The food quality schemes of the European Union and their implications on the Hungarian market

Abstract

It is becoming increasingly important for consumers to know exactly what kind of foods they consume, while it is increasingly vital for food producers to excel from the competition in the global market. This requires a great deal of information exchange between these two market players. The most common way to do this is through various food labels. I have focused on one group of such labels in my research, trying to find out as much useful information as possible about the geographical indications (GI) of the European Union. I was looking for answers to the following questions: 1, How well-known are the labels of EU GI products among Hungarian consumers, and how well do they know their meaning? The awareness of the GI labels in Hungary is definitely low (in the best case, it was 31%), even if this number is not much lower than the average in the EU. This number is probably too low for these labels to be effective marketing tools for producers. It also includes the fact that only 50% of those who said they know the label know at least approximately the meaning of the label. Can you build a marketing campaign currently on these markings? Probably not an effective one, but what gives hope is that awareness of the labels compared to previous surveys is constantly increasing. The EU focuses on GI products, so this growth is expected to be continued. So far, the EU has completed more than 30 international agreements, which allow the recognition of many EU GI outside the boundaries of the EU and the recognition of non-EU GI inside the territories of the EU. GIs represent an increasingly important aspect of trade negotiations between the EU and other countries. The Commission separates around €50 million year after year to support quality products in the EU and all over the world. Taking this into account, these labels can play an important role in the food markets in the near future. 2, What is the level of trust in the labelling of EU GI products, and what influences this trust? About half of the respondents said that they trust the logo. When we analysed the possible variables, which can influence trust, we concluded that knowledge of logos is important because if someone knows the label, they have more than three times the chance to trust them, while in terms of meaning, the chance is almost double. Based on the research, we can say that gender, education, and age do not affect trust in EU GI labels. In the case of place of residence, it can be said that someone who lives in a more urban environment trusts less in GI labels. All in all, consumer education is most needed to build confidence in GI, as those who recognize the labels on food packaging or are aware of what those labels mean will treat these products with much greater confidence. 3, How often do consumers buy EU GI certified products, and what affects it? More than 35% of those surveyed are regular customers of GI-labelled products. The frequency of purchases is mostly determined by consumer confidence (the result is not significant for the PDO). Women become much fewer regular customers (not significant for the PGI). In terms of age, the older a consumer is, the less likely it is to become a regular buyer (not significant for PDO), while residents of rural, smaller settlements are more loyal buyers of PGI products. The highest level of education has no detectable effect here either. So, in this topic also, we have to repeat that the most important thing is to inform consumers as widely as possible. 4, In the Hungarian market, what is the market size of products with geographical indication, examining the example of discount stores? The number of GI products available in Hungarian discount stores is limited, with an average of 11 products per store. The supply is fairly constant; however, even though there are only a limited number of GI products on the shelves, they are at least always available to consumers and are part of the chains ’core product portfolio. However, the number of GI products usually increases during the thematic days (e.g., Greek days). We can see that the supply is very limited for GI products, so buyers rarely meet face to face with the label, they are even less likely to find out about the meaning of the markings on their own. Targeted information on GI labels is needed for consumers, and for that they start to appreciate them. 5, In Hungarian discount stores, what is the price premium of products with a geographical indication compared to their direct substitutes, estimated from below? The average price premium for GI products is 29% in the Aldi, 46% in the Penny Market and the highest was in Lidl with 54%. Overall, the average premium was around 43%. It is also important to mention that in addition to supply, prices did not really change during the observations. Although the price of some products may also change during promotional periods, consumers can plan to purchase GI products in advance. On the other hand, discount stores provide a continuous market for producers as well. 6, Are geographical indications positively related to comparative advantages in the beer market? Our results show that the number of GI-registered beers is positively related to comparative advantages. Countries with traditional beer products closely linked to their place of origin are usually with a higher level of comparative advantages as the number of GI beers positively determines SRCA indices. From this, it can be concluded that it is not pointless to promote the increase in the number of GI products and devote resources to GI labels.