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Analysis of the Organic Food Marketing – Chain Store Companies (South Bohemia)

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Analysis of the Organic Food Marketing – Chain Store Companies (South Bohemia) Analysis of the organic food marketing – chain store companies (South Bohemia) Analýza prodeje biopotravin – obchodní řetězce (Jižní Čechy) H. Doležalová, K. Pícha, J. Navrátil Faculty of Economics, University of South Bohemia, České Budějovice, Czech Republic Abstract: The paper deals with the analysis of organic food selling within the chain store companies operating in the region of South Bohemia. The analysis is based on a questionnaire survey done in 2007 the aim of which was particularly to check the organic food selling strategies, product mix, selling conditions and culture in the particular chain store companies, finally at the end to define strengths and weaknesses, opportunities and possible threats. Following the analysis of the lists of offered products, the authors have determined the so-called chain stores of “good practice”. These chain store companies are characterized by a quite wide organic food assortment, a developed sales promotion and they try to co-operate with customers and provide them with the needful information on organic foods. Key words: organic foods, chain store company, product mix, regional organic product Abstrakt: Práce je zaměřena na analýzu prodeje biopotravin v rámci obchodních řetězců operujících na území Jihočeského kraje. Analýza se zakládá na dotazníkovém šetření, provedeném v roce 2007. Cílem dotazování bylo především zmapovat strategii prodeje biopotravin, sortimentní skladbu, podmínky a kulturu prodeje v rámci jednotlivých řetězců. V závěru pak vymezit silné a slabé stránky prodeje, příležitosti a možná rizika. Na základě analýzy nabídkových listů byly vybrány obchodní řetězce tzv. „dobré praxe“. Tyto řetězce se vyznačují poměrně širokým sortimentem biopotravin, mají rozvinutou podporu prodeje a snaží se spolupracovat se zákazníky a poskytovat potřebné informace o biopotravinách. Klíčová slova: biopotraviny, obchodní řetězec, sortimentní skladba, regionální bioprodukt The consumers’ interest in quality food in form foods. In the 1980s and 1990s, when the standards of organic products increases in every developed were set and some governments introduced organic country. The growth of interest is visible also in the aid schemes for farmers, organic farming became of- Czech Republic. The organic food market size is ficially recognized (Aschemann et al. 2007). Growing there still not so big at present; however, there is a consumer interest, partly induced by food scandals, led distinctive potential of increase. to the engagement of the major food multiple retailers, and this in turn to a growth of the market through a Organic farming greater availability and recognition of the products. In 1985, the certified organic production (the areas In the developed European countries, in Japan in stage of conversion included) in the EUcountries and North America, organic farming and organic represented 100 000 ha, with 6 300 agricultural en- food consumption started to become a widespread terprises farming on it. It means less than 0.1% of the phenomenon in the 1970s, when the consumer aware- total agricultural land (Alterová 2004). ness of environmental and health issues grew leading In 2000, after the finishing of the large survey of to a willingness to pay premium prices for organic the EUROSTAT, 3 823 306 ha of agricultural land Supported by the Ministry of Education, Youth and Sports of the Czech Republic (Project MSM No. 6007665806). 446 AGRIC. ECON. – CZECH, 55, 2009 (9): 446–458 were worked in the EU 15 in compliance with the as a way of how to get money. One of results of this principles of organic agriculture (the areas in the is that a big part of organic farming is represented stage of conversion to the organic way of farming by permanent grass areas. included). In comparison with the year of 1998, the Jánský and Živělová (2007) stated that the total increase of the areas amounted to 70%. Nevertheless, amount of subsidies to the organic farming has it meant only about 3% of the total agricultural land strongly increased in the Czech Republic (from in the EU (Javůrková 2003; Agra Europe 2003). In 48 million CZK in 1998 to 277 million CZK in 2004). 2003, there was accepted a reform of the Common In 2006, this amount was almost 306 million CZK Agriculture Policy which gave to the EU agriculture, and in 2007, 540 million CZK were required by according to the European commissionary Franz organic farmers (Valeška et al. 2008). Part of these Fischler (Alterová 2003), a more ecological dimen- subsidies was destined to the conversion of farms sion. The EU has declared a strong interest to develop from conventional to organic farming. Another organic agriculture as a basic element of sustain- part represents compensatory payments per unit able development what is proved by the European of the area of organically farmed land. The opinion Action Plan of Organic Food and Farming (2004). presented by Jánský and Živělová (2007) is that it According to the European Commission statistics, is necessary not only to support the production of there were around 5.7 million hectares of certified organic products but also to improve the process- organic land in the EU 25, representing about 3.6% ing and distribution of organic food and to educate of the total agriculturalarea in 2006. Austria has the consumers and to inform them about the benefits highest percentage of organically farmed agricultural of organic farming. This opinion corresponds well land in Europe (13% of the total agricultural land in with the statements of Zagata (2007) about the high 2006, 16% were estimated for 2007), with around support of organic farming. The current situation 10 percent of Austrian farms registered as organic in the organic food market is still rather the push in the same year. than the pull system. Organic agriculture has been developing in the Czech Republic since 1990. In 1990, only three farms Organic food market were working according to the principles of organic farming. Up to the end of 2003, Czech organic farming In the USA, the interest in organic food strongly has marked an important increase (810 farms working increased, which is confirmed by the trend in the on the area of 254 995 ha, which was 5.97% of the total turnover – from 3.6 billion USD in 1997 to 16.7 bil- agriculture land of the Czech Republic. The increase lion USD in 2006 (Sewel 2007). has continued, after a temporary stagnation, even in In 2004, according to the report of the European the following years. By the end of June 2008, 1 766 Commission (2005), the EU market for organic prod- organic farmers were farming on 333 727 ha which ucts is estimated to have represented about 11 billion represents 7.84% of the total agricultural land. The EUR, for comparison the EU 15 final agricultural number of organic food producers has increased to production was 225 billion EUR in 2004. Germany 375 (Valeška et al. 2008). This situation overreaches was the largest national market in Europe with a share the average of the EU countries. of about 30% of the total EU market volume (3.5 bil- The development of Czech organic farming is lion EUR), national markets with organic products apparently much shorter than in the “Western sales of more than one billion Euro are in the United countries”. Zagata (2007) points out that the cur- Kingdom (1.6 billion EUR), Italy (1.4 billion EUR) rent form of organic farming in the USA and the and France (1.2 billion EUR). West European countries still refers to fundamen- Market growth rates in most OECD countries are tals and values of the previous social movement. estimated to range from 15% to 30%. According to He queried about the potential handicap of such a Hallam (2004), the rapid expansion of the market for “lack of tradition” in organic farming in the Czech organic foods has been linked with the shifts in the Republic. The long development of organic farming structure of retailing. The big chain store companies in Western countries (in some of them even since have played a significant role in bringing organic the end of 19th century) resulted to the formation products to a wider market. of specific segments of consumers seeking for and In 2006, the Czech organic food market has achieved demanding organic food whereas the demand for 760 millions CZK, which represents an annual in- organic food in the Czech Republic is very low. It crease of 58.5% (Václavík 2007). In the next five years, seems to be a problem in the Czech Republic, that the expected increase will vary between 30% and the strong support of organic farming was misused 40%. According to the estimations, the organic food AGRIC. ECON. – CZECH, 55, 2009 (9): 446–458 447 trade will reach 2.5 billion CZK in 2010. Although companies use also their leaflets and newspapers, the most experienced in selling organic products are advertisements in the in-store radios or on trolleys, the healthy food shops (specialized shops ) offer- billboard advertisement, consumer competitions, ing also the widest assortment of organic products floor advertising etc. (Živělová, Jánský 2007), the considerable increase Generally, the offer of organic products is insuf- of sales in 2006 was caused particularly by an in- ficient regarding the demanded width and depth in creased supply of organic foods by the chain store the chain store companies. There is an insufficient companies when e.g. the Billa supermarkets and the supply of the domestic organic food for chain store Interspar hypermarkets have extended their offer of companies because of the small production volumes organic foods by fresh fruits and vegetables, dairy and the problems with delivery. Moreover, in spite of products and baked goods (Kaspříková, Kotásková an effort of the chain store companies to offer a wider 2007). A similar example is the Delvita that has, in range of organic food, the availability of processed the moment of the survey (2007), ���������������offered�������� both an food products is still very limited.
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