Fostering Local Consumption through Territorial Marketing

Bridges vol. 40, July 2014 / Spotlight

By Laura Natalia Fernández Cedi

The Austrian Example for a Local Food Products-Based Strategy

Some months ago, while having dinner at a Viennese restaurant, I took one of the butter packages and read “France” as the country of origin written on the label. I was surprised, as milk is the number one commodity produced in Austria, with more than 3 million tons per year, even outranking wheat or the meat to make the famous “Wiener Schnitzel.” That butter had traveled at least 750 miles from the place it was produced to the plate where it was to be eaten.

There has been a growing concern about the rise of globalization and an increasing awareness of the need to lower CO2 emissions, and sustainable agriculture researchers have calculated the distances that food products travel to reach their final destination. Rich Pirog, senior associate director of the Michigan State University Center for Regional Food Systems, spent numerous years tracking these products. In 2001, Pirog found that food products like apples, onions, strawberries, beef, and chicken travelled a distance of 44.6 miles before being sold to Iowa markets by local farmers. By comparison, the estimated distance for the transport of the same products, coming from conventional sources, averaged 1,546 miles. Using local suppliers rather than conventional sources would use 5 to 17 times less CO2 emissions, depending on the type of truck used for transportation.

The problem, however, stems from the lack of a universal definition for the term “local.” The 2008 Food, Conservation and Energy Act of the US Congress stated that “locally or regionally produced agricultural product” refers to one that has traveled less than 400 miles from the place it was produced to the place where it is intended to be consumed. But the term "local" means more than that. Whether the distance between producer and consumer is 100, 200, or 400 miles, or whether food is produced in the same state where it is supposed to be consumed, “local” suggests a close link between producers and consumers.

With the objective of bringing consumers closer to the producers, fostering local consumption, and adding value to the traditional food products, the Austrian Ministry of Agriculture and the Agrarmark Austria Marketing, responsible for marketing in the Austrian agricultural sector, created an initiative in 2005 called “Genuss Region” (GR) or "Regions of Delight." The basis of the initiative is a homonymous brand (Genuss Region) that is granted to self-defined regions promoting the sale of flagship products – traditional food products with particular and proven remarkable characteristics attributable to their place of origin.

To better understand the initiative: In 2013 a desk research study was conducted with Nuria Ackerman, a United Nations Industrial Development Organization (UNIDO) consultant. Ackerman interviewed licensing partners of the initiative and her findings were published in July 2013 during the European Society for Rural Sociology Congress. In the beginning, the initiative sought to increase the visibility and reputation of Austrian food products, mainly at the national level, through publicity campaigns. The idea was to use the attractiveness of the products, the landscape, and local traditions as a way to promote the region. At the same time, the campaigns protected the employment of farmers and entrepreneurs, maintaining or increasing the value of their products and promoting local development.

However, the specifications established by the initiative were not clear or strict enough regarding the quality that could be attributed to geographic origin. As a result, a large variety of products without strong evidence of authenticity, tradition, or high quality could apply for the brand. The initiative seemed to be only a costly advertising campaign for the Austrian Ministry of Agriculture and Agrarmark Austria Marketing. More importantly, producers used the brand for an array of products, taking advantage of the free marketing campaigns.

For this reason, in 2008 the public-private company “Genuss Regionen Marketing GmbH” (GRM) was created to implement a better strategy – switching from the idea of an advertising campaign to the objective of achieving local development. The new strategy focused more on the link between the quality of products and their geographical distinctiveness. Furthermore, it fostered cooperation between the stakeholders of the value chain: namely regional farmers, traders, retailers, and those who appreciate the art and science of good eating. Through developing an image of the Genuss Region brand, the initiative intended to promote consumption of the country’s rich variety of culinary specialties. Moreover, it aimed at boosting local tourism, which could lead to sustainable rural development through the value added to such products.

From 2009 onwards, small self-defined Austrian regions producing traditional agri-food products have been able to apply for the label, which is renewable every 5 years. They are required to meet the standards established by GRM: The region must be geographically defined, and the production and transformation of raw materials must occur within the region to avoid use of imported goods and to ensure protection of local producers. The production process has to be done in a traditional way to support the work of local producers, which in most of the cases were of small scale. To guarantee the quality of the product, applicants had to hold a certificate such as a Geographical Indication (much like the Champagne or Tequila regions) or an equivalent or similar national award, such as the Kulinarisches Erbe Österreichs (marking it as a traditional agricultural product grown or processed for at least three generations in Austria). A “Genuss Region Association,” a group of licensed producers of the typical product from the region, must be created to carry out promotion of the products through marketing activities and cultural events at the local level. Finally, at least five local shops and five local restaurants have to sell the licensed product.

According to Margareta Reichsthaler, chairman of the Genuss Region, this current initiative seeks to “position the brand which promotes unique and distinctive quality products with their own and particular terroirs, where landscape, people and product coexist in a coherent unity.” The main idea is to achieve sustainable local economic development around characteristic traditional food products of each region in Austria.

The initiative focuses on a variety of action fields:

  • “Profile development” refers to the elaboration of specific plans for each region, according to the typical products offered and the needs of that region.
  • “Gastronomy” seeks to create partnerships with restaurants to promote the use of the products in traditional or innovative dishes.
  • “Genuss Paket” includes the selection of the best products from the regions.
  • “Trade” focuses on support given to the local producers to offer their products to wholesalers, retailers, special partners stores, or through direct sales.
  • “Seasons Calendar” promotes the organization of special events during the year, with particular products featured each season. 
  • “Tourism” encourages the creation of tourist packages and networking between producers and the tourist sector to establish an image of each region as one of the main destinations in Europe.

Small producers, companies, or product associations can apply for a free license if they comply with the requirements specified above. Once the applicants have proven their fulfillment of conditions, an agreement is signed between the producers or companies and the GRM. All producers who obtain the license will benefit from the nationwide marketing strategies for the position of the brand, thanks to its presence at promotional events and other public relations activities. Such promotional events are developed at a national level by the GRM and at a local level by the Genuss Region Associations. Still, there is a fee of €52 for individuals and €520 for companies to become members of the National Umbrella Organization of Regions of Delight Associations, an organization created to group locally established Genuss Region associations. The contribution serves to support the region itself and to continue with initiative’s development. For their part, members of the umbrella organization benefit from exchanging knowledge between producers and from joint searches for partners and donors.

Once the specifications, the requirements, and the objectives of the initiative had been clearly established, the results did not take long to materialize. Three years after the creation of Genuss Region in June 2008, The Tiroler Tageszeitung (the daily newspaper of Tyrol) reported that 823 Genuss Region products held the brand and were considered licensed partners. By November of that same year, the number of licenses had increased to 1,703. In 2010 there were 3,063 licensed products, and by 2012, the number of licenses had grown to 3,477.

In 2008 the GRM launched the “licensed restaurants” project with the Austrian Gastronomy Organization (BÖG). Through BÖG, restaurants could benefit, indirectly, from monetary support for commercializing Genuss Region products, and from the sale of the Genuss Region products. The project also created the idea of so-called spring, summer, autumn, and winter “delight weeks” in which restaurants were invited to offer innovative dishes made with two to three licensed products. In 2008, 388 restaurants participated in the delight weeks and by 2010 the number rose to 759, stimulated by the increase in customers experienced by the restaurants. By 2010, the number of licensed restaurants reached 1,320, and by 2013, not only restaurants but also cafeterias and mountain huts joined the initiative. Even “Genuss farms” could become partners, as long as they were based in a Genuss Region producer territory and offered licensed products or activities related to the products, such as cooking workshops or guided tours.

Since 2008 several events and activities, such as festivals, culinary celebrations, and gastronomic fairs have taken place throughout Austria. Examples include the yearly “Fish week” in Carinthia and the “All Apricot” festival in the Wachau region. The “packages contest” invites producers to design innovative product combinations to convey the idea of the traditions from the region. The “Genuss Region destination of the year” contest awards the most interesting tourist package, which could be an event, an excursion, or a holiday. The “Genuss Region moves you” initiative, launched in 2011, promotes the use of e-bikes for facilitating cyclists' access to any of the establishments of the licensed Genuss Region products.

In terms of partnerships with the retail sector, OTS, an Austrian multimedia press portal, reported that the number of retail enterprises licensed to sell Genuss Region products had increased from 32 to 161 between 2008 and 2010. In 2010, licensing agreements were signed with two cash-and-carry companies, who agreed to sell the products in their 30 national branches. In 2012 an agreement was signed with a third wholesaler, who would offer a total of 300 Genuss Region products. The benefit for the producers lay in their market access, which was only possible with such partnerships; the promotional and marketing activities done by the organization and not by the producers themselves; and the positioning of their products in a premium segment, with pricing campaigns being forbidden. Furthermore, the establishment of an online shop offering about 600 Genuss Region products, with content in English and German, facilitated international trade.

According to Ackerman, managers of companies selling licensed products claimed that no automatic link between the initiative and the local development of the region has been proven. This was attributed to the fact that GRM led the marketing campaigns at a national level; however, responsibility for enhancing the value of the products and their link to their local environment corresponded to each of the regions. Nevertheless, with an average expenditure of around 27,000 Euro per Genuss Region, the national initiative can be considered as a cost-effective approach to place products of small scale economic stakeholders on premium markets. In addition, there are currently 120 certified Genus Regionen and more than 3,500 licensed partners that employ about 40,000 persons. And at least 1,600 restaurants have obtained the label of “Genuss restaurants.” Only seven years after the label started, the brand had achieved 75 percent label recognition in Austria. Furthermore, the total revenues for the sales of the regional products increased from€133 million to €150 million from 2010 to 2012.

No research has been done to calculate the distance that the Austrian products travel from one region to the other, or from the farm of the producers to the plate of the consumers. Nor have CO2 emissions been calculated and compared with those resulting from the consumption of imported products. However, the Genuss regions have created an awareness and cultural momentum towards closing the gap between producers and consumers. Small producers are now better protected because of the links created with important distribution chains, thus increasing their revenue through promotion campaigns, and creating jobs due to establishment of new enterprises and tourism activities focused on typical food products. There’s still a long journey ahead for the local food movement in Austria, but a promising trajectory has already been set for its future.

References

Ackermann, N. (2013). "A national approach to localized cluster development and branding around typical products. Lessons learned from technical assistance from the Austrian 'Regions of Delight' initiative." UNIDO. Unpublished.

Genuss Region Österreich (2014). "'GenussWirt des Jahres 2014': Die Finalisten stehen fest." http://www.genuss-region.at/news/bdquogenusswirt-des-jahres-2014-ldquo-die-finalisten-stehen-fest.html (Accessed May 20, 2014).

Genuss Region Österreich (2013). "Genuss Region Österreich." http://www.genuss-region.at/ (Accessed March 13, 2013).

Gratzl, Hanspeter (2010). “Regionale Qualität und Herkunft – was bringt die neue EU-Qualitätspolitik für Lebensmittel?” 15-16.12.2010.   http://www.netzwerk-land.at/lum/veranstaltungen/kleine-lebensmittelhersteller

GRM GenussRegionen Marketing GmbH (2010). "Genuss Region Österreich." http://www.netzwerk-land.at/lum/veranstaltungen/download-2010/regionale-qualitaet-und-herkunft-15.-16.12.2010/7-handout-groe (Accessed April 23, 2013).

OTS (2012). “Weld ab sofort nationaler Premiumpartner der Genuss Region Österreich.” Wien. http://www.ots.at/presseaussendung/OTS_20120823_OTS0024/wedl-ab-sofort-nationaler-premiumpartner-der-genuss-region-oesterreich-bild

Reichsthaler, M. and Klaczak, B. (2010). “Initiative Genuss Region Österreich" and "Regional genießen hat Zukunft.” http://www.netzwerk-               land.at/lum/veranstaltungen/kleine-lebensmittelhersteller

Tiroler Tageszeitung. (2012). "Genuss Region will Produkte verstärkt in Einzelhandel bringen." http://www.tt.com/%C3%9Cberblick/Chronik/5800749-6/genuss-region-will-produkte-verst%C3%A4rkt-in-einzelhandel-bringen.csp (Accessed July 19, 2014).