Awareness
Based on this model, an awareness campaign was carried out, supported by a budget of around 2 million euros, for final consumers and distribution agents, an observatory for Ecological Products and a sectoral Portal were created and a single logo was adopted for all products the regions of Spain.
Better taste, better contribution to the environment, healthier products: these are the main reasons why shoppers choose products of ecological origin.
1. The European and Spanish market for ecological products
The ecological market is in vogue. Demand is growing notably and large supermarkets are trying to enter and fight to establish a foothold in a market that was formerly exclusively owned by specialist stores. the growth of the consumption of ecological products in countries in the north of Europe is around 15 to 20% per year. In Germany, consumption grows by 15% per year and in the United Kingdom by 30%. In the US it grows at 20% a year.
The case of the market in Spain is quite different. Spain is the second largest European producer and the seventh largest worldwide. In the last five years, the Spanish production of ecological products has grown by 125%, that is, 23% a year, standing in 2005 above 300 million euros. However, the consumption of ecological products is very low, as each Spaniard spends only six euros a year on ecological products, compared to almost 50 euros in countries like Germany and the United Kingdom. Spain is a significant exporter of ecological products, directing between 80 and 90% of ecological production to foreign markets, although only about 3% of the useful agricultural surface is destined to ecological agriculture.
Despite this external success, the truth is that these products have had little success in the domestic market. the consumer alleges that the offer is limited and infrequent, failing to become loyal to the products and that the information provided is still incipient and dispersed. On the part of distribution, reduced demand is the most pointed factor for the limited commercial development dedicated to this type of product.
2. Traditional problems associated with the marketing of ecological products
Faced with this deadlock situation in the market, the Ministry of Agriculture in Spain contracted the services of LBC to develop a new model for the distribution and commercialization of ecological products in Spain. the objective is to define initiatives that will encourage the domestic consumption of ecological products and define an action plan and budget for their execution.
The eco-products business can be divided into three segments:
- fresh products (essentially fruits and vegetables),
- processed products
- meats.
Each of the value chains of these three segments presents different challenges in terms of the production chain, distribution model and product commercialization. An analysis of the European market - developed by LBC with the support of experts from countries where market shares for green products can reach more than 5%, namely Switzerland, United Kingdom, Denmark and Germany - illustrates the following typical problems associated with marketing of ecological products:
- Difficulties in planning production and sales and, consequently, producers' supplies
- Reduced quantities to meet the needs of large and medium-sized distribution chains
- Unattractive and uninformative packaging
- Poor cold chain (especially for milk and dairy products)
- Need to guarantee the freshness of products on the markets and consistent quality
- Insufficient margin and high prices
- Limited investments in brand(s)
In the more developed markets, a set of measures to mitigate these problems was defined and successfully applied, among which the following stand out:
- Cooperation between suppliers
- Common understanding of quality criteria / definition of production standards
- Panel of consumers and stockists to test the packaging
- Common investments in refrigeration systems
- incisive lobbying
- Favoring the cultivation of special species to differentiate from the conventional market
- farmers' expertise
- Use of “bio ambassadors”, ie, association with prominent people in society
An analysis of the Spanish market, conducted with the participation of the main players in the Spanish sector, identified the following problems specific to the Spanish market:
- Reduced production capacity to meet the needs of the national market in terms of quantities and frequency
- Proliferation of different brands for ecological products in different regions, which may cause some confusion to the final consumer
- Forwarding production to the international market, with reduced space in the distribution chains for these products
- Limited investment in information for the end customer, resulting in ignorance of the existence of this product
- Ignorance of the reality of the market, in terms of sales, prices, type of products, etc.
- Reduced cooperation between suppliers
3. Main lines of action for the commercialization of ecological products
To develop domestic trade in ecological products, a total of 12 strategic initiatives were defined. Additionally, an integrating initiative is proposed whose mission is to manage and coordinate the entire program of initiatives. Each initiative has a set of goals, an implementation and follow-up plan:
The most relevant initiatives are:
- Integrated promotion campaign – in order to raise awareness of the market and boost the internal market;
- Creation of the ecological agriculture portal – to facilitate content and information about/for the sector
- Adoption of a unique logo – in order to create trust and facilitate the recognition of ecological products
- Creation of an Observation Center for Ecological Products – in order to study and understand the market and hold a reference for the types of products sold and their prices
- Creation of incentive schemes for ecological production - ensuring the supply of the market with the required quantities and frequency
- Fostering distribution and local commerce – through joint negotiation with wholesalers and retailers and carrying out distribution awareness actions
Reference shares
The initiatives taken in Spain by the Ministry of Agriculture represent a significant contribution towards a more competitive and sustainable ecological agriculture, and can serve as a reference for the efforts to be developed by other countries.
Ecological Agriculture is practiced in more than 120 countries. According to the 2005/2006 FiBL study, the surface dedicated to Ecological Agriculture covered 31.502.786 hectares in the world, and the number of ecological producers reached 622.782. According to the same study, the global market for ecological products was estimated at 23.500 million euros, with Europe and North America being the areas with the largest market shares.