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Marketing local products:
Short and long distribution channels

[ Summary ]

Section I
Marketing local products via short distribution channels

 

Chapter 2
Conditions for success

 


More often than not, the development and successful outcome of initiatives to market local products via short distribution channels calls for six key points to be taken into account.

 


2.1 Realistically assessing the volumes
that can be sold via short distribution channels

 

The volumes that can be sold via short distribution channels depend on the type of distribution channel. In the case of direct farm sales in France, for example, it is estimated that a customer generally travels within a radius of less than 20 km to buy farmhouse products. In the case of the combined sale of tourist products from the farm, in essence it is not even a food product that is being sold, but rather a cultural or tourist product.

 


2.2 Developing collective action

 

Individual initiatives often quickly come up against their limitations and, what is more, it may be advantageous to set up a range of products. Direct farm sales of a single product rarely earn more than a few thousand euros per year for the farmer concerned, whereas the turnover of a collective point of sale, offering a range of farmhouse products, can attain several hundred thousand euros shared between ten or so farmers. The grouping and collective commitment of farmers and/or craft workers makes it possible to market a diversified product range, maintains motivation over the long term, limits the financial investment of each producer in developing a new distribution channel and strengthens solidarity and social cohesion in the area.

With the collective approach, it is a good idea to call on support structures to guide and assist the group of producers through their project, since the process is complex and comprises several stages, with individual interests and objectives having to be adjusted to suit a collective approach.

 


2.3 Harnessing commercial skills
to develop direct selling

 

In the initial stages, it is generally possible to sell via short distribution channels without making any significant commercial investment. Producers can take care of the selling side themselves from the farm premises or at an open-air market. However, as soon as investments are envisaged - in order to fit out a shop for example - commercial and management skills as well as formal market surveys are required. Furthermore, the motivation of the producer is vital: direct selling calls for the involvement of one or more people who have made it their job and have acquired the requisite skills.

 


2.4 Ensuring product quality

 

Product quality is a decisive factor. If the product is poor, no form of sale will be effective, nor will there be customer loyalty. In the majority of cases, improving the objective quality of the product AND matching it to the expectations of the consumers at whom it is aimed (uniformity, packaging, etc.) are prerequisites for the development of distribution channels. For a producer acting alone it is not easy to take an objective view of the product by setting aside all mercenary or emotional considerations. An outsider (specialised consultant or, very often, the customers themselves) will frequently be better at capitalising on the distinctiveness of the products for new consumers.

 


Three European quality labels

    In 1992, the European Community implemented a regulation aimed at promoting the quality and distinctiveness of certain agribusiness products.

    The regulation relating to the protection of geographical indications and designations of origin for agricultural products and foodstuffs [regulation (EEC) no. 2081/92], as well as the regulation relating to certificates of specific character for agricultural produce and foodstuffs [regulation (EEC) no. 2082/92] are two pillars of this European quality policy.

    Pursuant to this regulation, more than 500 products benefited in 1999 from one or other of the following three European labels:

    • “Protected Designation of Origin” (PDO) refers to foodstuffs produced, processed and prepared in a specific geographical area by making use of recognised know-how;

    • “Protected Geographical Indication” (PGI) refers to products for which there is a geographical link during at least one of the three stages of production, processing or preparation;

    • “Traditional Speciality Guaranteed” (TSG) refers to products that are traditional either on account of the ingredients of which they are composed or on account of their method of production.

    In 1998, the Commission launched a campaign to raise the awareness of producers, retailers and consumers about these labels. The campaign resulted, in particular, in the creation of logos identifying each of the three product categories (PDO, PGI and TSG). They can be accessed at Web site: http://ec.europa.eu/dg06/publi/review98/p09_en.htm


 

 


2.5 Adopting a gradual approach

 

As far as possible, a “step-by-step” strategy using successive forms of selling, starting with the markets that are easiest to reach with limited funding, makes it possible to overcome obstacles progressively. It allows time for products to adapt to customer expectations, for production to overcome its early teething troubles and for producers to test their selling abilities on a real-life scale.

Prior to taking any investment decision it is advisable to carry out a market survey, whilst continual monitoring of demand makes it possible to periodically adjust supply and to start up new initiatives.

 


2.6 Designing new products

 

By considering an area, its local communities and its products as a whole, it is often possible to create new products or services incorporating some sort of service that brings added value to the area. Associating fun and enjoyable activities with discovering a product, production method or area, or passing on product knowledge and culture can provide a wealth of opportunities. One key task is therefore to work out at the project design stage exactly where the players involved will recover, in terms of turnover or services, the effort invested in organisation.


European Flag

European
Commission

Agriculture
Directorate-General