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Marketing local products:
Short and long distribution channels

[ Summary ]

Section I
Marketing local products via short distribution channels

 

Chapter 3
Which clientele? Which strategy?

 


Short distribution channels are aimed at a special type of consumer, whom it is important to know thoroughly and to target carefully if this form of marketing is to succeed.

 


3.1 Clientele

 

Nowadays the majority of consumers buy from hypermarkets. However, certain categories of consumer do not fall into this general trend, at least for certain products, or during their holidays. So we are talking not about mass markets but about niche markets.

The potential customers of short distribution channels are found among:

  • local communities;
  • emigrants originally from the area;
  • tourists;
  • urban consumers.

Each of the above types of clientele has its own specific eating and buying habits, and so the forms of selling must comply with these.

 

3.1.1 Local communities


They are the primary clientele for local products. Being close, both culturally and geographically, to the production site, they have been accustomed to consuming the product since childhood. However, the local market has its disadvantages, in particular the invariably limited quantitative potential, due to the low population density in most rural areas and to the scattered clientele. This has led to the development of solutions of the “mobile unit” type, especially in Spain and France. In addition, products are sometimes undervalued locally, or may even have become obsolete in favour of standardised industrial products. It is therefore important to enhance their value in the eyes of the local population.


    Example:
    The “agroshops” of the Vall d’en Bas area (Catalonia, Spain)

    With the dual aim of giving farmers better returns and funding the technical assistance it provides to its members, the agricultural cooperative of the Garrotxa region, “S.A.T. La Vall d’en Bas”, has opened up four shops, each with a surface area of around 100-150 m2, including one in the covered market of the provincial capital, Girona. It has also put into service a mobile unit which tours markets where it sells craft and food products (including fresh fruit and vegetables), not only from cooperatives in Catalonia, but also from other Spanish and European regions.

    For a more detailed description of this initiative, see the directory “Innovative action programmes and rural development” (LEADER European Observatory).


    Example:
    Modernising traditional short distribution channels in “Terra Quente Transmontana” (Nord, Portugal)

    Since 1991, the LEADER group - the local development association Desteque - has based part of its strategy for revitalising the area on improving economic conditions for selling local products and services direct to consumers. In fact, in this region, direct farm selling of products represents between one third and one half of the production of products such as olive oil and delicatessen meats. The LEADER group is striving to improve the commercial presentation of the products sold direct, in particular through a process of labelling and the introduction of special packaging, as well as by setting up a local certification body. Moreover, the creation of centres of attraction for direct selling (such as the “Hunting Festival” or setting up points of sale at tourist sites) makes it possible to target customers with higher purchasing power.

    For a more detailed description of this initiative, see the directory of “Innovative action programmes and rural development” (LEADER European Observatory).

 

3.1.2 Emigrants originally from the area


Though geographically remote, they remain culturally attached to the region. They like the taste of local products and are accustomed to their appearance. They buy the products when they return to the area on holiday but may be willing to procure them all year round, provided that the products keep well or that a regular supply chain is available. Emigrants buy wines and certain other regional products in large quantities and consume them throughout the year.

Slightly higher prices can be charged, provided that the service offered is better than using personal channels - friends, relatives or acquaintances. Also, not all emigrants have retained such informal channels and this particular pool of regular consumers is worth prospecting.


    Example:
    Vinho Verde Festival of Basto (Nord, Portugal)

    Faced with the dilemma that whilst local wine production was rising in terms of both quality and quantity, wine consumption was tending to decline in favour of new beverages such as beer, the Basto LEADER group decided to organise an annual wine festival in order to boost traditional wine consumption. This festival is held during the summer to coincide with the return of emigrants on their annual holidays.

    • Contact:
      PROBASTO
      Bairro João Paulo II, Bloco 3 - 1° andar
      P-4860 Cabeceirs de Basto
      Tel: +351 53 66 20 25
      Fax: +351 53 66 20 26

 

3.1.3 Tourists


Although these potential customers stay in the area during their holidays, they are culturally removed from it. They do not necessarily appreciate the taste of local food products because they find it unfamiliar.

The first step is to point out the local specialities to tourists. By advertising the products in shops, using them in restaurants, explaining their history and production method, offering tasting sessions in pleasant settings, etc., tourists learn to like the product.


    Example:
    Bringing together farmers, restaurateurs, tourist operators and local authorities: “Natur und Leben Bregenzerwald” (Austria)

    In order to satisfy the growing appetite of consumers and tourists for local products, the association “Natur und Leben Bregenzerwald” set up a cooperative project to bring together producers, restaurateurs, tourist operators and local authorities in the Bregenzerwald LEADER area in order to expand the local market for products through closer collaboration between producers and hotel- keepers. The restaurateurs have therefore included many local products in their menus, on each occasion indicating the name and contact details of the producer concerned.

    For a more detailed description of this initiative, see the directory of “Innovative action programmes and rural development” (LEADER European Observatory).

Some products need to be adapted before they feature in the consumer habits of tourists. For instance, putting a little holiday “souvenir gift” in a pretty package makes it possible to charge a higher price. However, it may be necessary to consider packaging and packing the product in such a way that it can be stored and transported on pallets. Rigorous attention must be paid to hygiene. For instance, in the case of sweet chestnut flour, it is sometimes preferable to use polyethylene packaging that is resistant to the transmission of odours or attack by insects, rather than more aesthetic bags made from kraft paper. Tourists are highly sensitive to such matters of hygiene, particularly in northern Europe.

However, the tourist market remains limited. It is generally seasonal or only at weekends. Nevertheless, for products that keep well, customer loyalty to the product and to the area can be encouraged through distance selling.


    Example:
    Mail order sale of products by the group “L’Or Vert du Magnoac” (Aquitaine, France)

    Farmers and producers of foie gras belonging to a cooperative for pooling farming equipment (CUMA) have created a joint structure to market their product directly. The association, called “Or vert du Magnoac”, chose to focus on short distribution channels which permit direct contacts with their clientele. It develops loyalty from its tourist customers through a system of mail order selling.

    For a more detailed description of this initiative, see the directory of “Innovative action programmes and rural development” (LEADER European Observatory).

 

3.1.4 Urban consumers


This is a market with lots of potential. Nowadays, the great majority of Europe’s population lives in urban areas and, quantitatively speaking, they form the major food markets. For city- dwellers the lure of nature, intensified by concern about the recent “mad cow” disease and dioxin poisoning crises, is leading to a growing demand for “natural” products.

Within this marketing rationale, it is possible to envisage a shop for local products, either in town or in another highly frequented place. This type of initiative almost always has to be collective in nature, because the investment is significant and a formal market survey is required not only in order to evaluate the chances of the operation succeeding, but also to cement together the group heading the project.


    Example:
    “Uniferme”: a supermarket selling farmhouse products situated 40 km away from Lyon (Rhône-Alpes, France)

    A dozen farmers in the Lyon region have created a proper little supermarket for farmhouse products. It sells a full range of quality food products for family meals and entertaining: vegetables, fresh dairy produce and cheeses, meats, canned food, wines, etc. Consumers from the nearby city of Lyon go there to stock up at weekends. The experiment began in the late 1980s. Gradually, the shop and its turnover grew, with the result that ten years later it had become a small supermarket with a turnover of around 11 million euros. Most of its customers are regular and loyal. Each customer visits the shop at least once a month.

    • Contact:
      AVEC (Agriculteurs en VEnte Collective directe)
      c/o Corinne Tavernat
      Petit Fèouzet
      F-07190 Albon
      Tel. & Fax: + 33 475 66 60 28

Rural holidays, mail order selling and, more recently, selling over the Internet are all means of discovering local products. However, this does not in itself cultivate a particularly strong attachment to the area. People may discover the products of one region and go on to discover those of another, without any stable consumption behaviour necessarily being created. Furthermore, the marketing costs are far from negligible. For instance, in the case of the Spanish company “Vino Selección”, they amount to between 30% and 40% of the price they pay the producer (cost of printing and dispatching the catalogue and product distribution, promotion and quality control).


    Example:
    Marketing local products by mail order: “Vino Selección” (Spain)

    In 1973, the original idea of the founder and present manager of Vino Selección was to create a wine club to promote and sell, directly by mail order, quality wines that were little known at the time. In 1980, the product range was extended to include local products, especially cheeses and delicatessen meats. Today, more than 30,000 club members receive the magazine “Sobremesa” which includes the catalogue as a supplement. Vino Selección’s turnover is around 11 million euros. Wine represents 75% of sales, cheese 15%, and other gastronomic products 10%.


    Example:
    Discovering gastronomic products: Vino Selección’s “rincones gastronómicos”

    Five times a year, for a period of one month, Vino Selección offers its customers a package of 10 of the best products from a selected Spanish or European rural area. The range is attractive and the presentation pack costs between 48 and 61 euros. Apart from the expected promotional impact of presenting its products, putting together a coherent range for this market allows a rural area to test the soundness of its offering, from the standpoint of both production and quality. The products proposed by Vino Selección cost the final consumer the same or slightly less than equivalent products in specialised shops. However, Vino Selección members have the advantage that the product is delivered direct to their homes.

    • Contact:
      Vino Selección S.A.
      Gran de Grácia, 17, 3
      E-08012 Barcelona
      Tel: +34 93 415 41 20
      Fax: +34 93 218 97 13
      E-mail: socios@vinoseleccion.com


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European
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Agriculture
Directorate-General