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1. Structures and Strategies in the organic beef marketJoris.Aertsens@ugent.be27th of April 2005Promotor: Prof. G. Van Huylenbroeck

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3. Context • Study of one and a half year, • organic beef sector • production and commercialisation • Cooperation of • University of Ghent • Joris Aertsens & Guido Van Huylenbroeck • Université de Liège • Pierre Stassart & Marc Mormont • Centre Wallon de Recherches Agro • Daniel Jamar & Didier Stilmant

4. Intro: structure of the sector 52% 29% 10%

6. Paper submitted for EAAE in Copenhagen: DEVELOPMENT OF THE ORGANIC BEEF SECTOR IN BELGIUM 52% 29% 10%

7. Paper presented in Chania, Sept 2004: Role of a producers’ cooperative in vertical supply chains

8. Paper presented in Göttingen: Differences in strategies of retailers in marketing organic products / beef

9. ALT project: What is the effect of a more stringent legislation on feed stuffs for organic production on technical and economic aspects?

10. Comparing strategies of retailers • Markting mix • product quality, • price strategy, • promotion, • placement and visibility • Chain organisation • time and money spent in organising the supply

12. Characteristics in commercialising organic products 250 • D1 is really doing an effort • For D2 organic is just one of the many categories it is offering, nothing special.

13. Characteristics when commercialising organic beef

14. Summary 1 • Marketing strategies are very different for 3 retailers • D1 is really doing an effort, also on chain organisation • negotiation with farmers (breed, age of slaughtering, naisseurs-engraisseurs, …) • high price paid to producers => Trust! • D2 is outsourcing the organisation • D3 is not offering organic beef in its conventional points of sale

15. Summary 1 Characteristics and strategy of D1 • Geneneral characteristics • somewhat higher price, high quality products, high service, nice atmosphere • Organic in general • Important efforts • Good postioning, signalisation, quality, large gamma • Organic beef • important effort in Supply C. organisation + marketing mix, • Why these efforts? • IMAGE: positive / negative aspects eradiate on the whole gamma and beyond • organic products fits much more in the concept/image of high Q. • Emerging markets • Other ideas, help me, please?

16. Summary 2 • Characteristics and strategy of D2 • General • large gamma: food + non food; large surface, low prices, medium quality, moderate service. • Organic in general • low efforts, offering it for whom wants it: No special product. • moderate postioning, signalisation, relative small gamma • organic is just one of the many product categories (=not special) • a whole range of product categories, “number 1”, “Filière Qualitè”, … . • consumer picks from the category he prefers, we do not favorise 1 of them • Organic beef • no effort: organisation outsourced, no promotion • limited supply, gamma relatively small

17. Summary 3 • Characteristics and strategy of D3 • General • quality products offered at the lowest price • concept of points of sales = Basic but ok! • Organic in general • gamma of 250 products • Well positioned and signalled, • Management attaches importance to environmentally-friendly production, • organic products are a part of the “green line” products. • Organic beef • not offered in the 170 supermarkets • Reasoning: our conventional meat (=attraction) is ok, • (organic is expensive) • Also 3 “only organic” supermarkets

18. Paper presented in Chania, Sept 2004: Role of a producers’ cooperative in vertical supply chains

19. 4: Positive role coop • Increase of quality: • Decrease of transaction costs – organisation supply • Certainty for producers => stable supply • +++ Communication to consumers

20. Positive role coop • On Quality: • Breed: from slowing down => acceleration • Criterion: « animals must be born on the farm » • Selection of group of best producers • other +++ ideas: e.g. 100% organic feed

21. Positive role coop • on Transaction Costs Supply • The president of coop knows the producers => +++ • As president he is respected and has power • => +++ for efficiently organising the supply • => +++ for efficiently communicating about the required product and process characteristics => + quality • social control within small coop = cost efficient & effective

22. Positive role coop • On the risk for the producers of the preference group • And thus on stability of supply • Degree of certainty about supply volume • Priority of supply (contract at start) <= power of coop • Protection of producers of p. group <= demarcation of p.group • But it could be better for producers of p. group • Certainty about price for producers • retailer fixed a good price at the start (1997) • And sticks to this price which is still very good.

23. Positive role coop • On communication towards consumers • Image of “group of 20 Belgian autonomous producers with animals born on the farm” >>> 5 producers that only fatten animals supplied from a lot of different dependent farms (not necesseraly contradiction with Ruffio) • Cooperation with retailer to communicate this image • Organic farmers “understand” expectations of organic consumers

24. Conclusions • (1) This organic beef chain can be identified as a hybrid VMS, that functions quite well. Not everything is running smoothly, but the necessary criteria are fulfilled. • (2) The presence of the (small) coop has a (potential) positive influence on the functioning of this hybrid VMS.

25. Discussion, suggestions, remarks !!! • Questions • Thank you ! • contact: • Joris.aertsens@ugent.be