Geographical Indications: an answer
to emerging consumption trends
Luis Fernando Samper
Federación Nacional de Cafeteros de
Colombia
June 2005
© Copyright FNC 2005
National Federation of
Coffee Growers of Colombia
(FNC)
•Founded in 1927, by the coffee growers
of Colombia, the Federation is the nonprofit, democratic and active advocate of
560,000 small cafeteros.
• With the funds of the National Coffee
Fund, the FNC is dedicated to improve
the life in the coffee-growing
communities and to protect and promote
the Colombian Coffee Industry.
June 2005
© Copyright FNC 2005
FNC: a democratic organization
Through democratic elections, Colombia’s
coffee growers choose their representatives
to the different instances of the organization.
Coffee
Congreso
Growers’
Nacional de
National
Congress
Cafeteros
FNC
National
ComitéCommittee
Nacional
Directive
ComitéCommittee
Ejecutivo
Comités Departamentales
Regional
Committees
Comités
Local
Committees
Municipales
Caficultores
Federados
Federated Coffee
Growers
June 2005
15
353
566.000
The Coffee Growers’
National Congress elects
FNC’s CEO, and authorizes
him to represent the
interests of Colombian
Coffee Growers.
© Copyright FNC 2005
Colombian Coffee…
• Is exclusively Arabica
• Is grown in the Colombian mountains
by coffee growers who, through the
years, have mastered their traditional
manual harvesting and humid
processing techniques.
• Their careful selection, classification
and milling processes, result in a worldknown quality product characterized by
its mild and clean cup, pronounced
aroma and mid-high acidity and body.
June 2005
© Copyright FNC 2005
It is part of the FNC’s strategic objective to
maintain and strengthen the differentiation of
Colombian Coffee
• Due to its unique geographical
situation, Colombia enjoys the
advantage of having fresh coffee of
consistent quality throughout the
year, which allows the positioning of
100% Colombian brands.
June 2005
© Copyright FNC 2005
• Differentiation generates brand positioning needed to access
vertical integration and value added strategies.
• A recognized and demanded origin is a tool to penetrate the
entry barriers of the market, and create alliances with retailers.
June 2005
© Copyright FNC 2005
• Origin differentiation may become the competitive
advantage that minimizes Colombia´s exposure to the price
war coffee producers have gotten into.
Price index for nonpetroleum commodities
(1900-2000)
The product portfolio Colombia offers to its consumers, can be
provided by roasters under a common umbrella “Café de
Colombia” that has unified regulations and quality control
requirements.
June 2005
© Copyright FNC 2005
Café de Colombia
• In December 2004, the FNC presented the
Colombian government with an application for
the recognition of “Café de Colombia” as a
Denomination of Origin.
• In February 2005, the Colombian government
ratified Café de Colombia as a “D.O.-G.I.”
• In June 2005, “Café de Colombia” became the
first product from a non-EU nation to apply for
the Protected Denomination of Origin
recognition to the EU.
June 2005
© Copyright FNC 2005
Why are geographical indications an
interesting alternative to pursue?
• New generations have greater access and interest for more
information about the products they consume.
• Globalization has generated a niche of more conscious and
demanding consumers.
• Origin has become an important differentiation tool.
• More diverse product categories: Consumers want more options
with different value added proposals.
• Trade regulations are shifting towards greater traceability
requirements.
June 2005
© Copyright FNC 2005
New generations have greater access and
interest for more information about the
products they consume.
• Greater access to global information: internet,
specialized publications, etc.
• Increased exposure to cultural diversity.
X(25-38 yrs): 33%
(U.S.) are coffee
drinkers
Y(10-24yrs): 23% (U.S.) are coffee
drinkers
McKinsey & Company. Food
service 2010: America’s
Apetite Matures
June 2005
Commercial brands are no longer enough. New consumers
are practical and knowledgeable. They seek to make
informed decisions about the products they consume.
© Copyright FNC 2005
Globalization has generated a niche
of more conscious and demanding
consumers.
New consumption trends:
Fresh
Innovative/exotic
Fair Trade
Environment-friendly
Traceability
June 2005
Organic
+ information
© Copyright FNC 2005
Origin has become an important
differentiation tool.
Awareness of Colombia as a coffee-growing country
92%
95%
94%
91%
89%
85%
85%
82%
76%
72%
68%
71%
72%
69%
55%
22%
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a
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Ind
ia
Aided awareness
KRC Research 2004/2005
June 2005
© Copyright FNC 2005
Café de Colombia as “the best”
65%
53%
58%
26%
26%
25%
25%
30%
34%
28%
19%
13%
S.
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13%
11%
8%
a
ia
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fr ic
tra
u
A
s
R
th
Au
ou
3%
Ind
ia
Café de Colombia:"The best"
KRC Research 2004/2005
June 2005
© Copyright FNC 2005
More diverse product categories:
Consumers want more options with
different value added proposals.
i.e. Evolution of the coffee category in the U.S.
June 2005
© Copyright FNC 2005
Trade regulations are shifting towards
greater traceability requirements for food
products.
Traceability demands the industry to have systems and
procedures that guaranty the availability of information about
products and suppliers for consumers and regulating authorities.
• The Bio-terrorism law in the U.S. demands a traceability system for
products destined for human and animal feeding.
• In the European case, Ruling 178/02 of the European Commission, requires
that, from January 2005, all producing, transforming and distributing
companies of food products must have traceability systems.
• In Japan, the Ministry of Agriculture has regulated the labeling of food
products. The “Law Concerning Standardization and Proper Labeling of
Agricultural and Forestry Products” (JAS) requires labels to include
information about origin, ingredients and storing methods.
June 2005
© Copyright FNC 2005
• Additionally, there are commercial requirements like
Euregap, which includes traceability requirements and
establishes a global reference for ideal Agricultural
practices.
A few basic elements found in traceability regulations
• Product identification
• Product description
• Production Lot Number
June 2005
• Supplier ID
• Harvest date
• Shipper’s ID
© Copyright FNC 2005
Geographical Indications represent an
opportunity for the industry to respond to
emerging consumption trends
• European Consumers perceive GI’s as:
– Origin Guarantee: 37%
– Quality Guarantee: 37%
– Guarantee of place and method of production: 56%
– Tradition: 17%
• Geographical Indications represent a potentially attractive
commercialization tool for producers around the world:
– 43% of European consumers were willing to pay up to an extra
10% for GI products
Study developed by the European Comission 1999
– 8% of European
consumers were willing to pay up to an extra
20% for GI products
– 3% of European consumers were willing to pay up to an extra
30% for GI products
June 2005
© Copyright FNC 2005
Geographical Indications: an answer
to emerging consumption trends
•
For consumers and regulators of food products, Geographical
Indications are a source of information and credibility. Equally,
they are becoming a source of growth and development for
producers around the world.
•
Food safety, health and environmental concerns, are increasingly
present in today’s markets. Regulations are shifting towards more
demanding systems where traceability guarantees are essential.
•
Emerging consumer trends have created an ideal environment for
GI’s to flourish. Consumers’ demand for more and better
information about the products they consume represents an
opportunity for systems that guarantee origin and methods of
production.
June 2005
© Copyright FNC 2005