the 1970s, the Brunello di Montalcino’s luck seemed to decline during the 1980s. Once been the actors of the renewal of the Italian oenology, Montalcino producers seemed incapable to keep up with the further wave of innovations referring to the model of the so called Supertuscans (innovative wines produced according to the tastes dominating the international markets). Facing products as Antinori’s Tignanello and others top class new wines like Sassicaia and Angelo Gaja’s products, Brunello resulted a less and less

desirable product in terms of both value for money and ability to fascinate the market. If the Brunello has been (together with Bordeaux and partially California wines) the inspiration model for the new generation of Tuscan producers, during the 1980s the pupils seemed to be able to overcome the masters. To be ahead of the others for a long time and to continue to achieve positive economic results could have ended up being a weakness that, lacking significant innovative elements, in the mid term could have sensibly down played the market position of Montalcino wines. The innovative element playing a major role in the re-launch of Brunello has been the rise during the 1980s of a new leading firm: Banfi winery. Considering that Brunello were made mainly by small and traditionally managed firms and that, on the other side, Banfi was and still now is: . an actor of totally unusual dimensions compared to the Montalcino reality as well as to the entire italian wine industry; and . one of the most advanced winery in the world both in technical and managerial perspective (Johnson, 1989). It is possible to say that the birth of Banfi as a wine enterprise has represented a lashing for the entire area. Endowed with great assets and a managerial approach, this winery has given a decisive impulse to re-catch the strong market position of Brunello at international level. Such an action produced immediate and important effects on the entire economics of the area, indeed beautiful but until few years ago scarcely developed. In conclusion, the analysis of the case “Brunello di Montalcino” provides the following lessons: . It suggests the importance of the identity within the wine business. Not discussing if Brunello is or is not the “best” Tuscan wine, it is indeed a product that is strongly identifiable by target markets, with a precise taste model (great Tuscan wine of traditional kind) and related to a territory of strong evocative power (Italy, Tuscany, Montalcino). . It suggests the importance of the leading firms. In Montalcino this role has been played firstly by a limited-dimension winery, managed by one of the families representing the symbol of Montalcino, Biondi-Santi. More recently this role has been played by a winery of opposite kind, Banfi, one of the major Italian firms (in terms of both vineyard extention and turnover), owned by Americans, lead according to a managerial style, symbol of modernity in the wine business. In other words, in Montalcino we assist to a peculiar and fortunate synthesis between opposites: on the one hand, between tradition and modernity, on the other, between deeply differentiated wineries in terms of both structural characters and entrepreneurs’ mentality. From this it has derived a wine production and marketing model able to enter effectively the “virtuous cycle” linked to the evolution of wine consumption and offer toward high quality. In the last thirty years this development path has determined a deep revitalization of the wine sector, being the first mover-runner in a wider renewal process that has impacted the entire business of typical foods, re-positioned on more qualified market segments. According to this interpretation, Brunello di Montalcino represents a paradigmatic case.

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Notes 1. Source: Sistan, Amministrazione Provinciale di Siena, Camera di Commercio di Siena, Agricoltura in Numeri, 58 Censimento Generale Agricoltura. 2. According to the Siena District, incoming tourism has constantly been increasing since 1991 from 5,724 presences in 1991 (0.61 per cent) to 23,311 in 2001 (1.83 per cent). Source: Amministrazione della Provincia di Siena. Osservatorio Economico-Rapporti statistici – Turismo. www.provincia.siena.it. References Aa Vv (2000), The Marketing Decade: Setting the Australian Wine, Winemakers Federation of Australia, Canberra. Aa Vv (2001), “Quarant’ anni di vino italiano”, Gambero Rosso, Vol. 11 No. 123. Arsia, Irpet, Regione Toscana (2002), 48 Rapporto sull’ Economia Agricola della Toscana, Agrisole, Il Sole 24 ore, Milan. Johnson, H. (1989), The Story of Wine, Mitchell Beazley Publishers, London. Mattiacci, A. (2003), Il Marketing Consumer-based, Cedam, Padova. OECD (2002), Territorial Review, Province of Siena, Eurobic Toscana Sud. Pijassou, R. (1991), “Storia del vigneto bordolese”, in Dethier, J. (Ed.), I Castelli del Bordeaux, Firenze. Roudie´, P. (1991), “Il concetto di chaˆteau vinicolo”, in Dethier, J. (Ed.), I Castelli del Bordeaux, Firenze. Zampi, V. (2003), Wine Management, Firenze.

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Moving from “typical products” to “food-related services” The Slow Food case as a new business paradigm

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Costanza Nosi and Lorenzo Zanni University of Siena, Siena, Italy Keywords Food industry, Supply and demand, Local authorities, Distribution channels, Markets, Italy Abstract In the last years the market of typical food products (TFP) has been characterized by many changes showing the rise of a new paradigm of consuming and offering. The object of this case study is to underline the nature of these changes and the implications in terms of marketing strategies. The Slow Food experience is quoted here as a good example of this modernization process. This paper attempts to underline the characteristics of an interpretative model of the TFP business in order to understand the changes within the supply- and the demand-side of the market. The proposed interpretation model is both contextualized and evolutionary.

1. Understanding the changes in the typical food products market: the rise of a new business paradigm In the last years the market of typical food products (TFP) has been characterized by many changes showing the rise of a new paradigm of consuming and offering. The object of this paper is to underline the nature of these changes and the implications in terms of marketing strategies. The Slow Food experience is quoted here as a good example of this modernization process. We will try to underline the characters of an interpretative model of the TFP business in order to understand the changes within the supply- and the demand-side of the market. The proposed interpretation model is: . Contextualized. The term TFP is a relative concept, and needs to be contextualized both in terms of market segment and in terms of geographical cluster. To understand the competitive advantage and the peculiarities of TFP marketing (it could be a French cheese, an Italian pasta, a Spanish ham, a Scottish salmon, a Chilean wine, etc.) we have to enrich our traditional industry model of analysis. It is not a simple change in the object of analysis, it is more a revising of our theoretical framework to underline the junction industry/places which means (Rullani, 2000a): uniqueness of development processes; path dependency; localized learning processes; . Evolutionary. The present food market results as the overlapping of different consuming and offering paradigms: simplifying we can identify three main evolution phases. At the beginning the TFP business was organized and managed as an “artisan business” (small family firms, local markets, tradition as The authors wish to express their thanks to Giovanni Ruffa (Slow Food Editore deputy editor) and to Dante Albieri (Slow Food Editore art director) for their kind cooperation.

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main consuming motivation, individual relational marketing). With the raising of new distribution channels and the globalization of competition the food market has been impacted by a “process of industrialization” influencing firms’ profiles and critical assets (large firms, global markets, emphasis on standardization, modern distribution channels, etc.). In the last few years a new “post-fordist (or neo-industrial) paradigm” seems to emerge, showing peculiar traits both at consuming and at offering level (Rullani, 1998). As all emerging paradigms its critical variables are rich of strategic opportunities (new technologies, new organization models, etc.) that seem though hard to identify and measure. Focusing our attention on the TFP business we have summarized some of these new characters in Table I. In this paper we describe the dynamics characterizing the modernization process of the TFP business. In particular, considering the last 15 years, we intend to answer to three questions: (1) Which are the critical features characterizing the consumption model of TFP? (section 2) (2) Which are the main contents of the new TFP supply system? Moreover is it possible to analyze a firm representing a good example of this post-fordist paradigm? (sections 3 and 4) (3) Which are the main implications in terms of marketing strategies? (section 5) 2. From the “fast food” to the Slow Food system On the demand side, the “modern paradigm” has the characters of mass consumption: individuals ask for low prices, large quantities and homogenous products, require simple purchase processes and value aliments mainly basing on their functional

Table I. The changes within the food market

Relevant variables

The “industrial paradigm”

The “post-Fordist paradigm”

Consumption model: Choices and purchase process Motivation

Mass consumption (low prices, large quantities, standardization, etc.) Simple purchase process (tradition or quick response) Prevalence of functional motivations (basic alimentary products)

Non-standardized consumption (high prices, small quantities, slow consumption, high differentiation, etc.) Complex purchase process: experiential purchase process (experience, search, credence); high role of information (fulfill the gap) New motivation: safety, upgrading, ritual, myth

Offer system (product/market)

Local markets vs global market Low information content (homogeneous products) Single product offer (specialization in one industry) Traditional distribution (non-specialized stores, supermarkets)

Transnational markets (local and global markets) Knowledge products (biodiversity, high cultural identity) Bundle of products and services (inter-industry competition) New channels: Internet, new specialized stores

attributes. Food consumption seems to be reduced almost to the mere fulfillment of a physiological need. On the supply side, it shows the traits of conventional industrialized systems: large firms, technology-based manufacturing processes, standardized outputs with low information content (aside from compulsory), and traditional distribution channels. In the globalization era the agro-food system is therefore characterized by high complexity and by increasing distance between suppliers and buyers. These features originate a relatively transparent system in which strong information asymmetries space out people involved in the production and transformation processes and consumers (Torjusen et al., 2001, p. 214). Many studies (Garber et al., 2003; Gil et al., 2000; Grunert, 1995; Grunert et al., 1996; Ismail et al., 2001; Issanchou, 1996; Nielsen et al., 1998; Prescott and Bell, 1995; Solheim and Lawless, 1995) have however emphasized the complexity of variables characterizing both food purchase and consumption, and the multiplicity of attributes influencing the quality evaluation process. Far from considering only the organoleptic characteristics of aliments, some consumers evaluate food quality mainly basing on non-physical dimensions. They are in fact driven by health-related, cultural, social, environmental, hedonic, and ethical concerns that go beyond the judgement on mere functional product features and refer to its psychological and symbolic dimensions. Product attributes can be typed as search, experience or credence (Nelson, 1970). Search dimensions are accessible prior purchase, experience dimensions can be evaluated only after the purchase, credence dimensions cannot at all be ascertained by consumers or only at high costs. Most of food products’ attributes do not belong to the search category: in order to make purchase decisions consumers have therefore to form quality expectations. Typically being the health- and process-related foods characteristics of the credence kind, the building up of quality expectations by consumers becomes a matter of gaining information transmitted by a source that is perceived as credible and trustworthy (Grunert et al., 2000, p. 576). Within the modern agro-food system the information that consumers are able to gather, concerning products’ composition and the way they are produced and processed, becomes extremely important (Salaun and Flores, 2001, p. 24). The emerging of the “post-fordist paradigm” of food consuming and offering arises to counteract the lack of transparency and the complexity of the conventional agro-food system. It’s been few decades yet that increasing segments of food consumers show their reluctance and unwillingness to submit to the hasty and careless eating habit of modern society; while small facilities try to set value upon their (mostly artisan) manufactures, emphasizing both sensory and psychological attributes of their products. Started as an alternative trend, the Slow Food consumption model is becoming a global phenomenon. Spurred by health, social, ethical, and environmental concerns, consumers oppose to the industrialization of the agro-food system and demand for more natural cultivation and transformation processes. At the same time they perceive the standardization of aliments as “organoleptic boredom” and see the increasing foods homogenization contributing to the gradual loss of peoples’ cultural identity. The rediscovery of typical food productions represents the attempt to retrieve both the healthy and the social dimension of eating habits. A typical product is

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characterized by distinct historical and cultural features and by physical attributes that are deep-rooted to the territory of origin (Antonioli Corigliano, 1999, p. 59) encompassing therefore much more than bare texture. Within the post-Fordist paradigm, typical food consumption releases part of its functional characters becoming rich of symbolic and immaterial elements (Meroni, 2002). The overlapping of material and symbolic circumstances influencing the sensorial experience (“experience of an event”, “experience of an ambience”) influences the key variables that typical food producers build their strategies on. Planning their offer, they consider not only the organoleptic characters of foods but also the choreographic and experiential elements (the so called “food design”, packagings, consumption places such as cellars, agriturismi, awarded restaurants, wine bars, etc.). Similarly to other businesses such as fashion (Zanni et al., 2002), the cultural and emotional relevance of a store is becoming more and more critical and is turning into a major differentiating factor for the brand. This represents the “aesthetic” aspect of marketing strategies (Schmitt and Simonson, 1997; Schmitt, 1999). Within this paradigm consumers play a more active and dynamic role. On the one hand, they become more exigent about the information they can gain about foods characteristics and the undergone transformations along their processing, on the other they are curious and somehow fascinated by their symbolic features, embracing the historical, social, and cultural values they embody. On the part of producers, consumers’ persuasion and fidelization become therefore a matter of transmitting trustworthy information about products quality and naturalness, and of stirring up their interest emphasizing the psychological attributes of aliments. At last, the exploitation of agro-food local systems depends on the capacity of actors to optimize the information values of the territory, in its environmental, social, and economic dimensions (Belletti, 2002, p. 377). Within such systems, though, the lack of managerial culture and specific competencies on the part of small-scale production enterprises has created a new business opportunity. Multi-level operators, organizing scientific, cultural, promotional, training, consulting, and editorial initiatives, have entered the agro-food market focusing their activity on the business of tipicity. Endowed with specific agro-food and managerial competencies, they have nowadays achieved an important strategic position: interposing between the demand and the supply side, they are able to support producers to promote their wares and to satisfy the food-related information needs shown by consumers. 3. A new system of offer for TFP Corresponding to the rise of a new type of demand of TFP it is possible to identify four main features characterizing the new “postfordist paradigm” of production (Rullani, 1998, 2000b; Tamma, 2000): (1) New forms of labor division emerge connecting different geographical levels (local production systems inside a global network) and different entrepreneurial actors (medium-large managerial leading firms, small farmers, business services): the organizational challenge is not to overcome the distinction local versus global markets, but to create a “transnational network” (Bartlett and Ghoshal, 1989) able to legitimate diversity and manage complexity through a flexible coordination. As evidenced by Porter (1990, 1998) the globalization of

markets hasn’t extinguished the competitive advantage of nations; in particular the creation of regional clusters is considered a powerful system to create value for TFP. More recently, Normann (2001) has evidenced two elements characterizing the leading actors within the process of reframing the value creation of their businesses: they are moving from a world characterized by physical assets and local markets to a virtual and global world (de-materialized assets and no geographical frontiers). In this context nations release part of their importance, while towns and regions become determinant in order to build up knowledge-based value creation systems. In terms of marketing strategies this means the possibility of co-existent micro and macro communication policies (Kotler et al., 1993): TFP can be more effectively promoted building up strong synergies between leading brands and places, instead of being pushed as single and undifferentiated products. (2) Interdependence among actors. Firms’ dimensions are not determinant to compete in global markets: one of the key success factors consists in creating an articulated network allowing information flows and knowledge exchanges. What emerges is enlarged production system, where the client too is part of the value creation (prosumer, co-production). (3) New systems of value production based on bundles of products and services stressing the elements of convergence and hybridization among TFP and related businesses (inter-industry competition). This new system of offer is characterized by a significant integration among products and services into a complete product line, the so called “value constellation” (Normann and Ramirez, 1994; Zanni, 2002). As shown in Figure 1, these services can be distinguished both in terms of their functional specialization (marketing, technical, cultural, etc.) and in terms of their different level of specialization in the TFP industry. (4) A knowledge-based economy. Due to the increasing importance of immaterial attributes of aliments the information content of typical food seem to become a fundamental factor influencing producers marketing strategies. As “knowledge products” (biodiversity, high cultural identity) they require new segmentation criteria (different from traditional (demographic)) based on social and psychological variables such as people life style.

4. The Slow Food experience Founded in Bra (Piedmont, Italy) in 1986, the Slow Food Movement interprets the emerging need of food consumers, linked to the ethical and the social dimensions of eating habits, and institutionalizes it through the constitution of a non-profit association. With the original aim of countering “the tide of taste standardization and the manipulation of consumers”, since the beginning Slow Food shows the twofold nature of its activities. On the one hand, they are aimed to safeguard the food and agricultural heritage through scientific research and the support of small-scale typical productions, on the other they are aimed to educate consumers, increasing their knowledge about typical and traditional foods.

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Figure 1. A taxonomy of supporting services within the TFP market

As a non-profit organization, based on the voluntary membership of people, the original intent of the association responds to the need of consumers, aware of the danger of loosing their cultural identity along with the increasing homogenization of eating habits, to gain information about foods characteristics and embodied values. As the foremost countertrend becomes a greater market phenomenon and typical foods enterprises show their structural and cultural weaknesses the initial scope of Slow Food intervention becomes a concrete strategic opportunity. In 1989, from a national experience the movement turns into a transnational project.

Conscious that typical food products embody – among other things – the cultural and social identity of the territory of origin, the movement’s leaders understand that the pursuit and safeguard of excellent productions has to be carried out locally, through concrete on site interventions. At the same time they realize that the rise of the “Slow Food consumption model” is a universal phenomenon, crossing the borders of nations. Instead of seeing globalization as a threat to specificness, they take it as the opportunity to widely promote the culture of excellence. Through its network, the International Slow Food Movement disseminates and shares information related to quality-oriented development paths pursued at local level, extending the benefits of single experiences to a worldwide context. At the end of May 2003, Slow Food International counted around 76,000 members in more than 100 different countries in the world. The ability of diffusing information represents therefore a valuable asset influencing the potential business development of the organization. In 1990, Slow Food enters the media industry founding a publishing company, Slow Food Editore. Inspired by the philosophy of the movement, the publications (60 different titles) concern agro-food- and oeno-gastronomy-related themes, including reviews, guides, monographs, tasting manuals, and recipes books. In 1991, the first edition of Osterie d’Italia sold 35,000 copies, in 2003 it reached level 120,000 representing SFE’s best seller. In 2002, the global sales of SFE amounted of 4,600,000 euors. In 2001 Slow Food created its institutional Web site, Sloweb. With two different versions (.it and.com), between 10 October 2002 and 3 April 2003, it has registered 575,000 accesses, from 140 different countries, with a daily average of 3,400 virtual visits. Today, Slow Food plays an increasingly important role within the agro-food system, contributing to reduce the information asymmetries spacing out the production and the consumption spheres. Operating as a multi-level service provider it represents an emerging entrepreneurial actor in the business of typicity. 5. Provided services Following an interpretation scheme, based on the pursued aim, we can identify two main performed functions: (1) the preservation function: to catalogue and safeguard animal breeds, plant varieties and agricultural methods and techniques in danger of extinction; and (2) the education function: to educate people improving their tasting ability and increasing their knowledge about food. While performing the first function Slow Food operates as an “information organizer”, transforming the locally embedded knowledge into widely accessible formal databases, through the education function it contributes to endow consumers with the necessary competencies to gather and comprehend the provided information. Within each of the performed functions, we can identify three main scopes of intervention carried out through specific institutional projects. (1) Preservation function: . scientific research (Ark of Taste and Slow Food Award for the Defence of Biodiversity);

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support to producers (Presidia); and support to local public authorities (Slow Cities). (2) Education function: . organization of events (Convivia); . taste education (Masters of Food); and . academic education (University of Gastronomic Science). . .

While the preservation activity is mainly addressed to producers and local authorities, contributing to increase enterprises’ competitiveness and to improve the comprehensive conditions of the system of offer, the education activity is addressed to the demand and is aimed to endow consumers of products-related knowledge and competencies. Since the operational activities are performed within local systems they have to be interpreted as tightly related, both in terms of information flows and in terms of relationships among actors. Indeed the business success of this emerging operator depends upon its capacity of creating networks of different actors (consumers, producers, public authorities, and media) sharing the same knowledge and communication codes. 5.1 Scientific research Through the Ark of Taste, ad hoc experts commissions are in charge of retrieving traditional or typical food products in danger of extinction. The aim of the project is to rediscover, catalogue, and promote aliments that, still showing a concrete productive and commercial potential, risk to disappear from the market. Either typical or traditional, these products present excellent organoleptic characteristics, are produced in small-scale facilities and show a real or potential risk of extinction. The output of the commissions’ activities consists in databases showing products characteristics (used foodstuffs, production and transformation methods, sensorial attributes, origins, historical and cultural embodied values) and are diffused through the Slow Food’s media tools such as the web site and specific publications. Another initiative aimed to safeguard and increase the visibility of quality-focused activities consists of the Slow Food Award for the Defence of Biodiversity. An international jury, made of experts coming from different countries, annually assigns a variable number of awards in order to acknowledge excellence-focused works or projects in the agro-industrial sector. The awarded activities, with the common trait of benefiting biodiversity, can be pursued either in the research, production, marketing, promotion or documentation fields. The award consists in a cash prize and in the promotion of the acknowledged activity through publications and the organization of dedicated events. 5.2 Support to producers Within the Ark of Taste, the scientific research represents the first step of a wider and more complex project. In order to safeguard typical and traditional food productions the identification and public recognition of in danger of extinction aliments represent a necessary prerequisite. The following logical step is to support the promotion and commercialization of identified products. Through the Presidia (165 in Italy, 19 in the rest of the world), Slow Food directly intervenes at local system level providing

business services to producers. Acting as highly focused consulting companies, the Presidia work in the production, marketing, distribution and financial field, supporting the creation of micro-markets for quality food products. They source the funds to purchase and supply production equipments, provide production incentives, and identify marketing strategies and new distribution channels for quality food products, involving both GD operators and specialized points of sale, as well as through the support of the e-business technologies. 5.3 Support to local public authorities Basing on the principle that the development of local communities depends on their capacity to create a defined identity through the recognition and promotion of their distinctive qualities, Slow Food has constituted the so-called Slow Cities Movement. The international project involves towns and cities all over the world that have decided to institutionalize an excellence-oriented development path. Through tangible and verifiable actions the involved cities have to demonstrate to follow a common path toward the optimization of their territorial resources, implementing environmental and structural policies aimed to improve the quality of life of their citizens. Accomplished activities must be oriented to the promotion of eco-compatible agricultural productions and non-artificial transformation processes, through the safeguard of autochtonous plant and animal species and the preservation of traditional working techniques (setting up of Presidia). Within the local communities public authorities have also the duty to diffuse the “culture of excellence” through systematic communication and training activities addressed both to operators and to citizens. Within the network of cities Slow Food plays a twofold role. On the one hand it periodically checks the compliance of cities’ conducts and the homogenity of their development paths, on the other it provides the local authorities with competencies and know how particularly for those matters concerning food- and wine-related issues. 5.4 Organization of events At the Convivia level (in May 2003 Slow Food counted 650 Convivia worldwide, 337 in Italy) a systematic activity of events organization contributes to maintain the fidelity of the movement’s members and to enroll news. The organization of theme dinners or of any other meeting occasion during which intervening people share the same food-related interest and passion represents a further and effective communication vehicle. Sociality, entertainment, leisure time activities become tools Slow Food can play on in order to achieve its aim: disseminate the culture of quality food and of hedonic pleasure. In addition to this, at national level, Slow Food organizes two of the most well-known and attended Italian food-related fairs (Cheese and Salone del Gusto). They represent important events during which the producers meet the consumers: the first have the chance to show their wares and to promote them, the second to taste the products and to gain information about them. Involving also the public authorities of the food territory of origin, the local associations and consortia, and the distributors, the fairs are further opportunities to exchange information and to facilitate the building up of cooperation or business relationships among different operators. In year 2000 the Salone del Gusto counted 130,000 visitors coming from 80 different countries, 14,200 participants to 250 Laboratori del Gusto (tasting events), and 2,000

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journalists; in year 2002 it counted 138,000 visitors, 20,000 participants to 311 Laboratori, and 2,200 journalists. 5.5 Taste education Basing on the principle that the enjoyment of sensorial pleasure is a cultural matter, Slow Food addresses specific education activities to young people, trying to create positive attitudes towards quality foods since school age. With teachers’ support, Slow Food sets up training activities on sensory education and food culture, promoting and organizing conferences, congresses, courses for teachers and parents, and workshops. During the academic year 2002/2003, in Piedmont, Slow Food and the regional authorities have organized updating courses involving more than 700 teachers coming from any kind of school. Differently, the adult education projects satisfy the need of people – already sensible toward food-related issues – to deepen their knowledge about typical and traditional products and production methods, as well as gastronomy. From the beginning of 2003 Slow Food has been organizing 260 courses involving around 5,000 members of the association. 5.6 Academic education The lack of specific competencies of operators working in the typical food business represents one of the major problems menacing the competitiveness, not only of production enterprises, but of comprehensive local economies. In order to be competitive, enterprises need to be managed by prepared and competent human resources, able to effectively intervene along the entire value chain. The goal of the Slow Food academic education project consists in qualifying people, creating job profiles with a strong agro-food orientation, whose outlets can vary among the different agro-industrial fields and related businesses: production, marketing, distribution, communication, education, journalism, tourism, etc.. In compliance with the European in force regulations, the University of Gastronomic Sciences offers three basic study programs: historical-humanistic, technological-scientific, and economic-management, and two specialties: sciences of food and gastronomic communication and management of food production and distribution enterprises. In addition, the education offer includes post-graduate specialties such as Masters, seminars and monographic courses on specific wine- and food-related themes. The final aim of the project consists in creating the cultural point of reference in the agro-food sector and related fields. Slow Food intends to collect printed texts, documents, articles from scientific reviews and oral accounts coming from all over the world (World Encyclopedia of Food) and to diffuse the available material using the modern information and communication technologies (e-learning) (see Figure 2). 6. Conclusions: implications in terms of marketing strategies . Contextualized and evolutionary interpretative model (section 1). At theoretical level we have underlined the opportunity to adjust the framework of analysis in order to examine the TFP market. The contextualization of the analysis lets us catch and exploit the peculiarities of local systems even within a global competition environment. Differently, the evolutionary point of view enables us to identify the differences between the past and the present organization and

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Figure 2. The role of Slow Food within the typical food system

.

.

management activities of typical food productions. The actual practices do not represent a simple re-proposing of old artisan productions, rather they derive from the new reading of the internal and external environment based on the needs and characters of the modern consumer. Changes at demand-side level (section 2). The retrieval of typical and traditional foods represents the attempt to recover the safety and social aspects of eating habits. In order to form positive attitudes and expectations towards food, consumers need to be assured and informed about aliments’ production and transformation processes as well as about their origin and the symbolic values they encompass. One of the most interesting aspects of this emerging paradigm seems to be the rise of new operators trying to reduce the information gap spacing out food producers and buyers. Slow Food re-proposes and sets value upon relatively known products but most of all emphasizes a new consumption philosophy (aware consumption). Changes at offer-side level (section 3). The case of study confirms the importance of the local dimension in the achievement of competitive advantages. At managerial level it seems therefore fundamental to combine a place marketing strategy with a specific brand politics. Three are the main implications in terms of business strategy: in addition to the brand promotion activities it is crucial for typical food producers to effectively manage the image of the country of origin (made in) and most of all of the territory of origin (geographical appellations); the optimization of the image politics at local level requires combined management activities (co-marketing) but does not erase the distinctive potential of single

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firms (within the same local system, different firms can adopt different strategic conducts); the offer of typical foods is winning if optimizes the exploitation not only of products but also of related services. The evolution of both supply and demand spheres has specific consequences at marketing level. In particular, within the typical food business, peculiar tools of the marketing mix seem to gain relevance. Among them communication activities result of special interest and effectiveness: the contents and the way of transmitting food-related information become fundamental elements of the business strategy. At the same time, sales seem to be strongly dependent on the methods of proposing and presenting products. They seem to be successful if oriented to the creation of a complex experience (atmosphere of points of sales emphasizing the symbolic and psychological aspects of purchase and consumption) rather than to the accomplishment of a simple action – “experiential marketing” – (Schmitt, 1999).

References Antonioli Corigliano, M. (1999), Strade del Vino ed Enoturismo: Distretti Turistici e Vie di Comunicazione, Franco Angeli, Milan. Bartlett, C.A. and Ghoshal, S. (1989), Managing across Borders, Harvard Business School Press, Boston, MA. Belletti, G. (2002), “Sviluppo rurale e prodotti tipici: reputazioni collettive, coordinamento e istituzionalizzazione”, in Basile, E. and Romano, D. (Eds), Sviluppo Rurale: Societa`, Territorio, Impresa, Franco Angeli, Milan, pp. 373-97. Garber, L.L. Jr, Hyatt, E.M. and Starr, R.G. Jr (2003), “Measuring consumer response to food products”, Food Quality and Preference, No. 14, pp. 3-15. Gil, J.M., Gracia, A. and Sa`nchez, M. (2000), “Market segmentation and willingness to pay for organic products in Spain”, International Food and Agribusiness Management Review, No. 3, pp. 207-26. Grunert, K.G. (1995), “Food quality: a means-end perspective”, Food Quality and Preference, No. 6, pp. 171-6. Grunert, K.G., Bech-Larsen, T. and Bredahl, L. (2000), “Three issues in consumer quality perception and acceptance of dairy products”, International Dairy Journal, No. 10, pp. 575-84. Grunert, K.G., Larsen, H.H., Madsen, T.K. and Baadsgaard, A. (1996), Market Orientation in Food and Agriculture, Kluwer Academic Publishers, Boston, MA. Ismail, B., Haffar, I., Baalbaki, R. and Henry, J. (2001), “Development of a total quality scoring system based on consumer preference weightings and sensory profiles: application to fruit dates (Tamr)”, Food Quality and Preference, No. 12, pp. 499-506. Issanchou, S. (1996), “Consumer expectations and perceptions of meat and meat product quality”, Meat Science, Vol. 43 No. S, pp. 5-19. Kotler, P., Haider, D. and Rein, I. (1993), Marketing Places: Attracting Investments, Industry and Tourism to Cities, States and Nations, The Free Press, New York, NY. Meroni, A. (2002), “Un esercizio di sintesi: riflessioni attorno ai microeventi del cibo”, in Sgalippa, G. (Ed.), Quando il Prodotto Diventa Luogo: I Microambienti come Scenati del Design e Contesti dell’Innovazione Tecnologica, Franco Angeli, Milan.

Nelson, P. (1970), “Information and consumer behavior”, Journal of Political Economy, Vol. 78, pp. 311-29. Nielsen, N.A., Bech-Larsen, T. and Grunert, K.G. (1998), “Consumer purchase motives and product perceptions: a laddering study on vegetable oil in three countries”, Food Quality and Preference, Vol. 9 No. 6, pp. 455-66. Normann, R. (2001), Reframing Business: When the Map Changes the Landscapes, John Wiley & Sons Ltd, New York, NY. Normann, R. and Ramirez, R. (1994), Designing Interactive Strategy: From Value Chain to Value Constellation, John Wiley & Sons, Chichester. Porter, M.E. (1990), The Competive Advantage of Nations, The Macmillan Press Ltd, London. Porter, M. (1998), On Competition, The Harvard Business Review Book Series, Boston, MA. Prescott, J. and Bell, G. (1995), “Cross-cultural determinants of food acceptability: recent research on sensory perceptions and preferences”, Trends in Food Science & Technology, Vol. 6 June, pp. 201-5. Rullani, E. (1998), “Dal fordismo realizzato al postfordismo possibile: la difficile transizione”, in Rullani, E. and Romano, L. (Eds), Il Postfordismo: Idee per il Capitalismo Prossimo Venturo, Etalibri, Milan. Rullani, E. (2000a), “Crescita e innovazione nel made in Italy”, in Quadrio Curzio, A. and Fortis, M. (Eds), Il Made in Italy Oltre il 2000: Innovazione e Comunita` Locali, Il Mulino, Bologna. Rullani, E. (2000b), “Agire competitivo e contesti di interazione”, in Podesta, S. and Golfetto, F. (Eds), La Nuova Concorrenza, Egea, Milan. Salaun, Y. and Flores, K. (2001), “Information quality: meeting the needs of the consumer”, International Journal of Information Management, No. 21, pp. 21-37. Schmitt, B. (1999), Experiential Marketing, The Free Press, New York, NY. Schmitt, B. and Simonson, A. (1997), Marketing Aesthetics: The Strategic Management of Brands, Identity and Image, The Free Press, New York, NY. Solheim, R. and Lawless, H.T. (1995), “Consumer purchase probability affected by attitude towards low-fat foods, liking, private body consciousness and information on fat and price”, Food Quality and Preference, Vol. 7 No. 2, pp. 137-43. Tamma, M. (2000), “Sistemi del valore e competizione nei ‘servizi’”, in Podesta, S. and Golfetto, F. (Eds), La Nuova Concorrenza, Egea, Milan. Torjusen, H., Lieblein, G., Wandel, M. and Francis, C.A. (2001), “Food system orientation and quality perception among consumers and producers of organic food in Hedmark County, Norway”, Food Quality and Preference, No. 12, pp. 207-16. Zanni, L. (2002), “Il ruolo dei servizi per lo sviluppo imprenditoriale delle imprese del sistema moda in Toscana”, in Zanni, L. and Labory, S. (Eds), Il Settore Moda in Toscana, Irpet, Firenze. Zanni, L., Rabino, S. and Simoni, C. (2002), “Ehhancing competitive advantage overtime – the case of the Italian fashion industry”, in Wilson, J. (Ed.), From Art to Technology: Opportunities in Marketing Research and Education, Atlantic Marketing Association Proceedings of the 18th Annual Conference. Further reading Asp, E.H. (1999), “Factors affecting food decision made by individual consumers”, Food Policy, No. 24, pp. 287-94. Foglio, A. (1997), Il Marketing Agroalimentare, Franco Angeli, Milan.

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Jordana, J. (2000), “Traditional foods: challenges facing the European food industry”, Food Research International, No. 33, pp. 147-52. Lappalainen, R., Kearney, J. and Gibney, M. (1998), “A pan-EU survey of consumer attitudes to food, nutrition and health: an overview”, Food Quality and Preference, Vol. 9 No. 6, pp. 467-78. Orth, U.R. and Krska, P. (2002), “Quality signals in wine marketing: the role of exibition awards”, International Food and Agribusiness Management Review, No. 4, pp. 385-97. Pellegrini, L. (2001), “Luoghi d’acquisto e relazioni con il consumatore”, Micro & Macro Marketing, No. 3. Porter, M.E. and Stern, S. (2001), “Innovation: location matters”, MIT Sloan Management Review, Summer, pp. 28-36. Prescott, J., Young, O., O’Neill, L., Yau, N.J.N. and Stevens, R. (2002), “Motives for food choice: a comparison of consumers from Japan, Taiwan, Malaysia and New Zealand”, Food Quality and Preference, No. 13, pp. 489-95. Rosa, F. and Galizzi, G. (1993), “The agrifood system in Italy: structural adjustments to face the internationalization of the food industry”, in Meulenberg, M. (Ed.), Food and Agribusiness Marketing in Europe, The Haworth Press, Inc., New York, NY, pp. 55-81.

The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister

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The enhancement of the typical products value: from commodity to experience The case of Esperya.com

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Augusto D’Amico The University of Messina, Messina, Italy Keywords Value chain, Production processes, Internet, Culture (sociology), Italy Abstract The profound transformations taking place in the world economy pose the need for all businesses, of whatever size and sector, to review their production processes and reorganise their value chain. Recently, competition has become much more intense and all-encompassing, particularly regarding commodities or other poorly differentiated goods, not only of an agricultural or agro-industrial nature. For such products, cost is a critical factor in their success, encouraging decentralisation to areas where production, and especially labour conditions, allow the realisation of particularly strong economies. In particular, market globalisation is applying pressure to standardise the tastes of consumers, who are no longer used to the flavours of typical products, and to reduce biodiversity at a productive level. This globalisation is, thus, often experienced as a threat, which forces European agro-food producers and consumers to defend and protect those products and brands, which express the identity of their traditions. However, this process of market homogenisation may actually represent a factor of development for businesses producing typical products. In fact, the progressive unification of consumption models and the possibility of having typical products available on a global level will enable such products to rid themselves of the “provincial” image which often characterises them. In this context, also the businesses producing typical products should thus develop and implement strategies to improve their offer, which hinge not only on their products’ intrinsic features but, above all, on their extrinsic aspects.

Introduction The profound transformations taking place in the world economy pose the need for all businesses, of whatever size and sector, to review their production processes and reorganise their value chain. Recently, competition has become much more intense and all-encompassing, particularly regarding commodities or other poorly differentiated goods, not only of an agricultural or agro-industrial nature. For such products, cost is a critical factor in their success, encouraging decentralisation to areas where production, and especially labour conditions, allow the realisation of particularly strong economies. At first sight, it would seem that such phenomena do not affect typical products, which are strongly rooted to their place of origin, due to the impossibility of reproducing the same climatic conditions elsewhere or of exporting the necessary productive know-how. This should, consequently, give the businesses that produce them peace of mind. There are, however, other phenomena at work, which endanger the survival of certain special products. In particular, market globalisation is applying pressure to standardise the tastes of consumers, who are no longer used to the flavours of typical products, and to reduce biodiversity at a productive level. This globalisation is, thus, often experienced as a

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threat which forces European agro-food producers and consumers to defend and protect those products and brands which express the identity of their traditions[1]. However, this process of market homogenisation may actually represent a factor of development for businesses producing typical products. In fact, the progressive unification of consumption models and the possibility of having typical products available on a global level will enable such products to rid themselves of the “provincial” image which often characterises them. In this context, also the businesses producing typical products should thus develop and implement strategies to improve their offer, which hinge not only on their products’ intrinsic features but, above all, on their extrinsic aspects.

The multidimensional nature of typical products Generally, the term “typical” is applied to those products which have a close link with a particular geographical area, due to the fact that they are obtained using raw materials or production processes specific to the area in question. This gives them certain unique characteristics that are not repeatable elsewhere. Among the elements that express the product-territory link, the main one is geography, i.e. the climatic conditions which give the product its specific nature. These, amongst others, may be embodied in natural raw materials that give their distinctive features to the product, or by climatic conditions that significantly condition the production process. Closer examination, however, reveals that there are two other aspects that seem to have particular influence, albeit less evidently: history and culture. The historical dimension concerns cognitive content, which is the knowledge and know-how consolidated over time. This means customs, both in terms of production methods and how the product is consumed, which have become consolidated over time and are deep-rooted in the territory. From this perspective, typical products are part of local heritage and have a role in a place’s history. Moreover, local products have an extremely important cultural dimension, since they express the way of life and mentality of people living in a particular area. Food, painting and sculpture are in fact only some of the many ways in which culture is expressed and concretised, and the results of these activities are an integral part of it. It is evident that these three dimensions are not distinct, but tend to overlap and mutually influence each other. Nevertheless, while these dimensions are always present, they are expressed with varying intensity, thus leading to various “degrees” of typical character. For a product to be considered “typical”, therefore, it is not simply a matter of coming from a particular area, even if this is certified by a mark on the label, but must rather reflect a deep-rooted relationship with the territory in terms of the aspects outlined above. The characteristics of uniqueness that distinguish these products allow them to be theoretically considered speciality goods. In fact, thanks to these characteristics, typical products have strong brand identification and as such their purchasers are prepared to make a significant purchasing effort. Moreover, since they are speciality goods, they are part of the wider market of agro-food products which, conversely, are convenience goods and with which, sometimes, they may enter into competition.

From another perspective, the latter may be seen as common goods, i.e. homogeneous and self-explanatory products, which require embedded knowledge and lack symbols; while typical products often assume the nature of cultural goods, i.e. products which are not self-explanatory, which need additional services to direct the customer and which have “strong” and biunique symbolic and communicative elements.

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795 The valorisation of typical products At first, sight, it might seem fairly simple to valorise typical products, since their origin gives them original intrinsic or extrinsic characteristics, thus strongly differentiating them from other products in their category. In this sense, the typical aspect could represent a competitive advantage that may be made explicit and strengthened with official recognition in the form of an EU trademark which certifies its origins and makes it recognisable. It should, however, be specified that typical qualities represent a potential which needs to be developed, and many products which have obtained EU certification have not managed to translate this into significant commercial success. In reality, often certification does not represent a decisive factor in the choice of purchase, but at most a premise for the creation of a real competitive advantage. To turn this into concrete economic results, strategies need to be adopted to exploit the product’s distinctive elements. We should moreover highlight that, despite there being a common denominator (the link to a certain territory), this category does display a complete uniformity whereby it would be possible to identify a single strategy which businesses could adopt to valorise their products. Often, in fact, it is affirmed that such valorisation may be realised through a greater recourse to large-scale distribution, or by increasing public awareness of marks of origin. In reality, while these forms of development are ideal for certain types of typical products, they are ill-suited to others (D’Amico, 2002). In any case, it seems that no attempt at valorisation may work without customer education. In fact, unlike other common agro-food products, whose usage is often intuitive or, such as in the case of precooked foods, requires only basic information, with typical products it is often necessary to actively make the customer aware of their added value. One way to heighten awareness of a product’s distinguishing features is to initiate a process of acculturation aimed at promoting appreciation not only of its intrinsic attributes (for example, the aromatic characteristics of a wine), which are often superior to those of competing products, but, above all, at focussing on those immaterial elements which express other dimensions of the product’s typical and traditional qualities. From this perspective, the term “acculturation” means ensuring that consumer appreciation regards also the immaterial components such as a product’s history and production process, or the traditions and culture of the place from which it comes. Precisely the importance given to such elements leads us to interpret them as hedonistic products (Holbrook, 1980), i.e. goods in which the decision to buy and post-purchase evaluations are strongly conditioned by their capacity to excite emotions. Here, it may be useful to remember that Douglas and Isherwood have comprehensively demonstrated that the essential function of consumption is not that of

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satisfying primary needs for utilitarian and prosaic ends, in the way that food satisfies the need to eat, but rather its ability to create sense; food is not useful for eating, but for thinking (Corrigan, 1999, p. 43). This capacity to arouse emotions, which I feel is inherent in the concept of typical products, is found with varying intensity within the category of typical products but unfortunately is not always sufficiently highlighted. Focussing on the emotional dimension involved in the consumption of typical products is not in any way meant to belittle the their intrinsic components, but is aimed at identifying the best way to valorise those elements which, often, are not adequately promoted or, consequently, appreciated. We should perhaps here remember how Schmitt (1999) indicated the need for businesses to offer the consumer something more (the emotion of an experience) which does not cancel out the product’s benefits and functions, but rather integrates them in a new whole which takes account of the complex personality of each consumer. The importance of making the consumer aware of the plus value of this particular type of product suggests that the businesses that produce or distribute them should adopt a relational approach with the customer (relationship marketing).

The Pine and Gilmore model applied to typical products The idea of interpreting typical products in relation to their capacity to arouse emotions in the consumer leads us to apply to them the product valorisation model proposed by Pine and Gilmore (1999, p. 22). The model is based on the phenomenon of the progression of economic value, i.e. that demand tends to saturate an ever-wider supply and at falling costs, since businesses are called on to adapt, to offer a “superior” product with better features which increasingly involve the consumer. The progression of economic value is realised through a series of offers constructed on those beneath; as we climb up this pyramid, the added value offered to the consumer increases. At the base are commodities, i.e. raw materials extracted from the natural world. This class generally includes, for example, minerals and the other products of the earth, agricultural goods, etc. Their main characteristic is their high fungibility, insofar as these are products that cannot be differentiated. This does mean that a producer of commodities may not offer a number of varieties, but, in the framework of each variety, each commodity is easily replaceable. The critical factor of success for producers is represented by cost. To escape price competition and to deal with consumers’ increasingly diverse demands, many businesses combine commodities or transform them, to create goods. These are material products that may be differentiated from each other and, consequently, their degree of replaceability is extremely low. Competition between producers is no longer based merely on price, but also on the intrinsic and extrinsic qualities of the goods on sale. Very often the focus of differentiation is shifted from physical to immaterial components. As their influence gradually increases, the commodity itself assumes an accessory nature, and what is being offered is a service. When the business uses the services provided to involve the customer, offering a series of benefits that remain in his mind, the company offer is transformed into

experience. These services are embodied in events that involve individuals on a personal level, and thus make the experience memorable. It is important that the experience is memorable in order to avoid the risk of massifying it, whereby the pleasure and satisfaction caused by the offer would constantly diminish with each repetition. In the opinion of the two American scholars, such a risk may be avoided by customising the experience offered. This means initiating a series of events that cause a change in the individual, and this bring about his transformation. The idea of this latter type of offer is based on an observation made by various psychologists, who consider that the perception of an environmental stimulus generates an adaptive physiological and behavioural response, which is manifested also in somatic variations (Smith and Ellsworth, 1985). On the basis of the Pine and Gilmore model, each business should, above all, identify at which stage their products are and, subsequently, evaluate how to formulate a new offer to increase their economic value. The typical product as experience Typical products could be inserted at the second level of this scale of value, distinguishing them from the other products in the same commodity sector, which are defined as commodities. At least some of them (specifically niche products), could climb up the entire pyramid of value and be marketed as experiences or even as transformations, thus increasing value for the customer and for the business. The development of typical products into means of experience or transformation could be realised in various ways. The simplest would seem to be that of focussing on a product’s sensorial aspects, i.e. by adding elements which intensify the customers sensorial interaction with them (Pine and Gilmore, 1999, p. 22). By their very nature, agro-food products appeal primarily to the senses. Various chemical substances are freed during chewing and, on contact with the mucous membrane in the mouth and on the tongue, lead to the complex of sensations that define flavour. The sensations of taste (sweet, bitter, acid, salty), and the perceptions of burning, spiciness, cold or astringency also originate on the mucous membranes of the oral cavity. The sense of smell is strongly stimulated by food. But it should be observed that the sensation of aroma, more intense and at times different to the smell perceived externally, is also generated when the volatile substances freed in the course of chewing reach the olfactory epithelium in the nose. The visual impact plays an important role in our decision to consume food products: we eat first with our eyes and then our mouths. We will often refuse to taste a product if its appearance or packaging give us reason to doubt its good flavour or state of conservation. On the basis of these observations, the producers or distributors of typical products may accentuate the sensations created by the consumption of these goods through a process of sensorialisation, i.e. accentuating those elements which have a strong impact on the least used senses or reducing those which may cause a negative perception. Producers could try, for example, on one hand, to deal with the visual “defects” of some typical products (for example the mould on the rinds of certain cheeses puts off

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many consumers) without affecting the product; and, on the other, to accentuate the natural appearance of certain products, exploiting imperfections to give an additional touch of authenticity. In addition to sensorialisation, it is possible to promote product experience in other ways, such as making the goods rare by selling them in limited quantities or setting up clubs to bring together the appreciators of a certain product. A good example is the case of Brisighella, a typical oil from the Ravenna area produced in limited quantities and sold at a high price. Some years back, a number of olive growers decided to produce an even more “special” product, by selecting a high-quality variety of olive, Ghiacciola, grown in a much more restricted zone. Apart from raising the value of the new product, this move had a knock-on effect for standard Brisighella oil. The method most widely used for promoting customer experience of a product is, however, that of organising an event[2]. During such events, often inserted within larger shows, there is an attempt not only to involve the consumer in the appreciation of the aromatic and cultural characteristics of the commodity but, also, to relate directly with the producer and other lovers of the product. Promoting an experiential approach to the product often leads the business to widen their offer through processes of diversification and lateral integration. In the case of typical products, producers and distributors have the possibility of extending their activity to the sectors of publishing and tourism. The hedonistic dimension of typical products and the consequent experiential approach have significant managerial implications not only for the producers, stimulated to increase the emotional content of their offer, but also for distributors, who aim to create an environment (whether real or virtual) which involves the consumer in the act of purchase. In conclusion, I feel that we should look at a new form of offer related to typical products: the eating experience. The case of Esperya.com: an example of an experiential approach online The considerations made so far, regarding how to valorise typical products, are embodied in an interesting initiative developed over recent years which exploits new technologies. This is Esperya.com, the internet site specialising in the sale of typical agro-food products or, as its founder defined it, “the largest on-line store of Italian food and drink specialities”. A brief history Its launch dates back to the late 1990s, when Antonio Tombolini realised the potential offered by the commercial use of the internet and the world wide web in the field of agro-food products. There were already some websites offering typical products, but in each case the product range was either extremely specialised (since the sites were those of individual producers who marketed only their own products), or otherwise one-off initiatives, set up by improvised distributors who hoped to exploit the internet to earn easy money by selling products on line which they only procured themselves after they had received an order. In February 1998 in Porto Recanati, in the Italian province of Macerata, Antonio Tombolini, together with his brother Paolo and an old school-friend of his (Lorenzo

Giuggioloni), set up an unlimited partnership with a capital stock of 30 million lire (approximately £10,000). The organisational structure was fairly simple and based on a clear division of the duties: Antonio’s brother dealt with the shipments, his friend with managing the suppliers, while Antonio himself had the delicate task of looking for typical products and selecting suppliers. The choice of the name and trademark seems highly appropriate, since Esperya is the name by which the ancient Greeks called Italy, and derives from Hesperus, the star of the sunset; while the logo, composed of a red star on a white background, evokes the image of an apple, sacred fruit guarded by the priestesses of Hesperus, cut in half horizontally, where the core and seeds are arranged in a crown shape to symbolise the star (see Figure 1). A lack of funds caused the founders of the project to forgo the use of web designers, and to familiarise themselves with the use of html tools. The site is constructed so as to evoke, in the visitor’s imagination, a shop. Each product in the company’s portfolio is provided with a brief profile containing extensive information (sometimes even historical notes) and a picture. Overall, the graphics are fairly simple and designed for rapid page visualisation.

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Typical products online Once the technical difficulties had been overcome, on 20 September 1998 Esperya went on-line. The first visitors to the site were welcomed with a simple message which immediately made it clear what the site had on offer and who it was aimed at: “Be warned: if for you pasta is just pasta, and Parmesans are all the same, this site is not for you! . . . But if you know, or suspect, that it is still possible to eat and drink better than many would have us believe: try us!”. After the first year of business, during which the company became known and appreciated by a growing number of surfers, in April 2000, an important agreement was made with the express courier DHL to perform deliveries of Esperya products all over Europe in 24 hours. The choice of entrusting DHL with the responsibility of performing the deliveries was not motivated only by the courier’s high level of reliability, but also by the awareness that the company they chose would have the delicate task of representing the company at the moment of delivery. The particularly high level of interest displayed in the USA, with its large number of Italian immigrant families wishing to taste the foods of their country of origin, led the company to open their own distribution centre in Elmsford, near New York. In the meantime the company changed legal status and name, to become IFE Italian Food Experience srl. The excellence of the results achieved in under two years caught the attention of the publishing group, Gruppo Editoriale L’Espresso, so much so that in 2000, through the subsidiary Kataweb SpA, they bought 70 per cent of IFE srl. 30 per cent of the capital

Figure 1. Company logo

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remains with the founding partners of the site who continue to contribute directly to its management. Kataweb gave a shot in the arm to Esperya’s marketing, ensuring it greater visibility and helping it become one of the “cult sites” of Italian e-commerce.

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Widening the offer The validity of the tried and tested formula led to a widening of the offer, with the intention of exploiting scale-economies and consolidated know-how. This led to the progressive introduction of a series of other sites or, as they like to call them in the company, “shops”: Abbatya, Tobya, Enotrya and Iberya. Abbatya, the first to go on-line, in November 2000, specialises in the selection and sale of quality beers. The assortment is composed of over 100 beers from all over the world of various types (ale, wheat beer, lager, stout). The intention is to promote the quality products of small Italian and foreign breweries. Surfers can choose to purchase just one bottle if they want, without being forced to make a minimum order. In February 2001 Tobya was launched, a site aimed specifically at a particular type of consumer found all over the world, whose diet is subject to particular limitations for religious reasons, since Tobya sells kosher food products conforming to the dietary laws of Judaism, and which have been certified by a Rabbi. Tobya’s products are not aimed only at Jews, but at all those who want to know more about a culture different from their own and who are interested in learning more about dietary laws in particular and about the history, traditions and culture of the Jewish people in general. To satisfy this desire for acculturation, Tobya selects and sells specialised publications on the subject, and the site hosts a Forum where visitors’ ideas, opinions and suggestions are posted and compared, to encourage discussion and education. Particular attention is paid both to the storage and shipping of Tobya’s products. The Tobya.com distribution centre is the same used for Esperya’s other products, but the kosher products are stored separately. Different refrigerators and shelving are used to ensure that there is no contact between kosher meat-based products and kosher dairy products. This separation is due to the fact that one of the Old Testament dietary laws observed by practising Jews states that dairy products and derivates must not be mixed with meat and its derivates. September 2001 saw the launch of the site Enotrya, which specialises in quality wines. The wide assortment includes over 300 wines from France, Spain, Switzerland, Austria, Germany, the USA, Australia, Chile and, naturally, Italy. The decision to undertake this initiative involved a significant investment on the part of Esperya since, as is stated on the site, “We don’t cheat at Enotrya: we really do have the bottles”. As part of the company’s process of development, in November 2001, they launched Iberya, a site offering a selection of Spanish foods and wines. This is a replica of the original model that aims, in particular, to exploit the market trend in favour of ethnic and, more specifically, Spanish food products. Among the recent projects developed by Esperya, two seem particularly worthy of attention: Osterya and Esperymentando. Both these initiatives were set up following requests from Esperya customers, who wanted to experience the food not only virtually, but also physically.

Osterya is a franchising chain comprising about thirty restaurants specialising in typical cuisine, located both in Italy and abroad, with the common denominator that they are all run by people who nourish a real passion for food. The Esperya Osterya is not simply somewhere where you can go out for dinner; but is intended as a place in which wine and food experiences, flavours and knowledge can be discussed and exchanged. The host of Esperya acts as the catalyst and point of reference for such discussions. This means living an experience as if it were a play, with an actor (the restaurateur, the host) and a theatre (the restaurant, Esperya’s Osterya). To achieve this, Esperya provides for the organisation of exclusive weekly wine and food events, such as meetings with producers, guided tastings, and themed dinners with celebrities. On these occasions, diners are served traditional Italian wine and food products, many of which are the same as those selected and sold online by Esperya. The customer thus has the chance to taste Esperya products and is also motivated to purchase them online. Since each restaurant has an internet point dedicated to the Esperya site, customers can order the products they have just tasted at the restaurant, and arrange for them to be sent to their homes. The second initiative, which to a certain extent is connected to the previous one, was triggered off by the growing interest in food tourism. It is known that food and wine are the second greatest attraction for foreigners travelling to Italy and that, consequently, a new approach to this ancient form of hospitality will benefit the future development both of tourism and of food production. The search for local specialities throughout Italy is made easier for consumers thanks to Esperymentando, an initiative in which the Marches company accompanies lovers of good food to the places where it is produced. This is the first travel agent and tour operator specialising exclusively in gastronomic tourism. The formula adopted is that of the long weekend, generally from Friday afternoon to Monday morning, during which the customer has the chance to visit often forgotten historic towns in Italy, the places where Esperya’s delicacies come from. Once there, customers can learn about the product’s history from the producer’s own mouth and see for themselves how it is made. The statistics and the reasons for Esperya’s success In terms of performance, the results so far achieved by Esperya may undoubtedly be considered excellent. It is no coincidence that Esperya has been called “the Italian answer to Amazon, but without the debts of the famous online bookstore”. Esperya, with an average of 4,000 visits per day, is in fact Europe’s most visited on-line speciality food store, and has a customer portfolio of 25,000. The assortment includes over 1,000 Italian food specialities. There are on average 75 orders per day, which rise to 150/180 in the period between October and December. In 2001, turnover amounted to 4.5 billion lire. The fact that the company has still not made any profit is not an indicator of failure. This phenomenon is common to many businesses of the new economy which, despite high losses, have seen their share prices rise exponentially. There are a great many reasons for Esperya’s success and they certainly are not due to the site itself and per se. Although original and extremely user-friendly, it hardly has a fantastic layout or breathtaking graphics. It relies on “normal” technology in that it is

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suited to its aims, without superfluous elements, and that it offers maximum transaction transparency. However, these are features that many other e-commerce sites also boast. The reasons for commercial success must therefore be sought elsewhere. One reason is to be found in the validity of the initiatives undertaken over the years, aimed, above all, at breaking down all the possible barriers, both real and psychological, which may hinder on-line selling. With this in mind, new customers are invited to take advantage of an offer known as “il Pacco del Diffidente” [“Pack for sceptics”]. This is a selection of Esperya products offered at low prices aimed to get the customer to test out all the company’s services (in terms of delivery times, secure payment, post-sales guarantees, etc.). Particular attention has always been paid to customer satisfaction. Often, people are reluctant to buy on-line because they imagine it is difficult to return the goods if they are unsatisfied. The right to return the goods, despite being provided for under current legislation, in practice encounters many difficulties, which often means that unsatisfied customers do not take advantage of it. “We have chosen not only to respect the law, but to go beyond it”: this is the slogan Esperya uses to show its commitment to ensuring the right to return goods at conditions which are further-reaching than current legislation governing on-line sales. In order to help them keep track of the status and progress of their orders, customers are sent e-mail confirmation of shipping details and other information (order number, date the package was sent, shipment number). Precisely because of this obsessive attention to the customer’s peace of mind, Esperya.com was one of the first six Italian sites to be certified with the Web Trader mark. This is awarded by a group representing the major European consumers’ associations to those businesses present on the internet which respect a strict code of conduct providing extensive guarantees for on-line purchasers. In the light of this, in mid-2002, Esperya introduced a service aimed at increasing their visibility and, in particular, at reaching those still averse to buying online. The initiative was developed in collaboration with the Conad supermarket chain, and involved setting up internet points in a number of stores, where it is possible to order Esperya products and then collect the goods at the supermarket the next day. Probably, however, the real factor of success is the “shopkeeper” philosophy which inspires the business and which is based on a desire not to have a one-off contact with the customer, but, rather, to set up a stable and intimate relationship based on trust. Generally, in fact, the relations between business and customers are circumscribed to the negotiation phase (in which the conditions are defined) and to the delivery or supply of the product, according to whether we are dealing with goods or a service. Customers of Esperya, however, may also intervene at a more fundamental level, by reporting on typical products they have tried or are looking for. Moreover, Esperya supplies a series of services such as, for example, a mailing list to inform customers about special offers and new arrivals. “The customer – states the founder of Esperya – must be able to count not only on efficient technology, but also on finding someone able to answer his questions. And although the internet is a tool with great potential for this, there remains the difficulty of how to involve the customers through contact with the site alone. This is why we try

to give our web pages a perceivable human touch; it’s the only way to allay people’s fears about making purchases on-line” (Tombolini, 2000, p. 33). In line with this philosophy, the site is designed as a discussion forum; the customers ask questions and the “shopkeepers” supply answers; a site where you can give advice, complain, explain things and clear up any doubts. The Esperya homepage contains a link labelled as POTS, which stands for “Pick of the staff”. By clicking on this link, the visitor can get to know those who work with Esperya personally and hear about their personal favourites among the products sold by the company. It is above all on the activity of acculturation aimed at potential consumers which Esperya has focussed, aware that this is the only way to win the trust of those who appreciate typical specialities. This explains the launch, in January 2001, of Cibarya, Esperya’s magazine of food and literature, edited by Giulia Birindelli, and published online every month. There are many regular features: “Semplicissimus”, an anonymous comment by a celebrated connoisseur; “Cibarye quotidiane”, a round-up of the most interesting articles dedicated to the subject of food taken from the leading Italian newspapers; and “Ricette, scriveteci le vostre”, where readers can write in to share their recipes and suggestions. A further initiative is the creation of a discussion forum on everything regarding, directly, or indirectly, good food and wine. Another factor which may justify Esperya’s success is its ability to adapt to the environmental changes which distinguish the businesses of the so-called new economy. In particular, the recent events characterising many initiatives in the field of the “new economy” have emphasised the need to proceed gradually by introducing new technologies, thus creating an economy which is a hybrid of the old and new economy (Kotler et al., 2002). It is in this framework that we find the Esperymentando and Osterya initiatives, aimed at an original integration of traditional tools with the opportunities offered by new technologies. As we have seen, the case of Esperya is a concrete example of how to realise the process of valorising typical products by climbing the pyramid of value described previously. Basically, offering the possibility of going on gastronomic holidays or eating in restaurants specialising in typical products is nothing more than an attempt to transform the potential customer. Basically, it seems that the term “experience”, contained in the business’s trading name, perfectly encapsulates the basic idea which inspired Esperya’s founder: “interpreting food as an experience”. Conclusions On the basis of the considerations I have made, and through the analysis of the business case considered, we can affirm that for any business strategy to be effective, producers of typical products need to focus on marketing, rather than on the product, which is what they have done up until now[3]. Businesses producing typical products must, then, abandon the idea that consumers will simply choose products of higher quality, since such an attraction is often insufficient in the face of the strong competition afforded by the food industry and large-scale distribution.

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In other terms, they need to abandon the simplistic and reductive concept of “features-and-benefit marketing”, since this is still anchored to the mere physical nature of the goods (Schmitt, 1999), and rather to valorise them fully by adopting the experiential marketing approach already widely used for other types of commodities. Nevertheless, we should remember the specificities which distinguish typical products from other categories of commodities and take into account the diversities within the category. This process of valorisation may be encouraged by the advent and diffusion of new information technologies, which offer producers ever larger and differentiated “shop windows”, on the condition that they implement appropriate valorisation strategies. In particular, the internet makes it possible not only to develop reachable markets, but, above all, to create a stable relation with the customers (relationship marketing), aimed at valorising those immaterial components of the product which are most difficult to perceive and, thus, most appreciated by the consumers. Esperya demonstrates that this type of approach may be realised concretely: basically, going to an Osterya or on a trip offered by Esperymentando means combining pleasure with eating in an entertainment experience. Through such initiatives, Esperya’s intention is to educate its customers and transform them into connoisseurs of typical products, in the awareness that fostering an interest in typical products also serves to increase the consumption of their own products. Notes 1. We should remember that the anti-globalisation movement in Europe dates back to a protest made by a group of French breeders led by the legendary Jose´ Bove´in in defence of Roquefort, the first French cheese to obtain official recognition as a typical product. 2. The two American scholars also identify other ways such as that of incorporating the goods in a experiential mark or of producing goods requested by the directors of experience. Schmitt (1999, p. xiii), meanwhile, distinguishes five ways of promoting the customer experience of products, which he calls SEM (strategic experiential modules): sensorial experience (sense); emotional experience (feel); creative and cognitive experience (think); physical experience and lifestyle (act) and identity-social experience (relate). 3. Filser (2001) clearly showed that the present crisis in the agro-food sector is indicative of the crisis of a certain conception of marketing and of the practices triggered by it. References Corrigan, P. (1999), La Sociologia dei Consumi, Franco Angeli, Milan. D’Amico, A. (2002), Le Strategie di Marketing per la Valorizzazione dei Prodotti Tipici, Giappichelli, Turin. Filser, M. (2001), “Crise alimentaire ou crise du marketing?”, Revue Franc¸aise du Marketing, No. 183/184, pp. 11-19. Holbrook, M.B. (1980), “Some preliminary notes on research in consumer esthetics”, Advances in Consumer Research, Vol. 7, pp. 104-8. Kotler, P., Jain, D.C. and Maesincee, S. (2002), Il Marketing che Cambia, Il Sole 24 Ore, Milan. Pine, B.J. II and Gilmore, J.H. (1999), The Experience Economy, Harvard Business School Press, Boston, MA. Schmitt, B.H. (1999), Experiential Marketing, The Free Press, New York, NY.

Smith, C.A. and Ellsworth, P.C. (1985), “Patterns of cognitive appraisal in emotion”, Journal of Personality and Social Psychology, Vol. 48, pp. 813-38. Tombolini, A. (2000), “Gli ‘artigiani’ del Web: Esperya on line”, Impresa & Stato, No. 52, p. 33. Further reading D’Amico, A. and Baglieri, D. (2002), “Strategie di sviluppo nel settore agro-alimentare: i prodotti tipici tra identita` locale e sfide biotecnologiche”, Atti XXV Convegno AIDEA sul Tema “Competizione Globale e Sviluppo Locale tra Etica e Innovazione”, Giuffre`, Milan. Letablier, M.T. and Nicolas, F. (1994), “Gene`se de la typicite´”, Sciences des Aliments, No. 14, pp. 541-56. Mipaf (2001), L’Agroalimentare Italiano: Il Valore della Qualita`, Mipaf, Parma, 29 November. Nomisma (2000), Prodotti Tipici e Sviluppo Locale: Il Ruolo delle Produzioni di Qualita` nel Futuro dell’Agricoltura Italiana, Il Sole 24 Ore, Milan. Schmitt, B.H. and Simonson, A. (1997), Marketing Aesthetics: The Strategic Management of Brands, The Free Press, New York, NY.

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Investigating safe egg use in the catering industry A pilot study to estimate the nature and extent of adherence to government guidance Eunice Taylor School of Leisure, Hospitality and Food Management, The University of Salford, Salford, UK Keywords Food safety, Catering industry, Government policy Abstract Despite a 1993 ACMSF Report on Salmonella in Eggs, which offered specific guidance for caterers, outbreaks of Salmonellosis still occur, are frequently associated with the catering industry, and in many cases eggs have been implicated as the source of infection. Using a case study approach and multiple sources of data collection to achieve reliable results, this study assessed a random sample of 100 catering managers for their understanding of and adherence to government guidance. Establishments were randomly selected from four “high-risk” sectors: function catering, nursing homes, restaurants, and sandwich outlets. Results indicated that there was little awareness of food safety risks associated with eggs and that recommended good practice was not widespread. This was evident in all four sectors and especially in sandwich outlets. Possible reasons for and the implications of these findings are discussed, including the lack of specific advice on safe egg use in the current Basic Food Hygiene Certificate and recommendations for research into effective means of communicating safety messages to caterers.

Introduction Since the late 1980s there has been extensive public, industry and Government concern over the safety of the UK egg supply. It was precipitated in December 1988 by a televised statement from the then junior health minister, Edwina Currie, concerning the safety of eggs, followed by a Government report implicating hens’ eggs as a new and important source of human Salmonellosis (House of Commons Agriculture Committee, 1989). This led directly to the Chief Medical Officer of Health justifiably advising the public that raw eggs should be avoided and for vulnerable groups all eggs should be thoroughly cooked, as well as suggesting alternatives of pasteurised eggs and egg products. The advice is still in place today. In 1993 the Advisory Committee on the Microbiological Safety of Food (ACMSF) produced a Report on Salmonella in Eggs that offered further specific guidance and

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The author would like to acknowledge the contribution of the Food Standards Agency for financial support in this project, and the involvement of the project statistician, fieldworkers and advisory panel (project statistician – Anna Hart, Head of Statistics, University of Central Lancashire; project fieldworkers – Peter Manning, Independent Environmental Health Officer and Jerry Taylor, Independent Catering Consultant; advisory panel – Professor Eric Bolton, Deputy Director, Manchester PHLS, John Forte, Chair: HCIMA Technical Advisory Group, Alan Walker, Food Safety Group Leader, Preston, Dr Richard North, UK Egg Producers Association and Victoria Devon, Independent Egg Producer).

made recommendations for the poultry industry, caterers and consumers (ACMSF, 1993). The recommendations directly relating to caterers can be summarised as: . eggs should be consumed within three weeks of lay (i.e. served to the customer within this time); . once purchased, eggs should be stored in a refrigerator; . caterers should increase their use of pasteurised eggs, particularly for dishes that are not subject to further cooking prior to consumption; . the Government should seek to increase public awareness of the correct way to store eggs in catering premises; and . food hygiene training programmes should pay particular attention to the correct handling of eggs and the avoidance of cross-contamination. The committee have reviewed this guidance twice in subsequent years (1998 and 2001; ACSMF, 2001) and continued to support all five recommendations. There is, however, little data to determine if caterers are following this guidance and successfully minimising known risks from the use of eggs. During recent years the UK egg industry has undertaken many initiatives to reduce the possibility of the contamination of eggs with Salmonella species. In particular, the vaccination programme to control S. Enteritidis appears to have led to a dramatic fall in human infections. However, there are still outbreaks of Salmonellosis, with eggs often implicated as the source of infection (Sin et al., 2000). These Salmonellosis outbreaks are also frequently associated with the catering industry, which is unsurprising in view of the multiple and pooled use of eggs and the increased chances for cross contamination. The recent ACSMF reports continue to warn against “complacency” and it is against this backdrop that this pilot study was commissioned. The catering industry represents a vast, varied and relatively unchartered area of the food industry with in excess of 360,000 of its estimated 600,000 premises in the UK (Airey, 2002). Research in this area is fraught with methodological problems, especially in terms of sampling and generalisability of results. It is perhaps for this reason that there is a dearth of sound research data concerning food safety in this, the largest sector of the food industry (Taylor, 1994). At the present time there is limited information on safe egg use in the UK catering industry per se, with only one study that investigated egg use by commercial caterers operating from domestic premises (Sin et al., 2000). Given that this study used telephone-administered questionnaires, however, the validity of the data is questionable. Another study in the Republic of Ireland (Food Safety Authority of Ireland, 1999) aimed to capture information on safe egg use but again relied on self-reporting. The sample selection, through volunteers from trade organisations, further hindered attempts to produce valid and reliable data. The aim of this research project was to obtain data concerning the nature and extent of adherence to Government guidelines. It was designed to overcome some of the main methodological hurdles to research in the catering industry by identifying clearly the sectors to be investigated, taking a representative sample within each sector and using an investigative case study approach to data collection. The researchers relied on the involvement of a multi-disciplinary Advisory Panel to oversee their research decisions.

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In the two years since this research was commissioned and completed, issues of egg safety have once again been in the spotlight with fatal outbreaks of Salmonellosis in the UK linked to Spanish eggs. The Food Standards Agency confirmed that “it is disturbing that in several cases it is emerging that the Agency’s advice is not being listened to” (Skinner, 2002). Method Population The Preston area was chosen for the study because the researchers, Local Authority and Public Health Laboratory Service (PHLS) had a close working relationship involving previous collaborative projects. The Local Authority provided contact addresses from their database of food premises and the Environmental Health Team agreed to assist with gaining access to food premises if necessary. It was also considered that Preston represented a mixed geographical area with typical diversity of catering outlets and in close proximity, keeping costs for fieldwork to a minimum. Research sectors Whilst little is known about adherence to guidance concerning the use of eggs across the catering industry, the level of risk in the different sectors can be estimated using PHLS statistics and local authority experience. These indicate four clearly defined “high risk” sectors for investigation: (1) function catering (e.g. wedding receptions, parties, business lunches and conferences); (2) nursing and residential homes; (3) restaurants; and (4) sandwich outlets. Whilst there are few outbreaks reported in the nursing homes sector compared to the others, it is of particular concern to local authorities due to knowledge of poor practice and the vulnerable nature of client group. A fixed number, random sample was taken from the four sectors (strata) so that the data generated would indicate if there was a problem in each sector and allow simple comparisons to be made. Twenty-five sites in each sector were identified giving a total of 100 sites for investigation. Sampling method The first stage in selecting samples for this study was the enumeration of sector populations. This was done primarily using a Local Authority computer database that lists all registered food premises in the Preston area. Contact addresses for all premises in each sector were generated, and screened by the research team for compliance with the selection criteria. In the case of function caterers, however, businesses proved too spread across the various sub-groups within the database for many to be clearly identified. The research team thus used the Internet site www.yell.com to obtain further addresses of businesses “advertising” services of this kind. Each business was contacted to screen out those not using eggs (e.g. curry or hotpot specialists) and to ensure that they did provide catering services for functions.

The next stage was the generation of randomised samples. Each list was randomised by the research team statistician, with samples of 25 businesses randomly selected from each of the four groups. To avoid fieldworker bias, each of the two field workers were randomly allocated 12 or 13 businesses from each group. Furthermore, if a premise proved ineligible (e.g. did not use eggs) the fieldworker contacted the statistician for a replacement that was again selected randomly from within the sampling frame for that category. The final 100 premises were a mixture of small and micro businesses (under ten staff), reflecting the nature of the industry (Airey, 2002). Field work: a case study approach Given the well-documented problems of self-reporting, the sensitive nature of the topic (public safety) and the “legal” context (adherence to Government advice) it was apparent at the outset of this study that obtaining reliable data (i.e. getting to the truth) would pose a significant problem. It was decided that on-site visits to the selected catering premises using a case study approach to data collection would best reveal a true “picture” of awareness and practice. Moreover, primary data was collected using multiple sources to increase reliabilty (Ying, 1994). These included semi-structured interviews with the manager/owner/head chef of the premises, direct observation of the food production area and examination of food safety documents. The research tools A two-part questionnaire was developed which focused on both awareness of the guidance and associated practice. Part one was a short and straightforward list of issues to be used as a guide for discussions on-site. The printed questions were designed to appear innocuous in nature so as to put the caterer at their ease. Tick boxes were kept to a minimum to avoid the appearance of an “inspection”. Furthermore, based on “narrative” interview technique pioneered by psychologists (Hollway and Jefferson, 1997), leading questions were avoided and the caterer was encouraged to “tell their story” in a non-judgemental atmosphere. Part two was completed off-site immediately after the visit was finished. It required the fieldworker to use the notes from the interview and subsequent observations of the kitchen and documents to formulate an overall assessment of the research questions. From observing kitchen practices they could assess the extent to which the answers to their questions were truthful and accurate. Two fieldworkers were employed to carry out the on-site visits: a catering consultant (with research experience) and an Environmental Health Officer (with catering qualifications and experience). Both had completed recent postgraduate study in food safety management and were registered food hygiene trainers. The research procedure Extensive pre-piloting work was undertaken to ensure that the research plan was achievable and that the methods could be reproduced on a larger scale. This included identifying and visiting premises (outside of the Preston area) to develop the protocol and research instruments, and regular Advisory Panel review. A standardised telephone introduction was developed which explained the visit was for government research and emphasised EHO liason, confidentiality and focus on eggs alone in order

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to obtain successful access to the catering premises. Most visits were carried out by prior appointment, and the respondent was identified as the person primarily responsible for the catering operation. The average time on the premises was 45 minutes. This allowed a full coverage of the all questions on the on-site questionnaire, examination of documents and direct observation of the relevant kitchen facilities and procedures. The fieldworkers visited all companies within an eight-week period. It was felt necessary to restrict the time period so that seasonal changes would not affect the reliability of the results.

Results The fieldworkers gained access to all premises, with most caterers co-operating fully. Their catering background was found to be invaluable as it was necessary to use probing questions concerning commodities, recipes, procedures and practice to elicit the information required. The results indicate that there was strong correlation between the fieldworkers in most instances, indicating that the findings are reliable. Adherence to guidelines on safe egg use: (1) Eggs should be consumed within three weeks of lay: . Awareness. Was the respondent aware of the advice? It was found that approximately 10 per cent of caterers were fully aware of the government advice, with little variation across sectors. A further 30 per cent knew that eggs were date coded but were unaware of how this related to the life span of a shell egg in terms of safety. The remainder had not appeared to consider the perishable nature of eggs (see Figure 1). . Practice. Was company practice consistent with the advice? It was observed that many caterers practiced good stock rotation that ensured eggs were used within 21 days, as shown in Figure 1. However, fieldworkers agreed that these generally high levels of “compliance” were likely to be more a result of convenience than “informed” policy given the results of the awareness section above. It is of note that 42 per cent of function caterers, 24 per cent of nursing homes, 40 per cent of restaurants and 44 per cent of sandwich bars were using eggs that could not even be dated from either the egg itself or the box. (2) Once purchased, eggs should be stored in a refrigerator: . Awareness. Was the respondent aware of the advice? The results indicate that there are still caterers unaware of the advice concerning the storage of

Figure 1. Awareness and practice of using eggs within 21 days of lay

eggs. Whilst there is no evidence of statistical significance, this appears to be particularly the case for the sandwich outlets (see Figure 2). . Practice. Was company practice consistent with the advice? Whilst the results indicate that approximately half of the catering operations were found to be keeping eggs under refrigeration at all times prior to cooking, it appears that sandwich operations were notably less likely to be doing so (see Figure 2). It was also found that many caterers were making use of refrigerated storage but kept the eggs in the kitchen for long periods during production. There were a few cases where the caterer was aware of the government advice but stored their eggs at ambient, convinced that this was more appropriate. Reference was repeatedly made to the fact that supermarkets are not required to keep eggs refrigerated, “so why should we?” (3) Caterers should increase their use of pasteurised eggs, particularly for dishes that are not subject to further cooking prior to consumption: . Awareness. Was the respondent aware of the advice? During the visits it was evident that most caterers had not considered using pasteurised eggs. In many cases they had no knowledge of the product or how to buy it. It was thus difficult to assess awareness without using leading questions. However, results from both fieldworkers showed only 32 per cent of function caterers, 24 per cent of residential homes, 40 per cent of restaurants and 16 per cent of sandwich outlets had any knowledge of this guidance (see Figure 3). . Practice. Did the company use pasteurised egg where possible? The use of pasteurised eggs was found to be limited, with notable differences between sectors. Of the caterers that did use pasteurised eggs the function caterers represented half, and there were no residential homes in the sample using this product (see Figure 3).

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Figure 2. Awareness and practice of safe egg storage

Figure 3. Awareness and practice of pasteurised egg use

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(4) The government should seek to increase public awareness of the correct way to store eggs (in the home) and in catering premises. Seeking to investigate an increase in public awareness proved difficult to assess. There was little evidence that the caterers’ customers were concerned with egg safety – as would be indicated by their questions concerning menu items, cooking methods etc. Very few caterers were aware of literature, leaflets or media coverage concerning egg safety targeted at them or the general public. Many mentioned Edwina Currie’s comments on Salmonella in eggs as the only source of information from the Government that they were aware of, though some did recall specific advice from Environmental Health Officers during visits. In total, approximately 50 per cent of the respondents (spread evenly across sectors) were able to report that they had received Government advice on any aspect of safe egg use, whether through commercial or public routes. It was noticeable that those caterers who had formal catering qualifications (very few within the sample) were more aware of sources of advice on food safety generally. (5) Food hygiene training programmes should pay particular attention to the correct handling of eggs and the avoidance of cross-contamination. This matter again proved difficult to assess because of the need for recall. Almost all of the caterers (97 per cent) had a Basic Food Hygiene Certificate, 15 per cent had the Intermediate and 9 per cent the Advanced. When questioned about their training, however, most respondents did not remember having specific advice given to them concerning eggs. The pattern was similar across all sectors with only about 25 per cent claiming recall of any issues of egg safety and with positive responses from all those who undertook the intermediate or advanced training. Related issues The serving of “soft” eggs products. The study showed that there was widespread use of “soft eggs” (semi-cooked) in menu items, particularly for breakfast style meals. A total of 28 per cent of function caterers, 80 per cent of restaurants, 96 per cent of sandwich operations and 100 per cent of nursing homes served soft eggs (see Figure 4). This is despite the guidance that this should be avoided and especially for vulnerable groups. In some of the nursing homes the risk was “controlled” by the clients signing “disclaimers” if they wanted to eat such products. The caterers believed that such documents would provide them with a “due diligence defence” in the event of food poisoning.

Figure 4. Use of soft and raw egg products

Raw eggs used in uncooked products. Examination of menus and in-depth discussion of recipes uncovered the use of raw egg in dishes that were going to be consumed with no further heat treatment. This was found to be the case in 8 per cent of function caterers and 12 per cent of restaurants (see Figure 4). Purchase of Lion quality eggs. Very few caterers appeared to be aware of the Lion quality egg scheme with not one caterer expressing clear knowledge as to what the symbol indicated in terms of Salmonella control. Many made verbal claims to purchasing Lion Eggs but evidence showed that they did not (see Figure 5). Those that had Lion eggs on the premises appeared to be purchasing them inadvertently from a supermarket or a supplier who did not stock any other eggs. There was no evidence of any caterer having developed a specification for egg purchase based on safety. Specifications were, however, available for size and quality in some premises. Food safety management and HACCP. On-site discussions identified very little knowledge of HACCP amongst the respondents, although many were aware of the term “hazard analysis”. Some companies had generic “hazard analysis” plans but there was limited evidence that these had been fully implemented. Commonly given reasons for this were that “the consultant produced those” or “that was before my time”. There was no mention of hazards associated with eggs on any of these documents. Evidence of food safety record keeping was actually limited, in most companies, to the monitoring of cold storage and in-coming food temperatures. A fully documented system (based on HACCP principles) was found in three function catering premises, all of which addressed the issue of egg safety (see Figure 5).

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Discussion Methodology: the use of a case study approach Given the sensitive nature of the topic and the “legal” context, it was apparent at the outset of this pilot study that obtaining reliable data would pose a significant problem. The use of a case study approach has provided a mechanism for overcoming this problem and, combined with informed development and rigorous piloting, has successfully established a robust research tool. In particular, the disparity between the information gained during the interview and actual practice (only a few feet away in the kitchen) justifies the avoidance of self-reporting and the use instead of an on-site investigative approach. Adherence to government guidance There is evidence from this pilot study that there was little awareness of food safety risks associated with eggs within the 100 premises investigated. More importantly, in

Figure 5. Use of Lion eggs, HACCP knowledge and systems

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terms of practice, the results indicate that recommended good practice is not widespread, with evidence of concern in all four sectors. The good practice that does exist is not necessarily based upon knowledge and reflects the nature of the operation: for example, the lack of storage space in most catering outlets often ensures a fast turnover of eggs. The results indicate that most caterers are not aware of the guidance concerning the safe shelf life of shell eggs (i.e. 21 days) and consequently do not adhere, knowingly, to this advice. Whilst awareness of the need for refrigerated storage was more prevalent there was not an equivalent improvement in practice, with many caterers storing at ambient. Given that the evidence indicates that eggs in these outlets may not be fresh and that they are likely to be stored under conditions that could lead to multiplication of any pathogens present, the issue of cooking becomes very important. It was found that the majority of caterers were serving semi-cooked (soft) eggs and even in the nursing home sector. Experts from the Advisory Panel confirmed that the risk from serving semi-cooked eggs could be considerably reduced if Lion eggs were used. The total lack of knowledge of the improved safety of Lion eggs and their limited use is therefore of significance. Of considerably greater risk is the use of fresh egg in products that require no further heat treatment, yet there was evidence that function caterers and restaurants were producing products of this kind. Whilst it may have only been a relatively small percentage, it equates to a large number of premises in the nation as a whole if the results are representative. The guidance concerning the use of pasteurised eggs, especially in the context of the uncooked egg products described above, appears to be largely unknown. There was considerable lack of knowledge of the commodity; issues concerning the availability in appropriate quantities, cost and quality were raised by caterers, but these were overshadowed by the widespread ignorance of the existence of pasteurised egg products. This is despite the fact that pasteurised whole eggs, egg whites, egg yolk and scrambled egg mix are featured in most supplier catalogues and readily available. Sector differences Whilst problems were identified in all four sectors there was evidence to suggest that overall awareness and practice in the sandwich outlets was inferior to other sectors. This could be due to a number of reasons including the ease of starting up a sandwich outlet compared to the businesses in other sectors and the lack of knowledge, experience, commitment and finances that might result from this. There was also clear evidence that nursing homes did not appear to be better informed or use better practices than the other sectors investigated, despite the “vulnerable” nature of the client group. The use of “disclaimers” rather than “best practice” to control risks from egg use was of particular concern to the Advisory Panel and research team. Conclusion The results of this study indicate that there is little awareness of food safety risks associated with eggs within the catering sector, and that good practice is not widespread. These findings are of particular significance due to the robust nature of

the research methodology and the recent backdrop of fatal Salmonellosis outbreaks linked to eggs. Clearly, government guidance is not being adhered to, and the possible reasons behind this need addressing if the situation is to improve.

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Food hygiene training The major format for food hygiene training in the UK is the training of food handlers via “basic” level training. To date, over 6 million food handlers have received this qualification, the majority of whom work in the catering industry. This study identified the link between attendance on a Basic Food Hygiene Training Certificate course and knowledge of food safety risks associated with eggs to be tenuous. Examination of the newly revised 2001 syllabus from the major training provider identifies that egg safety is not written into the course specifically, which perhaps explains the apparent lack of awareness of these issues for most respondents. This is despite the 1993 ACSMF recommendation for training programmes to pay particular attention to egg safety. Whilst there is over 30 years of evidence to suggest that training does not necessarily equate to a change in practice (Taylor, 1994), it is obvious that this cannot possibly happen in this context if the syllabus does not indicate appropriate course content. The Government have either failed to alert training organisations to the above recommendation or the training organisations have failed to act upon this information. Research into of the effectiveness of food hygiene training, suggested by the ACMSF in their Second Report, may be an appropriate context within which to review this issue. Effective communication Most catering operations are small businesses that have well documented difficulties in keeping up to date with the requirements of the legislation, codes of practice and guidelines. It is therefore not surprising that that approximately 50 per cent of the sample, evenly spread across sectors, claimed that they had never received information on egg safety. However, given the amount of literature that has been distributed by the egg industry, local and national Government this is unlikely to be the case. The Preston Environmental Health Officers report consistently giving advice, over a ten-year period, and the research team conclude that some messages have probably reached caterers in the past, but that they have not been internalised and therefore simply forgotten. There is an urgent need for further research to investigate the most effective means of communicating information to the many disparate branches of the catering industry. A national study This research project has established that good practice in relation to egg safety is not widespread in the defined geographical area of the study. Discussions with representatives of the catering industry (through the Technical Advisory Committee of the HCIMA), the head of food policy within LACORS and various interested parties have concluded that the results are probably indicative of the rest of the UK. However, the general consensus was that a larger study would need to be undertaken to confirm this. The resultant evidence could then be used to inform concerted action to rectify the current state of ignorance and poor practice. This is considered essential if all the positive developments further down the food chain are not to be jeopardised within the 360 000 catering premises in the UK.

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References Advisory Committee on the Microbiological Safety of Food (1993), Report on Salmonella in Eggs, HMSO, London. Advisory Committee on the Microbiological Safety of Food (2001), Second Report on Salmonella in Eggs, The Stationery Office, London. Airey, S. (2002), A New Approach from the Food Standards Agency, 1st National Conference, HACCP for Catering: The Way Forward, HACCP Press, Salford. Food Safety Authority of Ireland (1999), Survey of Egg Usage in the Irish Hotel, Restaurant and Commercial Catering Industry, Food Safety Authority of Ireland, Dublin, available at: www.fsai.ir/industry/egg_usage/egg_survey.htm Hollway, W. and Jefferson, T. (1997), “Eliciting narrative and the in-depth interview”, Qualitative Enquiry, Vol. 3, pp. 53-70. House of Commons Agriculture Committee (1989), First Report: Salmonella in Eggs, Proceedings of the Committee, HMSO, London. Sin, J., Quigley, C. and Davies, M. (2000), “Survey of raw egg use by home caterers”, Commun. Dis. Pub Health, Vol. 3, pp. 90-4. Skinner, R. (2002), “Agency re-emphasises advice on use and handling of eggs”, press release ref. R507, 29 October. Taylor, E. (1994), “Food safety and the UK catering industry”, PhD thesis, Food Policy Research Unit, University of Bradford, Bradford. Ying, R.K. (1994), Case Study Research – Design and Method, Sage Publications, London.

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Globalisation: a study of the poultry-meat supply chain

Poultry-meat supply chain

L. Manning and R.N. Baines Royal Agricultural College, Cirencester, UK

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Keywords Food industry, Poultry, Integration, Risk management, Supply chain management Abstract Increasing globalisation of the poultry-meat supply chain has led to consolidation and evolution of transnational companies, whether by vertical or horizontal integration, and the development of business clusters. There are significant benefits in these economies of scale, especially improved purchasing power and greater intellectual, technological and production resources for organizations to draw upon to provide products that meet differentiated customer needs. The consumer has seen the benefit of globalisation in lower commodity food prices, wider product choice and the advent of “convenience” food. Seeks to review the key factors that have led to the globalisation of the poultry supply chain and the impact of these changes. The poultry supply chain was chosen because it is highly integrated and the research includes a literature review and an evaluation to determine how it specifically relates to the poultry supply chain. Identifies the factors that affect current and future developments in food globalisation, including: relative strength of currencies; speed of technology transfer to developing countries; tax and regulatory burden in nation states or trading groups; cost of capital and labour and its effect on competitiveness; continuing production specialization and greater differentiation between domestic and international meat trade; and concerns over production methods, food safety and hygiene standards. Analyses the impact of globalisation of the food supply chain to all sectors and will be of interest to academics and those working in food supply.

Introduction Globalisation is defined by the Food and Agriculture Organisation (2003) as the “ongoing process of rapid global economic integration facilitated by lower transaction costs and lower barriers to movement in capital and goods”. Cable (1999) defines globalisation as “a mixture of international, multinational, offshore and global activities and involves a general progression from the domestic to the global”. Globalisation as a model of fully integrated international markets was defined by Henderson (1999) as those meeting two conditions: (1) free movement of goods, services, labour and capital: thus a single market of inputs and outputs; and (2) full national treatment for foreign investors i.e. there are no foreigners. This will, in theory, lead to competition solely on price unless products can be differentiated by their quality attributes. O’Brien (1992) made the following distinctions: . domestic (national) activities; . international (cross-border) activities; . multinational activities where companies operate in more than one country; . offshore activities (outside national jurisdiction); and

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global activities where companies offer a global service to customers within any country which is co-ordinated, integrated, service is unaffected by national frontiers, and production can be organized in any country.

In addition to these terms Goldberg (1983) observed that: “Many transnational companies have grown so large that their size exceeds that of some nation-states. Thus they could override, neutralize, or even counteract the political will of a nation state”. Economic globalisation is due to capital movements and specifically foreign direct investment (FDI). Julius (1990) described the flow of FDI in the 1980s between the three areas Japan, the EU and North America. This was “market-driven” trade in services as well as goods. Cable (1999) identifies that the flow to non-OECD countries has increased as a share of the total to: . Asian countries including China, Singapore, Malaysia, Thailand and Indonesia; . Latin America including Mexico, Chile, Argentina and Brazil; and . Eastern Europe primarily Hungary. The major beneficiaries of food supply globalisation are considered to be consumers who now have greater choice and lower food prices. The “chain captains”, those who control the supply chain, have also seen significant financial benefits. In the USA, the “power” is fully in the hands of the processors and food service, in Europe the balance of control is largely with the retailers, although there is an increasing consolidation of food processing. Organizations, seeking to improve performance, shareholder dividends and share price, are constantly looking to new markets to lower operating costs. Operating in a global rather than a national market will not only give rise to increased opportunities i.e. a potential reduction in operating costs whilst increasing the size of the market the organization can potentially trade with, but also increased threats, i.e. increased competition in the individual national markets. Gaining globally recognized quality standards such as ISO 9000 may mean they can access markets, which are otherwise unavailable to them. Cable (1999) identified that the system of global governance has developed in several ways: . an increase in complexity of institutions, global and local arrangements; . issues with the liberalization of capital flows and the environment; and . increased market self-regulation in capital markets, standard-setting and network management; The development of global governance is summarised (Table I) the externalities described are largely economic, however global food supply chains are increasingly being affected by both social accountability and environmental externalities. Organizational structures Jacobson and McDonough (1997) defined four categories of organizational structure: sole organization; an organization, which has free, open market relationships with its suppliers and customers, and does not have any horizontal strategic alliances with other organizations. This study has evaluated the benefits and disadvantages of being a sole organization:

Externality

Institution

Instrument

Macroeconomic management

G8, EU, OECD, IMF

Fiscal

Rules for promoting liberal trade

WTO, regional customs unions and TBT, SPS, Codex free trade areas

Rules for direct foreign investment WTO, OECD, EU, World Bank

Fiscal

Systematic stability for capital Self-regulation (IOSCO), BIS, IMF, markets and international banking IIF

Fiscal

Economic development

World Bank, IMF, regional banks

Fiscal

International environmental spillovers and agreements

UN agencies, regional agreements

Conventions/protocols

Standard setting

Self-regulation, ISO, regional agreements, EU, WTO, UN agencies

International standards, Codex, UNECE

Network management

Internet

ICT

Commodity price stability

Regional agreements, self-regulation

Fiscal

Social accountability, corporate ETI, ILO, self-regulation social responsibility, ethical trading

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Conventions/protocols

Sustainable development, climate change, environmental management

CSD, UNCED, self-regulation

Conventions/protocols

Risk management

Self-regulation

Conventions/protocols

Source: Adapted from Cable (1999)

(1) Benefits: . single entity that can react quickly to changes in the market and can be flexible in implementing new protocols; . independence in decision making; . potential for the organization to have a national, regional or individual identity; and . able to provide personal contact with suppliers or customers. (2) Disadvantages: . weaker procurement terms due to limited purchasing power c.f. group purchasing; . may not be able to reduce the fixed costs of direct (employees) and indirect labour, e.g. marketing, quality assurance, technical, sales and financial departments that will affect margin; . inability to overcome trade barriers and thus compete on a global scale; . unable to gain access to markets because continuity of supply cannot be assured;

Table I. The development of global governance

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unable to access capital finance to expand the business so options for growth are more limited; unable to access technology and the potential cost savings it can provide.

Horizontal integration Horizontal associations are where organizations producing similar products or different components of one product, form a co-operative association. Horizontal integration can also occur between a group of suppliers that supply to one customer and/or the development of co-operative buying groups to reduce operating costs. These types of associations are present in a number of industry sectors. This study has evaluated the benefits and disadvantages of horizontal integration: (1) Benefits: . reduced logistics and administration costs for individual organizations; . improved procurement terms through group purchasing power; . lowering of the fixed costs of indirect labour, e.g. marketing, quality assurance, technical, sales and financial departments; . improved access to markets because continuity of supply can be assured; and . horizontal integration may overcome financial barriers to trade. (2) Disadvantages: . loss of independence for decision making; . potential loss of individual contact between individual organizations and their supplier or customers due to centralization of decision making; . potential to lose the national, regional or individual identity of an organization; and . decisions are taken to the benefit of the horizontal association not individual businesses. Vertical integration Processors can extend their influence in the domestic market “vertically” by taking over key steps in the supply chain. In poultry-meat production, this can lead to a vertically integrated chain with operations from parent stock to retail/food service outlet and the key benefits are summarised (Howells and Wood, 1993): (1) Control benefits: . continuity of supply; . access to management information; . free communication and co-operation; . barriers to market entry; . product customisation possibilities; and . direct influence over manufacturing “deliverables” such as quality, delivery and cost.

(2) Economic benefits: . spread of overheads; . coordination as a single system (improved knowledge over all aspects of the operation); . reduced logistics; . reduced change-overs by system management; and . speed of data flow.

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Food-chain clusters A transnational corporation (TNC) (or food-chain cluster) can be formed by both vertical integration and expansion horizontally into foreign markets and forming links including joint ventures with other organisations. The Food and Agriculture Organisation (2003) define the growth of TNCs which dominate the world’s global food economy. The dominance of a reducing number of retailers or processors, due to consolidation, creates a market “force” in that the domestic producers seek to supply an ever reducing number of customers and if you don’t supply them you don’t have a market for your product. The “customers” are also increasing their global supply base so this creates even greater pressure on the domestic market resulting in food-chain clusters having extended influence over regional trading groups and the development of co-ordinated global supply chains. In 1970, there were 7,000 transnational companies, by 1994 there were 37,000 parent companies with over 200,000 globally spread affiliates (Kolodner, 1994). Geographically 90 per cent of the TNCs are located in the OECD countries and one third of all global trade is composed of financial transactions within the same TNC (Warhurst, 1998). Table II identifies the top-ten global retailers sales in 2002, Table III details the total sales for the top-ten global food manufacturers 2001-2002, and Table IV includes 2001 and 2002 data from some of the largest food service companies. These tables further highlight the economic power of the organizations at the end of the supply chain compared with the contract farmers at the beginning.

Rank 1 2 3 4 5 6 7 8 9 10

Retailer

Region

Global sales in emillion (2002)

Global sales in US$ million

Wal-Mart Carrefour Ahold Kroger Metro Albertson’s Kmart Rewe Tesco Aldi

USA Europe Europe USA Europe USA USA Europe Europe Europe

199,000 86,000 53,000 51,000 47,000 39,000 39,000 36,000 34,000 33,000

211,000 91,000 58,000 56,000 50,000 41,000 41,000 38,000 36,000 35,000

Notes: Conversion rate used is from Bank of England average annual interest rate data (2002) – e1 to US$1.06 and numbers have been rounded for simplicity Source: Cap Gemini, Ernst & Young

Table II. Top ten global food retailers

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824 Table III. Top ten global food manufacturers

Rank

Food manufacturer

Total sales in US$ million (2001-2002)

1 2 3 4 5 6 7 8 9 10

Nestle Philip Morris (Kraft) Con Agra Unilever PepsiCo ADM (corn milling) Tyson Cargill Coca-Cola Mars

46,600 38,100 27,600 26,700 25,100 23,500 23,400 21,500 20,100 15,300

Source: Leatherhead Food International (n.d.)

Food service company McDonald’s Tricon Total Tricon KFC Tricon Pizza Hut Tricon Taco Bell Tricon other Diageo – Burger King Whitbread (pub and high street restaurants) Pizza Express

Table IV. Top global food service companies

Sales in US$ million (2001) Sales in US$ million (2002) 40,630 22,300 9,700 7,600 5,000 0 1,510 Not analysed 270

41,530 24,200 10,200 7,900 5,400 700 1,700 1,620 320

Notes: Conversion rate used is from Bank of England average annual interest rate data 2001 – £1 sterling to US$1.45; 2002 – £1 sterling to US$1.51 and numbers have been rounded for simplicity Sources: McDonald’s 2002 Summary Annual Report; Tricon Annual Report 2002; Diageo Annual Report 2002; Whitbread PLC Annual Report and Accounts 2002/2003; Pizza Express Annual Report 2002

The development of contract farming The development of contract farming is part of the process of integration whereby the processor provides some or all of the inputs and agrees to purchase the outputs (“the crop”) which has been grown to a set specification and to set management procedures for an agreed price. The “contract” partnership can also include services such as technology transfer and training including advisory services, and regular inspection of the “crop”. The primary producer in effect is being paid a “management fee” to grow the crop or livestock. Taylor (2002) stated that: “vertical integration may result in benefits for consumers in terms of lower priced, high quality and more consistent quality meat. However, vertical integration combined with horizontal consolidation may also lead to an imbalance of economic power that will harm both consumers and producers”. Contract Farming is increasing as supply chains become more integrated. This study has evaluated the advantages and disadvantages to contract farming for the supply chain: (1) Benefits: . Depending on the method of capital financing the producer may not have to outlay the cost of inputs on receipt and this has a positive benefit on cash

flow, i.e. not having to borrow the capital to purchase seed or livestock with the resultant saving of interest payments. . Contract farming can provide a mechanism for external capital investment making it easier for new entrants to primary production. Financial institutions are also more likely to lend capital if there is a tangible contract. . Contract farming can ensure a more consistent business cash flow compared to more traditional methods of primary production financing. . Producers can grow “product” to an agreed specification and an agreed finished price rather than on the open market when finished product specifications and prices may fluctuate more significantly. . Common production standards can be implemented across a large integrated grower base more effectively than with a large number of individual organisations giving both quality and quantity assurance. . Access to marketing and sales skills, new technology and training facilities. . Central purchasing can reduce the cost of inputs. . Protocols can be implemented more effectively through the supply chain, e.g. welfare protocols, health and hygiene. (2) Disadvantages: . Imbalance of economic power. The imbalance of power can be countered by the development of effective growers associations which not only negotiate price, but also feedback on actual performance compared with objectives and developing a joint mechanism for continuous improvement to the benefit of all parties in the supply chain. . Loss of independence for some decision making. . Internal systems can introduce bureaucracy, add costs and stifle innovation. . The producer can become isolated from the consumer within the supply chain and they produce to a processors specification rather than developing awareness of their impact on the end product. . If the methods of production add cost (and add value) and then the processor/ retailer changes the specification, and the product is no longer suitable it may incur significant losses if the product then has to be sold on the open market at a much reduced price. . The processors or retailers may demand 100 per cent supply of all product produced and they also control the supply chain so in the event that the processors or price they are able to pay are no longer sustainable there are limited options open to the producer. . May have a “limited” approved supplier list which reduces purchasing flexibility and may predetermine input costs. The principles of contract farming have been developed as the focus of agriculture has changed (Appendix 1) towards private, closed markets. The change in organisational focus in primary production has also been influenced by market externalities and legislation, namely environmental, animal welfare and social welfare legislation.

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Environmental and social impacts of globalisation Howells and Wood (1993) identified a number of ways in which environment concerns affected sustainable global production, these included the way products are produced; the products themselves, in turn entailing banning of certain products, modification of existing products, and creation of environmentally friendly products, transportation and the disposal of toxic substances and waste products and the overall cost structure and the pattern of production. This has led to organizations transferring their production to the least cost environmental locations. The need for regulatory compliance with EU environmental directives including integrated pollution prevention and control (IPPC), animal By-products regulations, nitrate vulnerable zones (NVZ), waste management, waste incineration and landfill directives, and the EU water framework directive has the potential to increase the costs of production and make EU poultry meat uncompetitive. Corporate social responsibility The EC Lisbon Summit of March 2000 developed the strategic goal by 2010 of the EU becoming: “the most competitive and knowledge based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion” (Commission of the European Communities, 2002). Corporate social responsibility (CSR) is a major strategy to ensure this goal is met with organisations integrating into a single policy the social and environmental concerns in their operations and their interface with internal and external stakeholders. Increasingly TNCs are being asked to allow access to information beyond financial reporting which demonstrates the organizations commitment and performance against social and environmental measures. The impact of the cost of social and welfare legislation on an organization’s competitiveness is a key factor in the developing global food market. Business competitiveness requires knowledge and innovation from its personnel, and organizations are continually striving to retain a skilled, competent work force. A study in 1998 found that the number of employees in the UK food and drink industry with educational qualifications was 30 per cent lower than the EU average and 40 per cent less than Japan (DEFRA, 2002). Global governance and the interrelationship between foreign direct investment, trade and sustainable development are key dynamics to CSR policy and the demands of both internal stakeholder (shareholder, employee or contract farmer) and those of external stakeholders for more sustainable investments, compliance with internationally accepted standards and agreed instruments. The interest in CSR benchmarking for social and environmental performance has led to an increase in guidelines and codes of practice and also to social accountability being a pre-requisite for farm assurance standards for example the EUREP (European Retailers) Integrated Farm Assurance Standard which contains a module for worker health, safety and welfare. International instruments include the International Labour Organisation (ILO) core labour standard SA 8000, and the Ethical Trading Initiative (ETI) base code. The market place has also seen an increase in fair-trade and ethical trade initiatives and labelling of food products. Trade policy environment for agriculture Agricultural trade policy is formed as a result of individual nation domestic policy and international trade agreements. The WTO Uruguay Round defined a structure for trade

dispute settlements and rules for foreign investments, recognising that FDI rather than trade is now driving globalisation and there was limited agreement on trade-related investment measures (TRIMS). The European single market was formed in 1992 and not only addressed the need to remove trade barriers but also to address differences in national regulation. Regulations such as personnel health and safety, environmental, animal welfare, social issues may potentially cause trade restrictions and harmonization removes barriers to free trade and this has been gaining pace in the EU since 1992. Harmonization of standards at both a global and/or regional level has continued, for example, the ISO series of standards, industry-generated standards, and the BIS (banking) standards. The requirements for food safety and the introduction of HACCP (hazard analysis critical control point) based food safety risk management systems as defined through Codex Alimentarius Commission (Codex Alimentarius Commission, 1997) and the activities of the World Trade Organisation (WTO) in defining trade agreements needed to develop in tandem to prevent trade disputes into the future. At the 70th general session of the OIE (World Animal Health Organisation) a recommendation was adopted committing the OIE to take the lead on animal welfare. The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), which came into force in January 1995 with the WTO, was aimed at minimising the negative effects of unjustified health barriers on international trade (Baines, 2002). The harmonization of product standards is one technique, the other is deregulation, i.e. the mutual recognition of different national regulatory systems. The theme of the creation and recognition of a “harmonised” system and/or the better understanding of equivalence of standards was addressed by Baines (2000). The Uruguay Round also resulted in a specific Agreement on Agriculture (AoA). The three pillars of the AoA are market access, domestic support and export competition (Food and Agriculture Organisation, 2003). Knight et al. (2002) describe the aims of the AoA. Financial trade barriers can prevent individual primary producers from intensifying production due to lack of investment capital, but there are technical trade barriers (TBT) in place including: variations in industry standards, differences in legal regulation, differences in testing and certification procedures, i.e. additional certification requirements over and above those required in the country of origin and, sanitary requirements including animal welfare or disease control. Regional trade agreements (RTA) have also had an influence on freedom of trade and include the European Union (EU), North American Free Trade Agreement (NAFTA) between Canada, Mexico and the US, Mercosur between Argentina, Brazil, Paraguay and Uruguay, ASEAN, the Association of South-East Asian Nations and the Asian Free Trade Group (AFTA). World poultry-meat trade Given this set of externalities what is the likely impact on the poultry-meat sector? In the context of world poultry-meat trade, the volume of meat produced has risen from just under 13 million tonnes in the late 1960s to just under 62 million tonnes thirty years later and is projected to reach 143 million tonnes by 2030 (Food and Agriculture Organisation, 2003). The figures have been drawn together (Table V) and demonstrate that this rapid rate of growth of poultry-meat production from 1969-1999 is projected to tail off on a global basis (excepting South Asia), although poultry-meat trade still shows significant growth when compared to other sectors of global meat production, e.g. bovine/ovine meat production with tonnage increases from 1997/1999-2015 on a

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Table V. Poultry-meat production past and projected 4.7 2.7 2.1 0.5 5.3 2.6 18.8 5.2

1.0 0.7 0.4 0.2 1.5 0.7 8.1 1.5

Source: Food and Agriculture Organisation (2003)

37.2 34.6 13.2 10.6 8.6 0.7

12.9 12.1 3.3 2.5 2.2 0.3 10.5 5.4 3.2 1.1 15.5 4.9 27.7 2.9

61.8 51.2 31.3 20.7 15.6 0.9

Million tonnes 1987/1989 1997/1999

18.2 10.2 7.1 3.9 27.9 8.7 37.5 4.1

100.6 81.4 59.1 39.9 31.9 1.9

2015

27.3 16.0 11.6 10.6 39.9 14.1 44.1 5.7

143.3 117.5 93.5 67.7 56.4 4.1

2030

7.8 6.7 7.7 7.7 8.5 7.3 4.0 1.6

5.2 4.8 7.9 7.4 6.9 3.8

1969-1999

9.0 8.4 5.2 7.2 11.7 6.1 3.9 -6.7

5.4 4.1 9.4 7.2 6.4 2.6

3.3 3.8 4.7 7.9 3.5 3.4 1.8 2.0

2.9 2.8 3.8 4.0 4.3 4.3

Per cent p.a. 1989-1999 1995/1997-2015

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World Excl. China Developing countries Excl. China Excl. China and Brazil Sub-Saharan Africa Latin America and the Caribbean Excl. Brazil Near East/North Africa South Asia East Asia Excl. China Industrial countries Transition countries

1967/1969

2.7 3.0 3.3 6.9 2.4 3.2 1.1 2.3

2.4 2.5 3.1 3.6 3.9 5.1

2015-2030

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world basis being projected as 15.3 (bovine) and 4.5 (ovine) million tonnes respectively compared with 38.8 million tonnes for poultry meat (Food and Agriculture Organisation, 2003). Transitional (Eastern European) countries are predicted to only achieve 1989 levels by 2030, and Industrial countries to see growth of 1.8 per cent p.a. From the total projected increase the major volume is still in industrial countries (10 million tonnes); China (8.5 million tonnes); Near East and North Africa (3.9 million tonnes); and Brazil (3.1 million tonnes). One of the largest meat producers in the world is Tyson Foods, as was shown in Table II. The sales figures and operating income for 2001 and 2002 have been analysed (Table VI) based on their annual reports. The figures show that although sales have increase year on year (YOY) since 2000, mainly due to the acquisition of IBP, and poultry sales have grown 2.3 per cent YOY, the per cent gross profit has reduced over the same period from 11.2 per cent in 2000 to 7.7 per cent in 2002. This may well be a reflection of the continuing pressure on margins in the meat sector at retail and food service level and the cascade effect through the supply chain. This has also been reflected at the primary producer level and although the supply chain can carry a reduction in margin for a period of time when combined with increasing costs derived from implementing new legislation and external stakeholder requirements it will ultimately impact, depending on an individual organization’s capital reserves, on profitability, cash flow, ability to meet loan repayments and continue capital investment plans and then actual business and supply chain viability. In June 2003,

Business segment

Sales 2002 (US$ million)

Sales 2001 (US$ million)

Sales 2000 (US$ million)

Change (US$ million)

–

8,461 165 (2.3 per cent increase YOY) 1,884 2,254 40 12,804 815

Beef

10,488

2,027

Chicken Pork Prepared foods Other Total Gross profit Gross profit as percentage of sales Net income Net income as percentage of sales

7,222 2,503 3,072 82 23,367 1,817

7,057 619 818 42 10,563 903

Business segment Beef Chicken Pork Prepared foods Other Total

– – – – 7,268 815

7.7 383

8.5 88

11.2 151

1.6

0.8

2.1

Operating income 2002 (US$ million) 220 428 25 158 56 887

Note: YOY ¼ year on year Source: Tyson Annual Report, 2002

Operating income 2001 (US$ million) 32 250 27 15 (8) 316

– – – – – – –

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–

Change (US$ million) 188 178 (2) 143 64 571

Table VI. Financial figures from Tyson Foods 2000-2002

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ConAgra sold its chicken division to Pilgrim’s Pride for $590 million to form the second largest USchicken company with an annual net sales of approximately $5 billion. O.B. Goolsby, president and chief operating officer of Pilgrim’s Pride said, “ Our increased size and scale will also give us the ability to compete more effectively in a consolidating marketplace and further enhance the technological leadership and cost-efficiency for which we are known” (PoultryMeat.com June 2003). This quote summarises the driving forces behind globalisation. Risk management Following recent well publicised corporate failures, attention has focused on the need to effectively manage risk within individual organisations and ultimately the supply chain (ICAEW, 2002a). Indeed many countries are now issuing guidelines on how risk should be monitored and publicly reported. This has led to the development of risk management models and risk management is becoming “a core business process” although different organisations will develop different risk strategies, objectives and tolerances (ICAEW, 2002b). Risk management requires a multidisciplinary approach from the management team and integrated risk management through the supply chain will lead to improved business sustainability. The Institute of Chartered Accountants in England and Wales (ICAEW, 1998) defined gross risk as the risk affecting an enterprise before any action is taken to manage them and net risk as the risk that remains following management actions. A risk management strategy will include: . Identifying and ranking the risks inherent in the organisations activities including overall organisational goals. The goals may be formalised in a mission statement or business objectives and be communicated to both internal and external stakeholders. Identified risks must be evaluated in terms of the likelihood of their occurrence and the impact, or severity, if they do occur. This process is often termed risk mapping and can be represented graphically or in a matrix. . Determining which risks the business willing to accept by the ratio of risk and reward. . Determining which risks the business is not competent or willing to manage and either transferring or avoiding those risks, e.g. processors selling off bird growing sites and concentrating on their core business activity and mitigating the potential financial risk of bird loss through heat stress or disease. . Identifying the appropriate risk management techniques and implementing the management system required to manage the remaining risks. . Monitoring the effectiveness of the management system and developing a risk reporting mechanism. . Implementing the necessary preventative and corrective action to ensure improved performance. Risks can be categorised into distinct groups (ICAEW, 2002a): . strategic: risks resulting from the industry sector and geographical location; . operational: risks resulting from internal procedures that define operational strategy;

financial: risks resulting from the financial structure of the organisation; compliance: risks resulting from the need to comply with legislative requirements and societal or market expectations including health and safety, animal welfare, ethical trading; environmental: risks resulting from environmental compliance.

Poultry-meat supply chain

Complete elimination of risk or reduction to an acceptable level is not always possible especially in a livestock supply chain. There are four main ways of dealing with risk to either accept; transfer to a third party or sub-contractor via insurance, or through risk-sharing provisions with suppliers or customers; reduce and/or manage; and eliminate by adopting an exit strategy. The Arthur Andersen Business Risk ModelTM as used in the UK by Deloitte (Appendix 2) identifies risks common across industries that arise from the external operating environment, internal processes and the information used by management for decision making and determines both internal and external (environment risk) factors. External risks are outside the control of the organisation namely social, political or economic forces on a national or global scale. Management can alleviate the effect of such risks by having contingency or disaster recovery strategies in place. Internal risks are associated with the organisation and include employee, supplier and process specific risks, these should be more controllable than external risk. The development of these strategies in the context of globalisation should ensure improved management of financial risk including maximising cash availability, reducing the impact of currency changes, interest rates or flow of investment and managing price variation and its impact on margin. Key performance indicators need to be developed to act as an early warning mechanism to identify when risk is not being sufficiently managed and before management of the risk is lost.

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. .

.

Stakeholders’ performance requirements A key factor in ensuring competitiveness is continuing to maintain attractiveness for a range of stakeholders. (Bredrup and Bredrup, 1995). Stakeholders may have specific or even conflicting interests, in key performance indicators. Customer satisfaction is determined by “the difference between expectations and percepted performance”. Perceived performance is related to the interfaces between the organization and its stakeholders and their needs and should influence the performance indications used as outline in Figure 1. Bredrup and Bredrup (1995) define three different kinds of interfaces: (1) stakeholder and company are partners; (2) stakeholder has a direct interest in the output or process; and (3) stakeholder has an indirect interest in the output or process; Performance requirements are developed by effectively integrating both stakeholder requirements and strategic business requirements and are defined by Bredrup and Bredrup as: “Qualities that a company is expected to possess to fulfil the needs of the present and future stakeholders in order to sustain or enhance competitiveness”. These key business requirements need to form the business objectives which form the basis for risk management.

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Figure 1. Model of definition of performance

Summary Integration and the development of food-chain clusters deliver increased purchasing power and greater intellectual, technological and production resources for an organization to draw upon in order to provide products that meet differentiated customer needs. Customer benefits have been lower commodity food prices and improved choice. This has led to a shift in organizational focus to ensure that they become more customer driven and cascade the requirements of the final customer through the supply chain, are assured of the quality and continuity of supply from their suppliers, manage risk and change effectively and ensure flexibility and quality of service and become more innovative and interdependent with other members of the supply chain. In the poultry sector this has led to an increase in contract farming whereby primary producers are margin-driven rather than price driven and are seek to maximize margin when the quality and consistency of most of their inputs and the price of their outputs is largely outside their control. Further research is now being undertaken to determine the implications for the UK Industry as it finds it increasingly difficult to remain commercially viable in the global market. Key performance indicators (KPI) are being developed at all stages of the poultry-meat supply chain to monitor the competitive performance of the supplier-customer-supplier-customer supply chain and the ability to manage risk. Factors that affect future development of global poultry-meat trade include: . Relative strength of currencies and its impact on imports and exports of traded poultry products. . The speed of technology transfer to developing countries.

.

.

.

.

.

.

. .

Tax and regulatory burden in nation states or trading groups – as this is likely to effect competitiveness especially legislation on welfare, environmental control and waste management. Cost of capital and labour and its effect on competitiveness including social legislation. Continuing production specialization driven by consumer preferences for specific cuts or types of meat and the trading of meat cuts which do not have a home market, for example, China imports chicken feet and wings and exports the higher value processed cuts (Food and Agriculture Organisation, 2003). This will lead to a greater differentiation between domestic and international meat trade. Concerns over production methods (animal welfare), food safety and hygiene standards. The development and implementation of biosecurity protocols to minimise the risk of notifiable disease outbreaks which would impact on both profitability and the ability to export product. The cost of compliance with production standards and assurance standards especially if they do not “add value” to the traded product but purely seek to maintain regional (rather than global) market share when faced with external competition. Feed costs and the use of growth promoters on a global basis. The availability of land to grow the cereals necessary to meet the feed requirements of increasing global bird numbers.

The development of global governance to date has been largely driven by economic externalities rather than regulatory compliance. However, globalisation has led to increased risk to the supply chain from the spread of pathogenic bacteria and zoonoses present in meat and the global spread of animal disease. The impact of a major bird disease outbreak such as Avian Influenza, as shown currently in Asia and previously in the Netherlands, is significant not only financially to individual organisations but also potentially to the security of food supply. Effective risk management, both the development of organisational strategies and distinct national policy is key to future sustainability, especially in a society where increasingly responsibility for the safety of the food that is eaten is entrusted in food processors, the retail sector and food service.

References Ado, P. (1998), How Globalisation of Agriculture Will Affect the Poultry and Livestock Industries of South East Asia, Technical Bulletin, American Soybean Association (ASA), St Louis, MO. Baines, R.N. (2000), “Environmental and animal safety dimensions to developing food safety and quality assurance initiatives in the United Kingdom”, in Busch, L., Bingen, J., Harris, C. and Reardon, T. (Eds), Market Rights and Equity: Food and Agriculture Standards in a Shrinking World, Institute for Food & Agricultural Standards, Michigan State University, Ann Arbor, MI. Baines, R.N. (2002), Quality Assurance and Food Trade: A Critical Comparison of Systems, Royal Agricultural College, Cirencester, November.

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Bredrup, H. and Bredrup, R. (1995), “Benchmarking as performance reference in a performance management model”, in Rolstadas, A. (Ed.), Benchmarking – Theory and Practice, Chapman & Hall, London. Cable, V. (1999), Globalisation and Global Governance, RIIA, London. Codex Alimentarius Commission (1997), Hazard Analysis and Critical Control Point (HACCP) System and Guidelines for its Application, published in Codex Alimentarius Commission Food Hygiene Basic Texts, Revision 3, 1997, ISBN 92-5-104021-4 (incorporated into the General Principles of Food Hygiene CAC/RCP 1 – (1969) Rev 3 (1997)). Commission of the European Communities (2002), 347 Corporate Social Responsibility: A Business Contribution to Sustainable Development, Commission of the European Communities, Brussels. DEFRA (2002), The Strategy for Sustainable Farming and Food, DEFRA Publications, London. Food and Agriculture Organisation (2003), World Agriculture: Towards 2015/2030: An FAO Perspective, Bruinsma, J. (Ed.), Earthscan Publications, London. Goldberg, W.H. (1983), “Introduction: global rationalization versus adaptation to national interest”, in Goldberg, W.H. and Negandhi, A.R. (Eds), Government and Multinationals: The Policy of Control versus Autonomy, Oelgeschlager, Gunn & Main, Cambridge, MA, pp. 1-11. Henderson, D. (1999), The MAI Affair: A Story and its Lessons, RIIA, London. Howells, J. and Wood, M. (1993), The Globalisation of Production and Technology, Belhaven Press/Pinter, London. ICAEW (1998), Financial Reporting of Risk: Proposals for a Statement of Business Risk, The Institute of Chartered Accountants in England and Wales, London. ICAEW (2002a), Risk Management for SMEs, briefing document, The Faculty of Finance and Management of The Institute of Chartered Accountants in England and Wales, London, October. ICAEW (2002b), Briefing 06.02 No Surprises: Working for Better Risk Reporting, briefing document, The Faculty of Finance and Management of The Institute of Chartered Accountants in England and Wales, London. Jacobson, D. and McDonough, T. (1997), Irish Industry, International Trade and European Integration, Dublin City University Business School, Dublin. Julius, D. (1990), Global Companies and Public Policy: The Growing Challenge of Foreign Direct Investment, RIIA/Pinter, London. Knight, C., Stanley, R. and Jones, L. (2002), Agriculture in the Food Supply Chain: An Overview, CCFRA, London. Kolodner, E. (1994), “Transnational corporations: impediments or catalysts of social development?”, Occasional paper no. 5, World Summit for Social Development, November. Leatherhead Food International (LFRA) (n.d.), Global Food Markets, LFRA, Leatherhead. O’Brien, R. (1992), Global Financial Interpretation: The End of Geography, RIIA/Pinter, London. Taylor, R.C. (2002), Restoring Economic Health to Contract Poultry Production, Agricultural Resource Policy Forum, Auburn University College of Agriculture, Autaugaville, AL. Warhurst, A.C. (1998), Developing a Sustainable Economy: Towards a Proactive Research Agenda ESRC Global Environmental Change Programme, University of Bath, Bath.

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Appendix 1 Historic organizational focus

Future organizational focus

Commodity input. Business dealing in commodities

Defined raw materials. Traceable inputs including livestock (traceability from broilers back through the supply chain to grandparent stock), feeds with defined nutritional standards

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Staple products. Business dealing in commodities Added value. Branded meat products (deboned (whole birds) products, ready meals) where growing birds to an exacting specification is key Asset-driven business. Business driven by what it can produce from its assets Hard assets. Business driven by buildings and equipment

Customer-driven business. Business driven by what its customers want Soft assets. Business driven by strategy and personal skills

Owning assets. Assets belong to the business

Controlling assets. Assets include leasing, contracted production, business co-operation

Money and assets provide power and control Labour is a cost

Information provides power and control Labour is an investment

Sell the product. Product-oriented

Sell the service. Marketing the whole package – product and service – selling “solutions”

Impersonal open markets. Sold on the open market Private closed markets. Contracted production to sole processor organization Price risk. Price is sole reason for sale

Relationship risk. Price is important but so is a long-term mutually beneficial supplier-customer relationship

Independence. Island

Interdependence. Member of a supply chain

Stability. Domestic market

Change, chaos and flexibility. Globalisation

Technical skills. Production skills determine success of the business

Communication skills. Production skills critical but ability to communicate skills provides competitive edge

Technological change. Technological change drives business

Institutional change. Technological change important but impact of global and national institutions critical

Core competency. Business relies on individuals and their skills

Unique skills and capabilities. Adapting to change and new demands from customers investing in new skills and technology

Tradition. Traditional methods of production

New ideas. Innovation in production methods

Public research. Government research and free cascading of information

Private research. Funding research to gain a competitive edge, e.g. poultry breed development

Resource users. Poor use of resources

Resource protectors. Protection of resources and waste minimization are key drivers of the business

Source: Adapted from Ado (1998)

Table AI. Changing focus of agriculture

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Figure A1. Arthur Andersen Business Risk ModelTM as used in the UK by Deloitte

Appendix 2

The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0007-070X.htm

Monitoring consumer confidence in food safety: an exploratory study Janneke de Jonge, Lynn Frewer and Hans van Trijp

Consumer confidence

837

Marketing and Consumer Behaviour Group, Wageningen University, Wageningen, The Netherlands

Reint Jan Renes Communication Sciences Group, Wageningen University, Wageningen, The Netherlands, and

Willem de Wit and Joke Timmers Food and Consumer Product Safety Authority, Den Haag, The Netherlands Keywords Food industry, Food safety, Consumer behaviour, Consumer risk, The Netherlands Abstract In response to the potential for negative economic and societal effects resulting from a low level of consumer confidence in food safety, it is important to know how confidence is potentially influenced by external events. The aim of this article is to describe the development of a monitor that enables changes in consumer confidence in food safety and consumer food choice behaviour to be assessed in conjunction with changes in institutional activities and food safety incidents. Results of the first assessment of longitudinal data on consumer perceptions of food safety will be presented to provide the basis for the development of such a monitor. A better understanding of the interrelationships between antecedents and behavioural consequences of changes in consumer confidence in food safety over time will improve understanding of the effectiveness of public policy, and allow the development of best practice in risk communication and risk management.

Introduction It is often assumed that public trust in the government, public policy and the food industry is declining and that consumers are concerned about the safety of food (Pan-European Conference on Food Safety and Quality, 2004). Several authors have indicated that trust is potentially an important factor influencing consumer behaviour (Bredahl, 2001), and public perceptions of risk assessment and management (Frewer and Salter, 2003; House of Lords, Select Committee on Science and Technology, 2000; Laird, 1989). In addition, the level of public trust in actors in the food chain, such as farmers, manufacturers and retailers, as well as trust in regulatory institutions, may influence the level of consumer confidence in the safety of food in general. This is similar to the view of Beck (1992) who contends that distrust is related to uncertainty, risk and fear. Increasing public distrust and reduced consumer confidence in food safety may have adverse economic effects on the food industry, as well as, on an aggregate level, national and international economies. In the EU economy, the production of food products and beverages is the second largest manufacturing sector The research reported here was funded by the Dutch Food and Consumer Product Safety Authority (VWA) as part of a project entitled “A monitor for consumer confidence in food safety”.

British Food Journal Vol. 106 No. 10/11, 2004 pp. 837-849 q Emerald Group Publishing Limited 0007-070X DOI 10.1108/00070700410561423

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accounting for 5 per cent of manufactured exports and 11.5 per cent of manufacturing employment (European Communities, 2003). Negative food safety events might, as a consequence, have profound economic implications across the European agro-food sector. Of course, food safety incidents are not confined to Europe, and have global resonance. A case in point is the meat industry, where various incidents have influenced consumer confidence in the safety of associated products, which have had considerable economic implications: (1) BSE crisis USA 2003 (NRC Handelsblad, 2004): . over 30 countries imposed an import ban on beef products from the USA; . the price level of beef products dropped more than 10 per cent; . MPA affair in Europe 2002 (Research voor Beleid and Q-Point BV, 2003); . destruction of animals; . destruction of contaminated animal feed; and . total costs involved with the affair in the European Union were between 107 and 132 million euros; (2) Foot and mouth disease in the UK 2001 (National Audit Office, 2002): . destruction of more than 6 million animals; . cost to the public sector estimated at 5 billion euros (over £3 billion); and . cost to the private sector estimated at 8 billion euros (over £5 billion). (3) Foot and mouth disease in The Netherlands 2001 (Oude Lansink and Peerlings, 2001): economic costs from food and mouth disease were more than 1 billion euros (0.25 per cent of the Dutch gross national product of 2001). (4) First BSE case in Germany 2000 (Pennings et al., 2002): decrease of consumption of beef compared to the same period in 1999. (5) Belgian dioxin scare 1999 (Verbeke, 2001): . product recall of chicken, eggs and pork; . import bans by other EU countries on Belgian egg products and meat; and . decrease of consumption of meat between June 1998 and June 1999; in June 1999 consumption level of poultry was 69 per cent and consumption of pork was 93 per cent of the 1998 consumption level. Besides the costs involved with food safety incidents, these incidents can potentially do much harm to the image of the meat industry (Verbeke, 2001) and, more generally, consumer confidence in civic governance and food policy (Frewer and Salter, 2002). In order to assess the impact of such food safety events on consumer confidence in food safety, it is necessary to develop a validated instrument sensitive to changes in consumer confidence resulting from external events. The aim of this article is to describe the development of such a monitor to examine consumer confidence in food safety over time. In addition to a brief review of the relevant literature, results will be presented of a first assessment of consumer perceptions of food safety, which will be used to develop the research further.

Consumer confidence in food safety Increased media attention to food safety issues (Frewer et al., 1993), consumer studies (Miles et al., 2004; Food Standards Agency, 2004; Dagevos and Hansman, 2003), and the establishment of new regulatory bodies, such as the European Food Safety Authority (EFSA) and national food safety agencies, demonstrate that food safety has emerged as and continues to be an important issue in society. This increased attention to food safety may negatively influence consumer perceptions regarding the safety of food products or may reflect increased consumer concerns. Whichever case is true, it is likely that increased attention to food safety can have a large impact on the economy through consumer purchase behaviour, as well as the ability of regulatory bodies to implement appropriate risk management measures. The issue of risk management will become more important as food chains become longer, more complex, and trans-national, which makes it increasingly difficult for consumers to trace the origin of both whole foods and food ingredients. This may further fuel consumer concerns, particularly under circumstances where traceability systems have not been effectively implemented. The development of both effective risk management and communication practices are likely to be important factors in the development and maintenance of consumer confidence in the safety of food. In order to assess the impact of effective risk management and communication, it is necessary to develop an instrument to assess the impact of relevant regulatory activities on consumer confidence. Siegrist et al. (2003) defined confidence as “the belief that future events will occur as expected”. In the context of food safety this would be the belief that the consumption of food products will not result in adverse health effects, as this is, under normal conditions, the expected outcome of consumption. Since it is prohibited to place unsafe food on the market (The European Parliament and The Council of The European Union, 2002), it is likely that consumers, generally, expect that food products are safe and of good quality. Despite the fact that consumers are no longer directly involved in food production and processing, which might negatively affect consumer confidence (Beardsworth and Keil, 1997), research has indicated that food safety is not the focus of consumer concern in day to day activities (Green et al., 2003). Therefore, in the absence of any incidents concerning food products, particularly those presented in a crisis context, it is arguable that the safety aspect of food will be taken for granted by consumers. Consumer confidence in food safety can, therefore, be defined as the consumers’ general expectation that food products will not cause any harm to their health or to the environment. Five potential determinants of consumer confidence in food safety that have been identified from the existing literature will subsequently be discussed. These are consumer trust in regulatory institutions and actors in the food chain, the occurrence of food safety incidents, media coverage of food risks, consumer recall of food safety incidents, and consumer confidence in the safety of particular product groups. Trust in regulatory institutions and actors in the food chain One potential antecedent of confidence is the extent to which consumers trust regulatory institutions and producers of food to protect consumer interests, as opposed to economic interests of producers and political interests of institutions (Frewer et al., 1996). This may be partly because consumers cannot always judge themselves whether

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food is safe during the course of normal consumption (Bo¨cker and Hanf, 2000; Green et al., 2003). As a consequence they have to rely upon others, such as regulators and the food industry, to develop and maintain effective consumer protection activities. External agencies frequently have the remit of informing consumers about food risks and food safety (Green et al., 2003), and so it is important to understand whether consumer trust in the motives of officials within those agencies influences individual responses to risk communications. Responses to information may also be contingent on the extent to which consumers trust information sources providing the information, although this relationship is less well understood (Eiser et al., 2002). At this point it should be stressed that confidence and trust are treated as distinct concepts. Trust is based on social relationships between individuals or between an individual and an institution (Kasperson et al., 1992; Siegrist et al., 2000; Slovic, 1993), whereas one can have confidence in anything (Siegrist et al., 2003), e.g. food safety or security. Trust in regulators and actors in the food chain is a minimum requirement for confidence in the safety of food, assuming such trust is one of the mechanisms by which confidence is created and sustained. However, trust in these actors and institutions alone might not be sufficient, as confidence might be affected by other factors as well. Food safety incidents and media coverage of food risks Both food safety incidents and media attention that focuses on food safety can influence the extent to which people perceive a particular food is risky. A theoretical perspective on this issue is provided by the social amplification of risk framework (Kasperson et al., 1988), which posits that external events and increased availability of risk information can increase public risk perceptions (risk amplification), which, in turn, might lead to a decrease in consumer confidence in food safety. The model also posits that information channels may also reduce risk perceptions (risk attenuation), although whether this might be expected to increase public trust in institutional activities or general confidence in the safety of food is not clear. Risk amplification is thought to occur because both individuals and the media give greater weight and attention to negative events compared to positive events, and because negative information is seen as more credible than positive information (Siegrist and Cvetkovich, 2001; Slovic, 1993). Over the past years, various problems with food safety have frequently been the focus of media attention in Europe (De Boer et al., 2003; Frewer et al., 1993). Given that previous research has shown that media coverage of food related risks negatively impacts consumer risk perceptions (Frewer et al., 2002; Liu et al., 1998), the occurrence of food safety incidents and media coverage of food related risks have to be taken into account as potential determinants of consumer confidence in food safety. Consumer recall of food safety incidents/issues As individuals selectively recall information and react differently to information, their familiarity or experience with food safety events should be taken into account when trying to understand the impact of external events on consumer confidence. Consumer recall of food scares that occurred in the past may increase the perceived probability that a similar incident will happen again, an effect referred to as the “availability heuristic” (Tversky and Kahneman, 1973). In addition, food scares can provide consumers with new information about the likelihood of similar or more destructive

incidents in the future, in other words representing the “signal value” of a food safety incident (Slovic, 1992). Both the number of food scares recalled by consumers and the signal value of food scares may influence consumer confidence in food safety. Barnett and Breakwell (2001) for example found that for involuntary risky activities, among which food related hazards such as eating food containing food colouring and food that has been genetically engineered, greater experience was associated with greater concern. Consumer confidence in the safety of particular product groups or production technologies Research has shown that the occurrence of food safety incidents influence consumer confidence in the safety of particular product categories. For example, consumer confidence in the safety of beef was heavily damaged after both reports of hormone abuse in the meat sector, such as illegal use of the bovine growth hormone clenbuterol, and the recognition that bovine spongiform encephalopathy (BSE) might have significant impacts on human health (Verbeke and Viaene, 1999). The negative safety image of beef held by consumers was significantly related to consumer claims to have decreased meat consumption and reported consumer intentions to decrease meat consumption in the future. A follow-up study showed that the images of various types of fresh meat had changed in concordance with what might be expected based on external events. That is, after the dioxin scare, which occurred between the data collection periods in 1998 and 2000, the image of poultry and pork was negatively affected, whereas the safety perception of beef improved after it had been initially damaged by the BSE scare (Verbeke, 2001). Although these findings clearly indicate that consumer confidence in the safety of particular product categories affects consumption intentions, it is not yet understood whether safety perceptions related to particular product categories influence general consumer confidence in the safety of food. Potential differences in confidence in the safety of food across consumer segments should also be taken into account. For example, previous research has shown that white males’ risk perception with regard to different kinds of hazards was low compared to risk perceptions of white females and people of colour (Slovic, 1999). It has been suggested that this “white male effect” can be explained by the fact that white males have more autonomy and perceive greater personal involvement in decision-making processes. Poorer people, females, and members of ethnic minorities, on the other hand, perceive to be excluded from risk management decisions and would prefer greater involvement (Frewer, 2001). Other potential factors of relevance may include social-economic class and socio-demographic variables (Dosman et al., 2001). In response to the potential for negative economic and societal effects resulting from a low level of consumer confidence in food safety, the development of effective risk management and communication are a priority for both national and international agencies, as well as the food industry. For example, the EFSA was established in 2002, together with a number of national food safety agencies, such as the Dutch Food and Consumer Product Safety Authority (VWA), the English Food Standards Agency (FSA), the Irish Food Safety Authority of Ireland (FSAI) and the Swedish National Food Administration, with the aim of promoting effective risk assessment and risk

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communication. The primary responsibility of the EFSA is to provide independent scientific advice with regard to matters relating to food safety. National authorities are mainly occupied with establishing a system of food control, developing and enforcing of food (safety) legislation, and communication about food safety matters with the general public (O’Rourke, 2001). The functions of the national authorities are essential both with regard to prevention of food safety incidents and instigating appropriate reactions to food safety incidents when they occur. Insights into how consumer confidence in food safety comes about, how confidence changes over time, and how consumer confidence influences consumer behaviour, enables food safety agencies to evaluate the effectiveness of their policy. The effectiveness of agency policy cannot, however, be evaluated in the absence of a rigorous methodology that enables changes in consumer confidence to be assessed in conjunction with changes in institutional activities designed to facilitate improvements in consumer confidence. In the next section the results of the first assessment of longitudinal data on consumer perceptions of food safety will be described. The data provide an opportunity to examine changes in consumer confidence in food safety over time, differences between consumer segments and consumer confidence in different product categories. This analysis will provide the basis for the development of the consumer confidence monitor. Materials and methods In 2002, the market research company NFO Trendbox gathered data on consumer perceptions of food safety by means of telephonic computerised research using a nationally representative sample of Dutch consumers. Quota sampling was applied to recruit respondents, using age, gender, household size, and region as selection variables. In 2002, the most important food safety issues in the Dutch news media were the medroxy progestrone acetate (MPA) hormone in animal feed (July, 2002), the Nitrofen pesticide in animal feed (June, 2002), and acrylamide in food products (April, 2002). In each wave of data collection (January, May and December) about 500 respondents were interviewed (age 16 or above). These points in time were chosen in order to observe potential changes in consumer perceptions of food safety issues, however there were no a priori reasons to expect changes. Of course it is impossible to predict when a food “scare” will occur. One of the purposes of assessing consumer perceptions regarding food safety over time was to determine the temporal stability of the monitor. When benchmarks have been assessed, future changes can be assessed against external events of relevance, although, of course, it will be necessary to continue assessing the temporal stability of the monitor to ensure that other unpredicted external events do not influence consumer confidence. Firstly, the respondents were asked to what extent they believed that sufficient attention was being paid and action was being taken with regard to food safety. There were four response categories labelled “not at all sufficient”, “not sufficient”, “sufficient” and “more than sufficient”. Respondents were then asked which of four actors in the food chain was perceived to be primarily responsible for the safety of food products. A distinction was made between farmers, manufacturers, supermarkets, and the government. In the third question consumer perceptions of food safety were assessed using 5-point Likert scales, labelled “completely disagree” to “completely agree”. The fourth and the fifth question were open questions. The fourth question assessed

respondents’ primary concerns with regard to food. In the fifth question respondents were asked whether there were any food products in which they did not have (complete) confidence. Finally, respondents were asked to indicate whether they did or did not have confidence in 18 different product categories. Results A total of 85 per cent of the respondents thought that (more than) sufficient attention was being paid, and action was being taken, with regard to food safety. Government was perceived as primarily responsible for the safety of food (43 per cent), followed by manufacturers (27 per cent) and farmers (26 per cent). Only three per cent of the respondents perceived supermarkets to be primarily responsible for food safety. General consumer confidence in food safety was measured with the four statements presented in Table I. To facilitate the interpretation of the responses, the ratings on two negatively formulated items were reversed. ANOVA analysis revealed that the results are consistent over the three measurements assessed longitudinally, except for the fourth statement ( Fð2; 1429Þ ¼ 4:7, p , 0:05). Average consumer confidence in food safety, represented by the mean score on the four statements, was moderate; 3.1 on a scale from 1 (low confidence) to 5 (high confidence). However, confidence in food safety differed across gender and age groups. Results from MANOVA indicated a significant main effect of gender (Fð4; 1427Þ ¼ 10:4, p , 0:001). Univariate tests for all four dependent variables were significant and inspection of the means pointed out that males showed more confidence in the safety of food than did females (Table I). MANOVA also indicated a main effect of age (Fð16; 4351Þ ¼ 5:9, p , 0:001). Univariate tests for all four dependent variables were significant. Post hoc tests

1. I think the quality of food keeps improving

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Statement 2. In recent years 3. I am worried my confidence in food products has about the safety of 4. Food products have never been as food products decreased safe as nowadays (reversed) (reversed)

Overall mean (n ¼ 1; 432)

3.30 (0.93)

3.26 (1.00)

3.09 (1.03)

2.80 (0.96)

Gender Male (n ¼ 603) Female (n ¼ 829)

3.44a (0.93) 3.20b (0.92)

3.38a (0.99) 3.17b (1.00)

3.19a (1.06) 3.01b (1.01)

2.96a (0.99) 2.69b (0.92)

Age group (years) 16-24 (n ¼ 126) 25-34 (n ¼ 260) 35-49 (n ¼ 458) 50-64 (n ¼ 352) 65+ (n ¼ 236)

3.48a (0.85) 3.29ab (0.87) 3.20b (0.96) 3.32ab (0.90) 3.36ab (0.97)

3.6a (0.96) 3.37ab (0.93) 3.19b (1.02) 3.23b (0.98) 3.13b (1.07)

3.37a (0.91) 3.24ab (0.99) 3.09bc (1.02) 3.02bc (1.07) 2.86c (1.07)

2.83ab (0.96) 2.68a (0.89) 2.66a (0.93) 2.92b (0.99) 3.01b (0.99)

Notes: High numbers indicate high consumer confidence and low numbers indicate low consumer confidence. Means that are significantly different from one another at the p , 0:05 level for that dependent variable are followed by different letters (for age group the Tukey test has been applied to assess significance between the groups)

Table I. Mean (and standard deviation) consumer confidence in food safety by gender and age groups

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revealed that there was no univocal relationship between confidence in the safety of food and age (Table I). With regard to the first statement, the youngest age group (16-24) believed most in the continuously improving quality of food products, whereas the age group 35-49 was most pessimistic regarding this issue. For statements two and three a negative relationship was observed between age and confidence in food safety. Elderly respondents (65+) worried most about the safety of food and, compared to the other age groups, more often indicated a decrease in confidence over the past years. Despite this, elderly respondents agreed more than any other age group with the fourth statement that food had never been as safe as nowadays. For this statement the middle age groups (25-34 and 35-49) had the lowest confidence scores. In response to the open question about consumer concerns regarding food, respondents mentioned a large number of different concerns, although 16 per cent of the respondents did not have any concerns. The five most common concerns are displayed in Table II. Consistent with the finding that males had higher confidence in the safety of food compared to females, male respondents more frequently indicated that they did not have any concerns regarding food ( x 2 ¼ 7:8, p , 0:01). Consumer concerns did not differ across age groups. A total of 42 per cent of the respondents reported that they did not have any concerns with regard to a particular product in response to being probed about particular items of concern. Confidence in product groups (Table III) was particularly high for agricultural products, such as cheese, dairy, and fresh vegetables. Respondents were least confident about products that have been processed extensively, such as ready-to-eat products and meals, or products that have a chemical character, such as vitamin supplements, and sports and energy drinks. Thus, respondents appeared to be more concerned about new technologies applied to food production, than about products produced without extensive processing, an observation consistent with the published literature (Fife-Schaw and Rowe, 2000; Miles et al., 2004). Significant differences in confidence in the safety of product groups over time were only observed for two product groups. Results showed that more females tend to distrust particular food products than do males. Examples are ready-to-eat products ( x 2 ¼ 13:1, p , 0:01), veal ( x 2 ¼ 29:2, p , 0:001), and sports and energy drinks ( x 2 ¼ 13:6, p , 0:01). With regard to age, elderly respondents had relatively less confidence, compared to younger respondents, in the safety of, for example, ready-to-eat meals ( x 2 ¼ 38:9, p , 0:001), ready-to-eat products ( x 2 ¼ 37:2, p , 0:001), and precut and washed vegetables ( x 2 ¼ 53:7, p , 0:001). When actual incidents in 2002, reported to the Rapid Alert System of Food and Feed by the Dutch national food agency, are compared to findings from this study, consumer concerns do not appear to reflect actual incidents. That is, no incidents occurred with regard to

Issue of concern Table II. Unprompted consumer concerns with regard to food (percentage of respondents)

1. 2. 3. 4. 5.

Additives Unnatural ingredients Genetic manipulation Lack of information on the product label Meat

Percentage of respondents who indicated concern (n ¼ 1,432) 19.0 14.1 11.6 5.4 5.0

Product group Dairy products Fresh vegetables Hard cheese Beef Soft cheese Eggs Fish Pork Baby food Veal Pre-packed cold meats Lamb and mutton Vegetables pre-cut and washed Chicken Ready-to-eat products Sports and energy drinks Vitamin supplements Ready-to-eat meals

Percentage of the respondents with confidence in the safety of the product group January 2002 May 2002 December (n ¼ 468) (n ¼ 486) 2002 (n ¼ 478) p-value 92.7 91.0 92.5 79.7 76.1 78.4 73.9 70.7 65.8 62.2 63.5 61.1 60.7 59.8 50.9 49.8 50.0 45.5

92.0 92.2 89.9 78.4 75.7 78.6 70.4 66.9 66.3 64.4 62.6 57.6 61.1 59.1 48.4 52.7 47.7 43.0

93.3 93.9 90.2 81.2 78.9 76.2 73.8 69.9 66.9 65.7 65.7 59.4 64.2 59.8 51.7 54.0 49.4 46.4

0.788 0.430 0.215 0.702 0.784 0.538 0.035 0.144 0.611 0.446 0.643 0.435 0.031 0.932 0.513 0.231 0.134 0.095

Notes: The p-values for each product group denote the significance of the x 2 statistic of 3 £ 3 cross-tabulations, that is three measurements (January, May, and December) and three response categories (confident, not confident, and don’t know). In the Table, only the percentage of the respondents with confidence in the safety of the product group is reported

ready-to-eat meals (where consumer confidence was particularly low). In contrast, consumer confidence in fish, the category with most incidents (16 per cent of the alerts were related to fish, crustaceans and molluscs), was relatively high. Despite the fact that consumer confidence in food safety did not change over time, it cannot be concluded that food safety incidents have no effect on confidence. This is because data collection periods were not specifically chosen with the purpose to measure the impact of incidents. Future research on the interrelationships between external events, consumer perceptions and consumer behaviour should address this issue further. Conclusion and discussion The data showed that consumer confidence in the safety of food is fairly high (i.e. above the midpoint) and that the level of confidence did not change over time. From this, it is arguable that food safety is taken for granted by consumers in the absence of food safety incident occurrence (particularly those presented in a crisis context) and that food safety only becomes a consumer issue when it is compromised in some way. The unvarying level of consumer confidence observed in this analysis would therefore suggest that no external events had occurred in 2002. However, the Dutch agency responsible for food safety reported 44 alerts to the rapid alert system for food and feed and a few incidents in the food sector received some degree of media attention. A better-equipped measurement instrument (Figure 1) will provide the opportunity to examine the antecedents of consumer confidence more thoroughly.

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Table III. Consumer confidence in the safety of 18 different product groups

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Figure 1. Proposed monitor for consumer confidence in food safety

Incorporating additional information about, for example, media coverage and consumer recall of food safety incidents will provide more insights regarding the impact of external events on consumer confidence. The finding that confidence in food safety does not change over time, despite the occurrence of some low impact food safety incidents in the same period, may then be explained by the low level of associated media coverage and a lack of consumer recall of particular incidents. Under conditions of a major food crisis the sensitivity of the monitor as a measure of consumer confidence can be assessed. We acknowledge that reductions in confidence may be due not only to specific scares or controversies, but also the erosion of cultural mechanisms that create and sustain confidence. Further research is required to understand the role of cultural factors influencing consumer confidence in food safety (Beardsworth and Keil, 1997). Besides assessing the impact of potential processes that may maintain or create confidence (e.g. trust) and factors that may be detrimental to confidence (e.g. food safety “scares”), the relationship between consumer confidence and consumer behaviour will be incorporated into the monitor. This will provide regulatory institutions with a complete instrument to assess the effectiveness of their regulatory and communication activities. Despite the increasing interest in consumer perception of food safety, the relationship between the occurrence of food safety incidents, consumer confidence, and consumer behaviour has never formally been assessed, although research has considered longitudinal changes in trust and risk perception in the context of specific food hazards (Fife-Schaw and Rowe, 2000). To truly capture the dynamics in consumer perceptions and behaviours with regard to the safety of food products, a longitudinal approach is required, in conjunction with a

systematic analysis of potentially influential external events. This monitoring system should be designed to respond to both specific events (e.g. “scares”), and trends (e.g. changes in governance practices focused on increasing consumer confidence). It should involve periodic questioning of consumers, in order to observe any trends, as well as occasional questioning in times of a food scare to assess reactions to actual food safety issues. In addition, consumer purchase behaviours should be studied to be able to assess changes in consumption patterns in response to external events. A better understanding of the interrelationships between antecedents and behavioural consequences of changes in consumer confidence over time will improve understanding of the effectiveness of public policy and allow to the development of best practice in risk communication. References Barnett, J. and Breakwell, G.M. (2001), “Risk perception and experience: hazard personality profiles and individual differences”, Risk Analysis, Vol. 21 No. 1, pp. 171-7. Beardsworth, A. and Keil, T. (1997), Sociology on the Menu: An Invitation to the Study of Food and Society, Routledge, London. Beck, U. (1992), Risk Society: Towards a New Modernity, Sage, London. Bo¨cker, A. and Hanf, C.H. (2000), “Confidence lost and – partially – regained: consumer response to food scares”, Journal of Economic Behavior & Organization, Vol. 43, pp. 471-85. Bredahl, L. (2001), “Determinants of consumer attitudes and purchase intentions with regard to genetically modified foods – results of a cross-national survey”, Journal of Consumer Policy, Vol. 24, pp. 23-61. Dagevos, J.C. and Hansman, H.J.M. (2003), Weten, Wensen en Waarden – Consument en (Voedsel) Veiligheid (Knowledge, Desires and Values – The Consumer and (Food) Safety), Voedingscentrum, Den Haag. De Boer, J., Willemsen, F. and Aiking, H. (2003), Voedselveiligheid, Communicatie en Gedrag – Analyse van een Viertal Recente Incidenten (Food Safety, Communication and Behaviour – An Analysis of Four Recent Incidents), Instituut voor Milieuvraagstukken, Amsterdam. Dosman, D.M., Adamowicz, W.L. and Hrudey, S.E. (2001), “Socioeconomic determinants of health- and food safety-related risk perceptions”, Risk Analysis, Vol. 21 No. 2, pp. 307-17. Eiser, R.J., Miles, S. and Frewer, L.J. (2002), “Trust, perceived risk, and attitudes toward food technologies”, Journal of Applied Social Psychology, Vol. 32 No. 11, pp. 2423-33. European Communities (2003), European Business, Facts and Figures Part 4: Consumer Goods and Media, European Communities, Luxembourg. (The) European Parliament and The Council of The European Union (2002), EC Regulation No. 178/2002, available at: www.efsa.eu.int/pdf/En_Base.pdf (accessed 23 February 2004). Fife-Schaw, C. and Rowe, G. (2000), “Extending the application of the psychometric approach for assessing public perceptions of food risk: some methodological considerations”, Journal of Risk Research, Vol. 3 No. 2, pp. 167-79. Food Standards Agency (2004), “Consumer attitudes to food standards”, final report available at: www.foodstandards.gov.uk/multimedia/pdfs/cas2003.pdf (accessed 16 February). Frewer, L.J. (2001), “Environmental risk, public trust and perceived exclusion from risk management”, Environmental Risks: Perception, Evaluation and Management, Vol. 9, pp. 221-48.

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Siegrist, M. and Cvetkovich, G. (2001), “Better negative than positive? Evidence of a bias for negative information about possible health dangers”, Risk Analysis, Vol. 21 No. 1, pp. 199-206. Siegrist, M., Cvetkovich, G. and Roth, C. (2000), “Salient value similarity, social trust, and risk/benefit perception”, Risk Analysis, Vol. 20 No. 3, pp. 353-61. Siegrist, M., Earle, T.C. and Gutscher, H. (2003), “Test of trust and confidence model in the applied context of electromagnetic field (EMF) risks”, Risk Analysis, Vol. 23 No. 4, pp. 705-16. Slovic, P. (1992), “Perception of risk: reflections on the psychometric paradigm”, in Krimsky, S. and Golding, D. (Eds), Social Theories of Risk, Praeger, Westport, CT, pp. 117-52. Slovic, P. (1993), “Perceived risk, trust, and democracy”, Risk Analysis, Vol. 13 No. 6, pp. 675-82. Slovic, P. (1999), “Trust, emotion, sex, politics, and science: surveying the risk-assessment battlefield”, Risk Analysis, Vol. 19 No. 4, pp. 689-701. Tversky, A. and Kahneman, D. (1973), “Availability-heuristic for judging frequency and probability”, Cognitive Psychology, Vol. 5 No. 2, pp. 207-32. Verbeke, W. (2001), “Beliefs, attitude and behaviour towards fresh meat revisited after the Belgian dioxin crisis”, Food Quality and Preference, Vol. 12, pp. 489-98. Verbeke, W. and Viaene, J. (1999), “Beliefs, attitude and behaviour towards fresh meat consumption in Belgium: empirical evidence from a consumer survey”, Food Quality and Preference, Vol. 10, pp. 437-45.

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What is the problem with sauvignon blanc? An investigation of expert dislike of an aesthetic product Steve Charters Edith Cowan University, Joondalup, Australia Keywords Food and drink, Winemaking, White wine, Marketing, Consumer behaviour Abstract There is substantial anecdotal evidence that, whilst popular in current international consumer markets, the grape variety sauvignon blanc is viewed ambivalently by some wine industry professionals. This study examines evidence for that anecdotal perspective. It reports first the findings from a qualitative research project that provided some support for the proposition that wine industry attitudes to the grape variety are ambivalent. Further qualitative research, involving semi-structured interviews, was then carried out to examine precisely why that ambivalence exists, and to explore in depth the perspectives of Australian wine industry professionals towards sauvignon blanc. The findings suggested both physiological and social reasons for this dislike. The study has relevance in two areas. The first is in the development of a theoretical understanding of how those who are responsible for the production of aesthetic products may approach working with material that they may dislike, or have little regard for. The second is more practical, and informs how those marketing sauvignon blanc should view the product.

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Introduction The grape variety sauvignon blanc is widely planted throughout the world; its spread includes not just France, but Italy, much of eastern Europe, Chile and the USA, and the antipodes (Robinson, 1999). The grape’s reputation for producing “high quality” wines was originally based on the product of Sancerre and Pouilly-sur-Loire in central France, but more recently Marlborough in New Zealand has also become internationally famous for making sauvignon-based wines (Robinson, 1999). Additionally it is a blending component paired with semillon to make highly regarded wines in places as diverse as Margaret River and Bordeaux (Robinson, 1999). Nevertheless, despite its worldwide impact and the fact that it has the reputation of making quality wines, at least in some regions, there is a certain ambivalence in the response of some wine professionals to the variety. This is noted, for instance, by one author of a popular book on wine tasting (Basset, 2000, p. 44), who commences his section on the variety with the following: “a very fashionable grape, producing the type of wines that you either love or hate”. The purpose of this paper is to consider attitudes to sauvignon blanc as a grape variety. It is based on research that focused primarily on professional perspectives, within an Australian context. The research considered the level to which sauvignon blanc is disliked and probed a number of professionals on the causes and results of their antipathy to it.

The wine industry perspective on sauvignon blanc Most professional commentators on wine suggest the existence of grape varieties which are “classic” (Johnson, 1997; Robinson, 1986) or “noble” (Peynaud, 1987). These are varieties which consistently produce wines of greater perceived quality, whether restricted to one key location, such as chenin blanc in the Loire valley of France, or in many countries and regions, such as cabernet sauvignon. The precise list of the classic or noble varieties is not subject to universal agreement. For instance, Hugh Johnson (1997) includes gewu¨rztraminer, but excludes chenin blanc, whereas Jancis Robinson embraces the latter but not the former (Robinson, 1986). However, almost any commentator who does list classic, noble, or “great” varieties appears to include sauvignon blanc as one of them, thus confirming its status as a major contributor to the world of wine, and suggesting that it can produce wines of high perceived quality. The term “classic” has consequently been adopted by those who also market wines, so that, for instance, the official website of the Chilean wine producers’ association also describes sauvignon blanc as a “classic” variety (Vinas de Chile, 2003). There seems little doubt that the grape is considered one of the premier varieties in the world of winemaking. Nevertheless, even amongst those who accept its membership of such a pantheon, admiration is not unequivocal. Jancis Robinson, in the classic English language text on the world’s grape varieties, starts her entry on sauvignon blanc by noting its fashionability, but adding that “of the nine grape varieties included in this ‘classic varieties’ section, sauvignon blanc’s claim to classic status is perhaps the weakest” (Robinson, 1986, p. 120). In another, more personal book, she adds that whilst she used to enjoy wines made from the grape “I also tired of sauvignon, except on a very hot day” (Robinson, 1997, p. 59). Even those who are more positive may still damn it with faint praise, as this report on the comments of another British wine journalist suggest: “There’s nothing wrong with a crisp nettly Sauvignon Blanc”, says Tim Atkin. “The grape is enjoyable enough in small quantities, but to paraphrase Dorothy Parker’s line about Katherine Hepburn’s performance in The Lake, it runs the gamut of flavours from A to B. For a grape with such a worldwide reputation, Sauvignon Blanc is distinctly mono-dimensional” (Williams, 2002, p. 13).

This perspective is echoed by some Australian commentators. The wine critic of the West Australian newspaper, Ray Jordan, wrote the following after judging in a wine show: Now I’ve got to tell you, to me 33 sauvignon blancs are the closest thing to purgatory . . . To me a good sauvignon blanc is like a good haggis. Is there such a thing? (Jordan, 2003, p. 7).

He added that he had a “pathological dislike” of the variety (Jordan, 2003, p. 7). Likewise Peter Godden, the co-ordinator of the Australian Wine Research Institute’s training courses for prospective wine show judges, displays a similar distaste: The only wine style I’d say that I’m really not keen on is sauvignon blanc. I can recognise the great ones, but I can’t say I like them. I remember visiting Sancerre in the Loire valley and having tasted a whole pile of wines thinking: “I can’t wait to get to Burgundy tomorrow” (cited in White, 2003, p. 68).

Sauvignon blanc is not the only grape variety which evinces such dislike in wine professionals. For instance, White (2003) claims to hate chambourcin. Nevertheless, sauvignon blanc appears to be the one variety which is mentioned repeatedly in this context. Contextually it is worth noting that with wine it may be possible for

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professionals and highly involved consumers to maintain that they can “objectively” evaluate the quality of a product – in this case wine made from a specific grape variety – whilst still disliking it (Charters and Pettigrew, 2003a). However, this apparent professional caution about the grape variety is at odds with developments in its production within Australia. From 1997-1998 to 2001-2002 the tonnage of sauvignon blanc produced rose from 19,608 to 28,567, an increase of 46 per cent (Hoffman, 2003). During the same period the production of riesling (a variety which makes similar styles of wine) declined by 11 per cent (Hoffman, 2003). This suggests that whilst professionals may be ambiguous about the grape variety, consumers are drinking more of its wine. Process Given the exploratory nature of this research a qualitative approach, allowing for both a wide ranging and detailed examination of individuals’ thoughts and feelings, was considered suitable (Calder, 1977; Morgan, 1988), especially as the study aimed to produce insights rather than aid the prediction of behaviour (Harper, 1994). The process of collecting data for this study took place in two stages. The first component was a large, qualitative research programme that investigated the concept of quality in wine. This involved four focus groups with 27 wine-industry participants and a further 18 depth interviews with professionals. Additionally another 60 consumer informants were used for this research programme, but information obtained from them has been excluded from this study. The topic of sauvignon blanc was not explicitly raised by the researcher during this study. However, a number of informants voluntarily referred to the grape variety in a range of contexts and these responses were analysed to gain an overall picture of attitudes to the grape. The interviews and focus groups transcripts were imported into a qualitative software package (NUDzIST) for coding to facilitate analysis. Full details of the methodology of this study can be found in Charters and Pettigrew (2003b) The second stage of the research was an explicit investigation of negative attitudes to sauvignon blanc. This process sought out wine industry professionals who overtly declared that they dislike producing and/or consuming wines made from the variety. These individuals were initially obtained by contacting a number of acquaintances of the researcher who have a high profile within the wine industry. A total of 50 individuals were initially invited to be involved and a number responded positively. Four of these, selected to represent a balance of industry and demographic background were finally interviewed individually for the study. One was a winemaker based in regional New South Wales; one a wine writer and promoter, also based in New South Wales. One was a wine educator, and member of a family that owns a winery in Victoria. The fourth was a winery manager, also based in Victoria. Four was felt to be a sufficient number to reach “saturation” of data on the topic beyond which little or nothing new would be learnt (Calder, 1977). These informants were questioned about their perceptions of and feelings about sauvignon blanc. The emerging themes which arose during the first part of data collection were developed during the data coding, so at the point where detailed analysis began a series of concepts, and ideas for evaluation and cross-comparison were already assembled. These were recorded, and formed the basis for the subsequent further exploration in the second stage of data collection. Throughout analysis the data were assessed for credibility, transferability, dependability (both of content and of

informant), confirmability (Marshall and Rossman, 1989) and integrity (Wallendorf and Belk, 1989). Additionally triangulation of the data was obtained by using two stages to the data collection process and multiple forms of interviewing (Wallendorf and Belk, 1989; Fontana and Frey, 1994).

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Findings Stage one data collection As noted above, informants in the first stage of data collection were not specifically prompted to speak about sauvignon blanc or their attitude to it. In total four wine professionals voluntarily spoke about it. They tended to be at best equivocal when referring to the variety. The following extract comes from a focus group of winemakers, which had been asked about their drinking preferences:

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Hal[1] (winemaker): Yeah, definitely, [it] depends what you’re in the mood for. Sauvignon blanc’s a good example. Well, it’s hard to find a good bottle of sauvignon blanc [general laughter] . . . I might say “that’s a very good wine – high quality – but my preference at this point in time is to drink the other one.” Yeah, that happens all the time.

Hal’s comment that it is hard to find a good bottle of sauvignon blanc provoked widespread, light hearted approval within the group, and the tone of voice used made it obvious that he was negative about the variety. His derogatory comment did not result in any of the six other members of the group contradicting him. This perspective was repeated in another context: Ernest (wine importer): I find it quite amusing . . . the way the trade talks and thinks about sauvignon blanc in Australia. You’d get stoned if you came out as a big fan of herbaceous, Marlborough sauvignon blanc . . . It’s partly fashion but we’re influenced by them I think for sure.

Ernest has a perception that the Australian wine industry dislikes sauvignon blanc, at least in its New Zealand form. He goes further, attributing this partly to “fashion” – perhaps a group trend amongst the cognoscenti; one of the trends which influences the industry widely. Stage two data collection The fundamental reason given for the dislike of sauvignon blanc was its taste. All interviewees raised this at an early stage of the interview. However, it became apparent that this factor operated in different ways. Part of the dislike focused explicitly on the aromatic characters of the wine. At its most extreme this could cause the interviewees to be quite damning: Jemima (wine writer and educator): I think that the worst examples smell like someone who’s been to the gym and hasn’t had a shower for two days, like [a] really sweaty, underarm thing.

Jemima mentioned one flavour character in the wine that she disliked. This specificity on flavour was a factor repeated by all the interviewees, with characters such as tinned asparagus and herbaceousness singled out. Another interviewee commented as follows: Thomas (wine promoter): I love eating asparagus but the so called asparagus character in Marlborough sauvignon blanc is reminiscent of fresh urine or silage.

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This does appear to be partly contradictory; the asparagus aroma is credited to New Zealand sauvignon blancs simply because it is reminiscent of true asparagus, yet Thomas likes one and dislikes the other. Another interviewee disliked the grape’s “cut-grass” character, yet claimed to enjoy the smell of a freshly-mown lawn. Beyond this aromatic specificity, other flavour-related issues were raised, neatly summarised in the following comment: Peter (winery manager): It’s always very hard to match with food. And it’s just like on a singular line. It doesn’t have great complexity, it’s just an intense wine – [It’s] not a style I really enjoy at all.

All the interviewees stated that they considered that sauvignon blanc is not a “food friendly” wine. Beth, a winemaker, commented approvingly of more “neutral” grape varieties, like pinot gris, which were much easier to pair with food. The pungency or aromatic intensity of the wine was also noted disapprovingly by some of the interviewees. Additionally, all the interviewees referred to the apparent “simplicity” of flavour. Unlike other grape varieties, they claimed, sauvignon blanc provides little aromatic complexity, so that “what you see is what you get”. Another organoleptic issue raised related not to flavour, but to the texture of the wine – the way it feels in the mouth: Jemima: [It has a] hardness on the palate. There’s no seductiveness to the texture of the wine. I think that texture’s very important to me when I’m drinking wine. Thomas: It’s never generous – and if it’s lively the tautness of structure makes it feel cold in the mouth.

Thomas suggests that these wines lack generosity; a sense of fullness or roundness in the mouth, and if “lively” (generally a term of approbation for lighter, aromatic wine styles) then it paradoxically became “cold”. Jemima subsequently compared sauvignon blanc unfavourably with riesling which has textural components which she enjoys. Beyond the taste-related reasons offered for disliking the variety, the issue of social acceptability was raised by the researcher. Responses to this topic covered two related areas: the idea that sauvignon blanc may be too commercially popular, and a sense that the interviewees’ industry peer-group tended to share their perspective. The former issue was dealt with in detail by Peter, who had previously been a sommelier: Over the last . . . four or five years sauvignon blanc [has been] generic for wine. You have customers that’ll come into restaurants and go . . . “I’ll have the sauvignon blanc” . . . It’s a wine that they don’t know anything about, but it has recognisable aromas . . . I think the way the wine industry’s moved is towards trying to work towards that person – by accentuating those characters I dislike in the wine. Accentuating the herbaceousness, and gooseberry, and green characters in it, to appeal to people who have little understanding of wine. Which is fine – but it makes the wine so much less appealing to me.

Peter’s ostensible reason for disliking sauvignon blanc is that, in order to give the wine mass appeal, wine producers have focused on constructing flavours which he does not like. However, there may also be a sense that if the wine currently offers mass appeal then he does not want to be seen to be liking it. This perspective is reinforced by a comment he made later about this approach to producing the wine:

It’s just a money-making, cut price, volume sort of thing – and not the end of the market or the industry that I’d be interested in.

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He neither wants to produce and sell wines with mass appeal, nor to drink them. The converse of this position seems to be a perspective that other wine professionals do not generally like sauvignon blanc. Thus Thomas, volunteered the following: When I’m on various wine tasting panels, and we’re told there is a sauvignon blanc tasting happening, there isn’t a lot of enthusiasm.

This gives the sense that there is a group mentality that is unsympathetic to the variety. Thomas was pressed on this issue, and on whether or not he disliked sauvignon blanc in order to fit in with an industry viewpoint. He did not accept that: I don’t think I follow the crowd . . . My views are a matter of personal enjoyment, and I rarely enjoy sauvignon blanc. I think, perhaps, a lot of people have arrived at that perspective independently.

The other interviewees were explicitly asked if they felt that their views were generally held by others in the wine industry, and they all concurred. Peter noted that: . . . hardly anyone [in the industry] drinks it – and the general thing is there’s a negative sentiment about actually.

Whether or not this is accurate there is, therefore, the perspective amongst those who dislike sauvignon blanc that they merely express a view common to their fellow professionals. Although the research process had sought interviewees “who do not like wines made from sauvignon blanc” it became clear that there are two forms of dislike: absolute and general. Thomas, quoted above, dislikes wines made from the variety without exception. The other interviewees, having acknowledged a general dislike, would accept that very occasionally sauvignon blanc wines were drinkable. Beth, the winemaker, suggested that it could make acceptable wines when blended with semillon and then made the following comments: I’d have to say I would [accept] French styles – Sancerre and things. And I quite enjoy it like that . . . I prefer it subtle, and with more wine making influence.

The style of wine made in France is less pungent, with – perhaps – more attention to texture than in Australia or New Zealand, and two of the other interviewees explicitly commented that wines from Sancerre were occasionally acceptable. These wines, sometimes with more use of oak and the use of yeast lees during maturation to give a creamy feel to the wine, exemplified the viewpoint of three of the interviewees that adequate wines could be made where there was overt winemaker intervention in the wine’s production, rather than when it was made with an emphasis on the (disliked) “pure” varietal fruit character. The interviewees were all asked whether their antipathy to the variety made it hard for them to be involved in its promotion. Most suggested that they have as little to do with the variety professionally as possible. The following comment, in response to the question, is illuminating: Beth (winemaker): That’s why I’m not making that much . . . I’ve never made it as a single varietal and [in] the area I’m in . . . it would be the second most dominant variety . . . And I’m

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involved in a local event, organising wine selection panels – and it’s really hard for me to line up 20 local sauvignon blancs.

There is pressure on Beth as a winemaker who is in a region where the variety is widespread, and who herself has to make it, albeit, as she later pointed out, to be blended with semillon. She noted that she carried out this blending as soon as possible after the wine was made, so that she could avoid having to taste the sauvignon blanc on its own, a process she found unpleasant. There seems to be a perspective amongst wine professionals (and some general consumers) that preference for a wine and the recognition of its quality are separate issues (Charters and Pettigrew, 2003a). This issue was raised with the interviewees. Beth, when asked if she could still evaluate wines made from the variety, responded: Yeah [I can]. And I do – because I do wine judging – and this year I think I had sauvignon blanc for three days . . . and it’s not a favourite style – but you can still appraise its concentration, the ripeness level of it, and its balance. So, it’s not my preferred style – but you do look for quality and in a wine show you’re looking for style and quality and so you can [judge it].

This reflected a general perception amongst the informants that their dislike had no bearing on their professional position. As wine professionals they showed how, as creators, judges and promoters of an aesthetic product they could split their own liking from popular taste. This reinforces the sense in which there may be “two wines”; those for the mass, and those they would chose to drink themselves. When they judge wines they can divorce their own preference from an assessment of the “objective” quality of the wine – even if they clearly dislike the wine’s style. It is worth noting that three of the four interviewees voluntarily compared sauvignon blanc unfavourably with riesling. This comparison is instructive. Sauvignon blanc and riesling share some similarities; they are both light to medium bodied, both have crisp acidity, and are aromatic, yet one was very popular and the other hated The comparisons made serve to highlight some of the uncertainties surrounding the informants’ views on sauvignon blanc. Thus Thomas made the following comment: I don’t particularly like Marlborough [sauvignon blanc] wines. I don’t like the tinned asparagus characters. [Whereas] I like the oilskin characters – what others call petrol – on riesling.

One aroma is reminiscent of a foodstuff, yet disliked, whilst the other is chemical in character and liked. The preference is counter-intuitive, and expressed in this way it may not reflect the preferences of most consumers. In another context Jemima commented: My parents have never enjoyed sauvignon blanc either – and so we never drank it at home. But we also never drank riesling at home, and I love riesling now. And I’ve really come to appreciate riesling as one of the great grape varieties of the world.

The suggestion is that Jemima’s dislike may have arisen because her parents disliked drinking wines made from the sauvignon blanc, yet there is an element of uncertainty about this as she loves riesling even though that was not drunk at home. In this case the interviewee was herself aware of the paradoxes surrounding her dislike of the product, but seemed unable to resolve some of them.

Discussion and conclusions It appears probable, from the data gathered in both stages of this study, that there is a distinct group of wine industry professionals who dislike wines made from sauvignon blanc. It is possible that this professional antipathy is focused on this grape variety more commonly than on other varieties. The dislike may be unwavering or it may be general, allowing for occasional instances where the response to the wine is positive – usually when its provenance is French and/or it has been made with overt winemaker intervention which tones down its natural varietal character. Such an aversion was perceived by the interviewees in this research not merely to be individual but to reflect a widely-held perspective amongst other professionals. This perception seemed to be maintained despite the obvious popularity of the variety, expressed by the increase in production over the last six years. There are two possible reasons for this dislike. Both relate to the issue of personal taste. It has been suggested that personal taste in wine is based on two precursors (Charters, 2004). The first precursor is physiological – that we find specific aromas and/or tastes pleasant or unpleasant. The second is social expectation, which is based on both cultural and status-related issues (Charters, 2004). The impact of physiological constraints means that, just as it has been shown that individuals have different sensitivities to components in wine such as acid or bitterness (Peynaud, 1987; Schutz and Pilgrim, 1957), so they may have different responses to aromatic compounds. The physiological response itself may be subject to psychological and affective influences (Pangborn, 1981), but it also seems clear that in part it is purely physical, and even genetic in origin (Bartoshuk, 2000). Thus the “cut-grass” enjoyed by one drinker may be the “sweaty armpits” disliked by another. At the same time the organoleptic reasons offered by interviewees for finding the variety objectionable relate closely to some of the dimensions utilised by wine drinkers generally when assessing the quality of wine (Charters and Pettigrew, 2003b). It has been suggested that complexity and balance are markers for establishing how good a wine is (Charters and Pettigrew, 2003b), and thus perceiving the grape variety to make simple or pungent wines (the latter showing a lack of balance) reflects a perspective that the wines are of poor quality. The constraints of social expectation may operate in other ways. It is possible that some may use the variety to mark themselves off from others (in this case the mass of consumers). Thus their dislike of sauvignon blanc operates as a means of differentiation (Bourdieu, 1986), establishing their status by means of their good taste. This relates to the suggestion that the taste of food and drink are themselves “socially constructed” (Seymour, 2004), and that wine is archetypally a “food for hierarchy” (Demoisser, 2004, p. 94) – although the apparent physiological influences mentioned above would appear to moderate such a strict “social-constructionist” interpretation. As a gloss on the idea of using wine for differentiation, one could also add that the acceptance of French sauvignon blanc wines is a further way of making a point of distinction in a country which overwhelmingly drinks domestically produced wine. Conversely the interviewees’ perspective on the variety may also operate to identify their inclusion in the group of wine professionals (all of whom, they perceive, share their dislike). This approach to sauvignon blanc thus marks the group as a whole from consumers, and again establishes their position as experts.

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What is therefore being expressed by the informants is, essentially, the outworking of personal taste – a synthesis of physical characteristics (the physiological taste of the product) with social and cultural influences. A comparison with similar research into consumer preference may be instructive. This synthesis was addressed in one analysis of food preference: Sweetness seemed to be a major driver of preference with sweeter products preferred in blind tests but when asked for descriptor preferences sweetness was often a negative (Wright et al., 2000, p. 433). With growing sophistication in wine drinkers in the UK, [sweet wines] offer little cultural capital and so consumers who quite like the taste move on to other wines with more kudos (Wright et al., 2000, p. 436).

Consumers may physiologically tend to enjoy sweeter wines, but socially be required to express a preference for wines with less residual sugar in them. In this case the physical and the social influences act dialectically to produce a synthesis of personal taste, which will be distinct for each individual. However, the research by Wright et al. (2000) focused on consumers. The relevance of the current research is that it concentrates on experts – those who could, superficially, be expected to suspend personal judgments in favour of more “objective” analysis (Charters and Pettigrew, 2003a). What seems clear is that these interviewees feel able to articulate “objective” reasons (“everyone dislikes the taste”; “it doesn’t match food”) for what less articulate consumers might see as a more subjective process (Charters and Pettigrew, 2003a). It also appears that they understood the necessity of divorcing their own preference from an appraisal of the “objective” quality of wines. This objectivity is essential to their role as professionals whereas mere subjectivity would mean they would have no more authority than the consumers for whom they make or promote wine. There is a major implication from this for those involved in the marketing of wine generally. Those who promote wine, whether wine makers or staff at the cellar door or those in retail, may be involved in activities with grape varieties they dislike – just as the winemaker Beth is involved in industry promotions surrounding sauvignon blanc. Generally the interviewees in this study were able to use avoidance mechanisms to pre-empt that situation arising – but that is not invariably the case. There must be a question mark over how effective someone can be in promoting a style of wine that they do not like. There is also an issue over how responsive a producer may be to consumer demand if they are unwilling to provide a style of wine that is otherwise popular. This is especially the case in areas such as the Adelaide Hills, in Australia, which is gradually developing a reputation for high quality wines from sauvignon blanc. This study is limited by the fact that data was only collected in Australia. It may be that the comparatively concentrated dislike of sauvignon blanc is limited to that country, although the literature review suggests it may have a wider application. Further quantitative studies could determine how widespread the antipathy is, and whether or not similarly intense views are held widely about other grape varieties. Experimental research could explore in further detail the relative balance of social and physiological precursors of the dislike. Such further research could have substantial benefits for practitioners. It may be possible to show how widespread an issue the

dislike of the variety is, and assist industry managers in compensating for the bias when they or their staff exhibit it. Wider publicity of the issue – if necessary – could also alert both consumers and professionals to the existence of the bias, allowing them to make more informed purchase or marketing decisions. Note 1. All interviewees and focus group participants have been given pseudonyms. References Bartoshuk, L. (2000), “Comparing sensory experiences across individuals: recent psychophysical advances illuminate genetic variation in taste perception”, Chemical Senses, Vol. 25, pp. 447-60. Basset, G. (2000), The Wine Experience, Kyle Cathie, London. Bourdieu, P. (1986), Distinction: A Social Critique of the Judgement of Taste, Routledge, London. Calder, B.J. (1977), “Focus groups and the nature of qualitative marketing research”, Journal of Marketing Research, Vol. 14, pp. 353-64. Charters, S. (2004), “Perceptions of wine quality”, PhD dissertation, Edith Cowan University, Perth. Charters, S. and Pettigrew, S. (2003a), “I like it but how do I know if it’s any good? Quality and preference in wine consumption”, Journal of Research for Consumers, Vol. 5. Charters, S. and Pettigrew, S. (2003b), “The intrinsic dimensions of wine quality: an exploratory investigation”, in Lockshin, L. and Rungie, C. (Eds), 3rd Annual Wine Marketing Colloquium, University of South Australia, Adelaide. Demoisser, M. (2004), “Contemporary lifestyles: the case of wine”, in Sloan, D. (Ed.), Culinary Taste: Consumer Behaviour in the International Restaurant Sector, Butterworth-Heinemann, Oxford, pp. 93-108. Fontana, A. and Frey, J.H. (1994), “Interviewing: the art of science”, in Denzin, N.K. and Lincoln, Y.S. (Eds), Handbook of Qualitative Research, Sage Publications, Thousand Oaks, CA, pp. 361-76. Harper, D. (1994), “Reimagining visual methods”, in Denzin, N.K. and Lincoln, Y.S. (Eds), Handbook of Qualitative Research, Sage Publications, Thousand Oaks, CA, pp. 403-21. Hoffman, D. (2003), “The changing face of viticulture”, Australian and New Zealand Wine Industry Journal, Vol. 18, pp. 40-5. Johnson, H. (1997), Hugh Johnson’s Wine Companion, Mitchell Beazley, London. Jordan, R. (2003), “Battle of the wines”, The West Australian, “Fresh” Supplement, p. 7. Marshall, C. and Rossman, G.B. (1989), Designing Qualitative Research, Sage, Newbury Park, CA. Morgan, D.L. (1988), Focus Groups as Qualitative Research, Sage, Newbury Park, CA. Pangborn, R. (1981), “The acquisition of likes and dislikes for food”, in Solms, J. and Hall, R.L. (Eds), Criteria of Food Acceptance, Forster Publishing Ltd, Zurich, pp. 117-219. Peynaud, E. (1987), The Taste of Wine, The Wine Appreciation Guild, San Francisco, CA. Robinson, J. (1986), Vines, Grapes and Wines, Mitchell Beazley, London. Robinson, J. (1997), Confessions of a Wine Lover, Viking, London. Robinson, J. (Ed.) (1999), The Oxford Companion to Wine, Oxford University Press, Oxford. Schutz, H.G. and Pilgrim, F.J. (1957), “Differential sensitivity in gustation”, American Journal of Psychology, Vol. 103, pp. 495-517.

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Seymour, D. (2004), “Social construction of taste and the work of Pierre Bourdieu”, in Sloan, D. (Ed.), Culinary Taste: Consumer Behaviour in the International Restaurant Sector, Butterworth-Heinemann, Oxford, pp. 1-22. Vinas de Chile (2003), “Glossary of varietals”, Vol. 2003, available at: www.vinasdechile.cl/ ingles/vinos/cultura_del_vino/glosario2.htm Wallendorf, M. and Belk, R.W. (1989), “Assessing trustworthiness in naturalistic consumer research”, in Hirschman, E. (Ed.), Interpretive Consumer Research, Association for Consumer Research, Provo, UT, pp. 69-83. White, T. (2003), “Drowning by numbers”, The Weekend Australian Financial Review, p. 68. Williams, D. (2002), “Wines”, Harpers, p. 12. Wright, L.T., Nancarrow, C. and Brace, I. (2000), “Researching taste: layers of analysis”, British Food Journal, Vol. 102, pp. 429-40.