Establishing marketing concepts and branding Diet for a Clean Baltic in Poland

Transcription

1 Establishing marketing concepts and branding Diet for a Clean Baltic in Poland Author: Malgorzata G. Sliczna Polish Ecological Club, Gliwice Chapter Table of content Description of the organic market in Poland... 2 Practical example of local, organic producing plant... 4 Marketing concept... 6 Branding of Diet for a Clean Baltic... 7 Conclusions... 8 References

2 Description of the organic market in Poland The origin of the organic food market in Poland is dated years back; however this market is still developing. Since the year Polish organic farmers can count on EU subsidies for their production. Those subsidies are one of the main determinants for organic market development in Poland. Since joining the European Union the amount of organic producers has increased noticeable (exact numbers can be found in the figure below) Organic producers Figure 1 Number of organic producers in Poland in years (source: Organic producers shown in the chart are defined as organic farmers, organic food producers and organic products distributors. One of the main conditions influencing development of the organic market in Poland is the distribution system of the products. Due to the fact that Polish organic farms are relatively small (more than 50% of the farms have less than 10 ha of arable land) distributors encounter 1 In the year 2004 Poland joined the European Union is also the year when Poland for the first time passed a bill about organic production. 2

3 difficulties in organic food accessibility. The Polish distribution system is based on direct sale, in the year 2004 this kind of retail had a 66% share on the Polish market (based on research of Żakowska-Biemans S). It seems that even now direct sale plays the main role in the distribution of organic products. Direct sale can be defined as a sale from a farmer to final consumer at first hand. This channel of distribution can take place on the farm, where consumers can collect products or buy them from the farm shop. This kind of sale can also take place outside the farm in a market place, tradeshow or picnic. In Poland farmers need to obey some laws and regulations regarding direct sale. Polish legislation in the matter consists of: Act from year 2 about foodstuff of animal origin Agriculture and Rural Development Minister ordinance from year 3, (This law shows the veterinary s requirements for production and for products of animal origin which are to be sold by direct sale channels.) Act from r. 4 about food and food safety Health Minister Ordinance from year 5 Wladyslawa Luczka-Bakula [Łuczka-Bakuła, 2007] claims that benefits from direct sale can include: higher price (the farmer receives the added value), relatively low sale costs (lower marketing costs, lack of middlemen), direct access to consumer s opinion about the product. However the flaw of the direct sale is limited ability to increase the demand. Furthermore the farmer needs to be good at customer service. Direct contact with the farmer gives the customers the ability to purchase fresh and organic products. Shopping connected with the tour of the farm helps to create good relations and loyalty between seller and buyer. The Polish organic food 2 Ustawa o produktach pochodzenia zwierzęcego z dn r. ( Dz. U. z 2006 r. Nr 17 poz. 127 z późniejszymi zmianami ) 3 Rozporządzenie Ministra Rolnictwa i Rozwoju Wsi z dn r.( Dz. U. Nr.5 poz. 38) w sprawie wymagań weterynaryjnych przy produkcji produktów pochodzenia zwierzęcego przeznaczonych do sprzedaży bezpośredniej 4 Ustawa o bezpieczeństwie żywności i żywienia ( z dnia r. Dz. U. Nr 171 poz z późniejszymi zmianami ) 5 Rozporządzenia Ministra Zdrowia z dn r. ( Dz. U. nr 112 poz. 774 ) 3

4 market is suffering from lack of organic companies. In 2010 only 293 parties were involved in processing of ecological food (exact numbers on the chart below). In the year 2011 the number dropped to 270. The small number of producers is definitely related to very strict laws and regulations regarding organic food processing. The decreased number of producers in the year 2011 could be caused by global crisis. Chart 1 Number of processing companies in Poland in the organic market within years (origin IJHRS) Number of processing companies Figure 2 Number of processing companies in Poland in the organic market within years (origin IJHRS) Organic food processing is not so popular, because most farmers have no patience and funds to fulfil all the requirements. Nevertheless in Poland one can find a few good examples of local, small producing plants. Practical example of local, organic producing plant One of them can be found in an organic farm owned by Iwona and Janusz Śliczni (BIC). On the Ekostyl farm the grain processing plant is located. The BERAS Implementation Center (BIC) located in Biadacz-Kamienisko has been an organic farm since the year The farm consists of arable land, permanent grassland, with runoff to the Baltic Sea. The whole farm is organically managed. The total area of the farm is 10,51 ha, which includes 8,93 ha of agricultural land. 4

5 Permanent grasslands take 0,92 ha. Ekostyl is a mixed farm based on crop and animal production. The farm s livestock consists of 1 dairy cow, 1 heifer, 1 horse, 5 pigs and 40 layers. Grain produced on the farm is processed on the farm: flours and cereals are being made. The processing plant is organic and it has all the required certificates. Organic products are sold directly to customers who are visiting the farm. Some products are delivered to the customers homes. As for today all products from the farm are sold through direct sales. This kind of distribution channel reduces the cost of transportation and gives the farmers higher profit. Most customers are picking up goods straight from the farm, which gives them possibilities to confirm its organic status. Some of the farm s customers are placing orders via phone and have products delivered to them. Deliveries are usually once a week, prior to customers request. Further plans consist of new distribution channels, such as retail stores and use of middlemen. The new channels will allow increasing the demand for flour, cereal and other processed products. The products could be distributed nationwide. All grain products are manufactured from the farm s own resources. In the future when increase in supply is needed, the owners are planning to buy raw material from local organic farmers. Processing products on the farm is the best way to add value to the farm s products, such as grain. The profit rate depends on the market and on the specific year s price of grain. Usually the price difference between grain and processed products is around 60%. In the example of spelt: spelt grain costs around 5 PLN per kg, 1 kg of spelt flour costs 8 PLN. Cereals (flakes) can increase the value by 160% (1 kg of spelt cereal is around 13 PLN). Of course the extra profit needs to be decreased by operating costs of the processing plant (electricity, employees etc.). The plant in Ekostyl is a family run plant and there are no employees at the moment. The situation may vary when it will expand. The level of investment in the grain processing plant depends on many factors: space and building availability, equipment, certification scheme, national regulations. Ekostyl already had a building on the farm where this kind of activity (business) could take place. However the building needed some modernisation and renovation to fulfil all 5

6 requirements. Most of the rebuilding was made by the owners, which definitely decreased the costs. The equipment for the plant was already at the farm, so no new investments were needed. The market value of those devices was min PLN. Approximate costs of reconstruction and etc. are shown in the figure below. COST DESCRIPTION price (PLN) reconstruction costs furnishing of the social room 500 controls after reconstruction 230 organic certification 1000 packaging projects 1600 SUM PLN Figure 3 Approximate costs of grain processing plant in Ekostyl farm In the example the total cost of organic processing plant was around PLN. Of course the level of investment and its profitability depends on local conditions, farm abilities and etc. In this example starting a processing plant was profitable, for it allows supplying customers with products they are looking for through a distribution channel that they accept. Marketing concept One of the main factors of organic market development is marketing. Organic products require a little bit different approach than conventional food products. What is more is that if we talk about ERA products the promotion and marketing is even more complicated. The main factors that can influence marketing and product recognition are as follows: sales promotion, labeling, advertising, fairs and trade shows, direct marketing, etc. It seems that consumers are not aware of benefits of organic products. So actions that will increase the organic awareness can be beneficial to the market development. Promotional events such as fairs and trade shows are very 6

7 important as they not only promote organic products but also inform consumers about environmental issues. In many cases there are seminars organised during the fair that are open for the public. The goal of the seminars is to increase the organic awareness among visitors. The trade show itself is a place where ERA producers can sell their products. This is the perfect way to increase or establish sustainable food societies. In Poland this kind of promotion is very popular and some evens have a long history. One of the best examples of successful events is Gliwicki Kiermasz Żywności Ekologicznej (an organic fair in Gliwice). In the year 2013 the event was organized for the 18 th time. Each year the number of visitors and exhibitors is increasing. The products are sold mostly by farmers, thanks to that consumers can actually meet the producers and verify the origin of organic food. This year the Organic Fair in Gliwice was a place where a big number of ERA farmers were present. Branding of Diet for a Clean Baltic To promote Diet for a Clean Baltic (DCB) first the ERA system has to be popular among farmers. On the other hand consumers have to be aware of ERA farming principles and its benefits to the Baltic Sea. Promotion of the brand Diet for a Clean Baltic should be focused on its superiority over conventional food products. During the BERAS Implementation project a logo for DCB has been developed. This can be used in all the Baltic Sea countries to identify DCB products, restaurants and concepts. 7

8 Figure 4 Diet for a Clean Baltic logo In the future one should think of establishing standards that need to be fulfilled to be able to use the Diet for a Clean Baltic brand. To be successful a certification system needs to be developed to make sure that the name DCB is used in a proper way. Conclusions Building awareness of the existence of ERA system and the "Diet for a Clean Baltic" brand among producers and potential consumers of organic food will increase the Diet for a Clean Baltic market. A positive image of Diet for a Clean Baltic products needs to be created so that consumers and producers will be interested in the system. "Diet for a Clean Baltic" should show the benefits of eating organic food for its potential customers, both among young and older people. 8

9 References Łuczka-Bakuła, Władysława Rynek żywności ekologicznej. Warszawa : Polskie Wydawnictwo Ekonomiczne,