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GIs GIs Consumer preferences Consumer preferences And firm strategies And firm strategies The case of The case of Parmigiano Parmigiano - - Reggiano Reggiano 16 June 2008 Leo Bertozzi Consorzio del Formaggio Parmigiano Reggiano Reggio Emilia (Italy)

GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

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Page 1: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

GIs GIs

Consumer preferencesConsumer preferences

And firm strategiesAnd firm strategies

The case of The case of ParmigianoParmigiano--ReggianoReggiano16 June 2008

Leo Bertozzi

Consorzio del Formaggio

Parmigiano Reggiano

Reggio Emilia (Italy)

Page 2: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The Parmigiano-Reggiano chain

Cheese plants(461 and 112.855 tons 4413 milk producers)

Production and ageing until 12 months

Maturing companies-wholesalersAgeing between 12 - 24 months and more

Whole cheese – Portions - Grated

Market(82% national 18% export)

Page 3: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Sales distribution according to the age of the cheese and to the ageing:· 65% Parmigiano-Reggiano 24 months · 27% Parmigiano-Reggiano 18 months · 8% Parmigiano-Reggiano 12 months “Mezzano”

8,10

9,98

8,39

7,17

7,717,80

9,12

9,81

8,88

7,758,34

6,40

7,38

8,21

8,988,769,04

8,89

9,78

10,80

9,30

7,68

4,00

6,00

8,00

10,00

12,00

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07

Pric

e (€

/kg)

Parmigiano-Reggiano 12 months Parmigiano-Reggiano 24 months

7,507,8

7,036,79

Page 4: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The link with the area of origin: the necessary core of all its historyNatural and Human factors

Page 5: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Parmigiano Reggianoa noble and historic designation

• Parmigiano Reggiano in Figures ( 2007)

- 251.000 cows solely producing milk for Parmesan cheese - 4.413 producers of milk - 461 cheese dairies - 16 litres of milk to make 1 kg of Parmesan cheese - 600 litres to make one wheel - 30 Kg: minimum weight of a wheel- 38 Kg: average weight of a wheel - 12 months: minimum maturation period - 20-24 months: average maturation period- 3.089.732: wheels produced- 0 additives

Page 6: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

- The strong and unique link with the “terroir”

-the cows are fed predominantly with local fodder no silage

-the milk is produced and transformed exclusively in the area of origin, it is collected twice a day; it is kept at min 18 °C

- The traditional process -solely raw milk, natural starter, calf rennet and salt-absolute prohibition of additives and conservative elements- copper vats, one cheese making per vat

- The ageing process: - minimum 12 months; flavour, grainy texture- the packaging in the area of production

Parmigiano Reggiano

Page 7: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

THE MANAGEMENT OF THE PDO

1. The Custodian of the PDO: CONSORZIO DI TUTELAVoluntary association of PDO producers representing at least 3/4 of the PDO

2. The Inspection system of the PDO: DCQ PRIndependent organisation responsible for auditing the adherence to the PDO’s Code of Practice

The cost of the system: 6 Euro per cheese (550 litres of milk)Paid by the producers

Page 8: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The “Consorzio del Formaggio Parmigiano Reggiano”and the use of the PDO Parmigiano Reggiano

1. The “Consorzio del Formaggio Parmigiano Reggiano”

• Created in 1934;• Voluntary non-for-profit body in charge of the defence,

promotion and safeguarding of the Protected Designation of Origin Parmigiano Reggiano;

• Can be members of the Consorzio, on the condition that they are established in the area of origin:– Milk producing farmers of milk directed to the production

of Parmesan;– Diaries producers of Parmigiano Reggiano;– Companies maturing and/or grating P.R., that hold

the cheese until the end of the maturation period

Page 9: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The “Consorzio del Formaggio Parmigiano Reggiano”and the use of the PDO “Parmigiano Reggiano”

• In charge with the protection, safeguard and promotion of the PDO Parmigiano Reggiano, towards every one;

• Promotion tasks, • Product specification• Establishes the modalities/conditions for the use of the marks of origin

and their correct use in respect of the specification;• In charge with the protection of the Designation of Origin against any

exploitation of its reputation, against imitation, misuse, etc. (article 13 Regulation 510/2006);

• In Italy, its supervisory agents have the qualification of policemen.

Page 10: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

II. Parmigiano Reggiano on the market.(iii)packaged in portions, grated

Page 11: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The composition of the Consorzio

• 461 associates (General Assembly). Elect 48 delegates

• Board of Administration (28 + 4 members))• Executive Committee (10 members). It

includes the president and 2 vice presidents• Term: 3 years • Members: legal representatives of the

cheese plants

Page 12: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The Consorzio: a common interest & strategy

• 1934: Consorzio Grana Tipico CGT• 1955: regulation for Parmigiano-Reggiano• 1964: marking of origin• 1979: feeding regulation• 1983: annual production• 1987: marking of origin• 1991: extention to the grated form• 2001: modification of producing regulation (standard,feeding, marking)• 2002: new statute• 2003: modification of product specification (on going)

• 2005: amendement to the statute

Page 13: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

International Convention of Stresa, 1st June 1951Law 10 april 1954 n. 125The protection of denominations of origin and typical names of cheesesDPR 30 October 1955 n.1269Recognition of the standards for Parmigiano-ReggianoDPR 17 June 1957Attribution to the Consortium for the inspection of the production and sale of Parmigiano-ReggianoDPR 28 March 1958Attribution of the qualification as agents of Public Safety to the inspection agents of the ConsorzioDPR 22 September 1981Extension of the denomination of P-R from the entire wheels to parts of the product sold in pre-packaged formDPR 4 November 1991Extension of the denomination of P-R to grated types

Reg. (EEC) n.2081/92 of 14 July 1992Law 526/99 and subsequent decrees

Reg. (EEC) 692/03

Reg. (EEC) n. 510/06

Page 14: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The control systemin the PDO Parmigiano Reggiano

DCQ-Dipartimento Controllo Qualità P.R.

• Private Organism authorized by the Italian Ministry of Agriculture and in compliance with the Standard EN 45011;

• The printing of the selection marks on the rind is done by the Consorzio after the control made by the DCQ P.R. that guaranties the compliance with the product specification;

• Every cheese maker established in the area of origin has a rightto the marks of origin and access to the control system: only in the case that the requirements in the specification are compliedwith. His cheese can than bear the Designation of Origin.

Page 15: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Parmesanino

Girolamo Francesco Maria Mazzola (11 January 1503 – 24 August 1540), also known as Francesco Mazzola or more commonly as Parmigianino (anickname meaning 'the little one from Parma') orsometimes "Parmigiano", was a prominent ItalianMannerist painter active in Florence, Rome, Bologna, and his native city of Parma.

Page 16: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Italian? from “Parma”?

Page 17: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

15 Parmigiano Reggiano– 60GI15/60GJ93 – October 2005ABCDEF significant difference (90%)

Main spontaneous evocations when «parmesan cheese» is mentioned

Belgium(1004=100%)

13

13

2

1

1

2

8

1

6

9

5

31

29

43

87

Smell Shavings

Tough

Good taste

AccompanimentPizza

Grated

Italian food

Cheese

Italy

Pasta

At least 1 mention

Reggiano

Strong

Don’t know 41

1

4

1

8

2

5

2

4

32

8

5

59

Estonia(1005=100%)

France(1000=100%)

6

1

1

2

1

11

9

6

76

33

31

94

Germany(1004=100%)

5

9

10

10

12

19

20

20

25

31

35

44

53

95

Spain(1000=100%)

24

2

1

4

2

13

4

3

35

10

13

76

Sweden(1049=100%)

12

4

5

23

5

12

7

3

14

38

36

88

UK(1144=100%)

20

9

16

1

3

4

1

9

5

10

7

18

27

80

Wherever the question is asked Italy, Cheese, and pasta are top of mind mentions. To be noticed: many Swedish talking about a good taste, many Brits talking about the smell of

parmesan (mainly to say they « don’t like it, stinky »), and only Belgium mentioning ReggianoQuestion Q0- Please tell me all the words or expressions that come to your mind when you think of « Parmesan cheese» (several answers)

Page 18: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

…local, loyal and constant usages …The evolution process in agriculture1. → 1945: the rural society2. 1945-1960: the technical progress3. 1960-1975: the apogeum of growth4. After 1975: the time of crises and interrogations

- over-production- price support and (export) subsidies- reduction of selling prices 1992: the PDO/PGI EEC Regulation

HOW TO BE COMPETITIVE

Price / Quality (specification, difference…)

Page 19: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

43,2%31,3% 28% 22% 20% 19%

13% 11% 9% 5%0%

20%

40%

60%

80%

100%

Proce

ssed

milk

(P-R

)

Grapes

Milk fo

r consu

mption

Maize

Pears

Beef

ApplesPork

meat

Tomatoes

Soft whea

t

Agriculture Industry Retail

Value added chain

Agriculture captures 43% of the total value of Parmigiano-Reggiano cheese on theconsumption market; the share of value created by the agricultural sector is the highestcompared to other agrifood supply chains

Page 20: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Cheese balance sheet in the EU-27, 1991–2014

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Prod

uctio

n, C

onsu

mpt

ion

(mio

t.)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

Trad

e (m

io t.

)

Consumption

Production

Exports

Imports

EU-15 EU-25EU-12 EU-27

Cheese production in the EU 1991-2014: gradual increase

Page 21: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Export of cheeses towards third countries

0

5.000

10.000

15.000

20.000

25.000

30.000

2001 2002 2003 2004 2005 2006 2007

Cheddar Grana Padano et Parmigiano

Fiore Sardo et Pecorino Provolone

Asiago, Caciocavallo, Montasio et Ragusano

2001 2002 2003 2004 2005 2006 2007Total Export of Cheeses 469 338 487 297 509 881 545 252 546 038 584 206 594 158

Total exports of EU cheeses

Page 22: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

95-9

6

96-9

7

97-9

8

98-9

9

99-0

0

00-0

1

01-0

2

02-0

3

03-0

4

04-0

5

05-0

6

06-0

7

DK DE

ES FR

IT NL

AT FIES

DK

DE

FR

IT

NL

AT

FI

Evolution of the number of producers

Page 23: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Milk price

Drought Australia

Drought Southern Europe

Wet Northern Europe (climate change)

Export bans in India & Argentina

Increased Demand (Asia) World milk consumption of 650 million tonnes is growing by roughly 2% per year (13 million tonnes)

Food versus Fuel

Factors affecting world dairy market

Page 24: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

GI: GI: Benefits Benefits and and difficultiesdifficulties

Protection RestrictionsNotoriety ImitationsAdded value CostsVigilance ControlCollective mark Private brand

Page 25: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The Product Specification: a broad possibility

Parmigiano-ReggianoCheese packaging in the production area

ProvoloneCoatingsGrana PadanoAdditivesGorgonzolaPasteurizationAsiagoSilageFontina Animal Breed

Page 26: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

The challenge of Producing and marketing a PDO

• The Legal Protection• Ex officio protection of

GIs• Common regulation• GI register• Ext. art 23 TRIPs

• The Market Access• Management of

production• Minimum price

Page 27: GIs Consumer preferences And firm strategies The case of ... Cetraro.pdf · The “Consorzio del Formaggio Parmigiano Reggiano” • Created in 1934; • Voluntary non-for-profit

Grazie