Project note No.10-2006

Nicolas Ferras

About local food in the French food and agricultural market Overview concerning network of production, safety regulation, Marketing concepts and consumers' perception

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Project Note No. 10 - 2006

Title

Antall sider

Dato

50 About Local food in the French food and agricultural market - Overview concerning network of production, safety regulation, Marketing concepts and consumers’ perception-

Forfatter(e)

Prosjektnummer

Faglig sign.

ansvarlig

Nicolas FERRAS

Oppdragsgiver SIFO Summary This report is a presentation of the food system in France, from the producer to the big large retailers. In addition to some economic data, some indications about the organisation of the producer's unions and about the French safety system are mentioned. The main part of this report is a diagnostic of the use of PDO/PGI and Official Signs of Quality by producers and also by food industries and the store brands, and few critics of some aspects of their use or of the labels themselves. The last part of this report is a description of the French research in marketing and tries to analyse the use of the words "tradition", "terroir" to valorise those food products, and how those cues are used to sell "local food", to define a characterisation of typical consumers of "local food". Résumé Ce rapport consiste en une présentation du système agro-alimentaire en France, des producteurs aux consommateurs en passant par les grandes marques de distributeurs. L’organisation des réseaux et syndicats de producteurs sont présentés par le biais de données économiques du secteur. Le système sanitaire français souvent évoqué ces dernières années est aussi décrit, afin de mieux comprendre son rôle. La partie principale de ce rapport présente une vue générale de l’utilisation des Signes Officiels de Qualité et notamment des AOC et IGP, à la fois par les producteurs mais aussi les industries alimentaires et les marques de distributeurs, agémentée d’un diagnostic et de quelques critiques apparues dans leur utilisation. Nous mettrons finalement en valeur les avancées de la recherche française dans le domaine du marketing, et tout particulièrement dans la tentative d’explication de l’utilisation des termes « tradition », « terroir », utilisés en grande quantité pour valoriser ces produits locaux, afin de pouvori caractériser « le consommateur ». Keywords Local food, Label, Official Signs of Quality, France, Marketing, Consumer Mots clé Produits locaux, Label, Signes Officiels de Qualité, Marketing, Consommateur

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About Local food in the French food and agricultural market Overview concerning network of production, safety regulation, Marketing concepts and consumers’ perception

by

Nicolas FERRAS

2006 NATIONAL INSTITUTE FOR CONSUMER RESEARCH P.O. Box 4682 Nydalen, N-0405 Oslo

Preface This report was written as a part of my trainee assignment at SIFO, with Virginie Amilien as my supervisor. From the beginning of May to the end of August 2006 , I stayed at SIFO, the National Institute for Consumer research in Oslo, Norway, through an Internship agreement within the French Norwegian project “Consumers conceptions of Local Food” financed by the French Norwegian Foundation. I would like to thank particularly SIFOs direction for giving me the opportunity to stay there and having an enriching experience. I also would like to thank Jean-Louis Rastoin and Fatiha Fort for their comments and Khara Grieger for her wonderful editing work.

Oslo, 30 august 2006. Nicolas Ferras

Aknowledgement Dr Virginie Amilien – Senior Researcher – SIFO Dr Fatiha Fort – Assistant Professor-Researcher – AgroM/UMR MOISA Atle Wehn Hegnes – SIFO Dr Anne Moxnes Jervell – Director General - SIFO Eivind Jacobsen – Head of Research – SIFO Pr Jean Louis Rastoin – Professor-Researcher – AgroM/UMR MOISA Pr Lucie Sirieix – Professor-Researcher – AgroM/UMR MOISA Pr François D’Hauteville – Professor-Researcher – AgroM/UMR MOISA Khara Grieger – Lecturer

FNS - Fransk Norsk Stiftelse French Norwegian Foundation – Fondation Franconorvégienne

Content Preface....................................................................................................................................... 5 Aknowledgement ...................................................................................................................... 7 Content ...................................................................................................................................... 9 Summary ................................................................................................................................. 11 Résumé.................................................................................................................................... 13 1 Introduction...................................................................................................................... 15 2 Agro-food industry .......................................................................................................... 17 1. Presentation of French food sector............................................................................. 17 2. Local Food sector....................................................................................................... 17 3. The Terroir companies ............................................................................................... 18 4. Terroir® store brands and “Reflets de France”.......................................................... 19 5. Producers.................................................................................................................... 20 2.5.1 The Producer Union .......................................................................................... 21 2.5.2 The Agricultural Unions.................................................................................... 21 3 French Official Quality Signs .......................................................................................... 23 1. Attributions of labels and appellations....................................................................... 24 3.2. Reduction of the diversity of labels by the French Government to prevent credibility loss ..................................................................................................................... 27 3.3. Wine: French particularity ..................................................................................... 27 3.4. Critics of PGI......................................................................................................... 28 3.5. Labels and local species......................................................................................... 28 3.6. Appellations and rural development ...................................................................... 28 3.7. Private signs of quality .......................................................................................... 29 4 Management and Costs of Official Quality Signs ........................................................... 31 4.1. Management of labels and appellations................................................................. 31 4.2. Price policy ............................................................................................................ 31 5 Distribution Areas and Networks..................................................................................... 33 5.1. Types of sellers ...................................................................................................... 33 5.2. Influence areas of labels and appellations ............................................................. 33 6 Promotion......................................................................................................................... 35 6.1. Advertising ............................................................................................................ 35 6.2. The Terroir® image ............................................................................................... 35 6.4. Use of the Terroir image and tradition................................................................... 36 6.5. Proximity ............................................................................................................... 37 7 Success............................................................................................................................. 39 7.1. Some economical data ........................................................................................... 39 7.2. Success in consumer perceptions........................................................................... 39 8 Consumer ......................................................................................................................... 43 8.1. Knowledge of consumers on local food ................................................................ 43 8.2. Conviviality and consumption habits .................................................................... 43 9 Conclusion ....................................................................................................................... 45 Literature................................................................................................................................. 47

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Appendix ............................................................................................................................ 51 1. French safety regulation .................................................................................................. 51 1.1. AFSSA (French Agency for Food Sanitary Safety of food).............................. 51 1.2. DGCCRF (General Department for Competition, Consumption and Fraud Repression) ...................................................................................................................... 51 1.3. DSV (Veterinary Services Direction)................................................................ 51

Summary Since the food crisis of 1996, French consumers have begun to be more concerned and interested in the food processing processes and in the origin of the raw materials of food products. After these crises, consumers have been increasingly interested in product labelling since it guarantees product quality and traceability. The availability and resemblance of all products in the same category to each other influenced consumers to find other criteria when purchasing a product. We use here the notion of “local food product” in its broad sense, which is typically a food product linked to an identified location either by geography or by tradition (i.e. products using SIQO like regional food, food with PDO - Protected Designation of Origin- or PGI - Protected Geographical Indication- 1 , small scale food etc). Currently, France produces many different types of local food which are linked to the place of its production, obviously due to political decisions and territory diversity. However, the French signs of quality have been in legislation for almost one century. Many regulations and legislations have been created through product labelling which link the product and its manufacturing place of origin in order to promote, protect, and defend these particularities. The French system of food certification inspired the European Union, which created and european regulation about PDO (Product Denomination of Origin), PGI (Protected Geographical Identity) and TSG (Traditional Speciality Guaranteed) in 1992. Many other French labels underline the superior quality of food products, as for example the “Label Rouge”, the environmental protection label, about organic foods “AB”, the Certification of Product Conformity, termed “CCP” or the “Food from Mountain” label which specifies the particular origin of mountain products as well as regional labels. The PGI (Protected Geographic Identity) and PDO involve around 120 000 producers in France, which represent more than 20 % of the total number of producers and more than 80% of the value created in the wine fields. Today all the regulations concerning PDO, PGI and TSG (Traditional Specialities Guaranteed) are established by the European Union for all Member countries of Europe. Moreover, the management of these official signs of quality also pertains to their insertion in the World Trade Organisation (WTO). One goal for the European food sector is to extend the validity of these signs of quality world-wide. The demonstration of this goal concerning local food in agriculture since the beginning of the Cancun Negotiations has been to include these quality signs in its agriculture policy. The choice to use subsidies to transform agriculture from quantitative production to qualitative production and to reduce direct subsidies linked to quantitative production seems to be in agreement with the expectations of WTO. Promotion of local food by the development of quality signs can be a means to try to convert European agricul-

1

We refer here to the definition used in the French Norwegian project “Consumers conceptions of Local Food” financed by the French Norwegian Foundation and to the three official European signs: Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) and Traditional Speciality Guaranteed (TSG).

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ture to a qualitative production thanks to the allowance of producers to have financial compensations due to the valorisation by the consumer of labelled products. The last modification concerning the regulation of PDO and PGI occurred on March 20th 2004. This new regulation simplifies the procedures of demand and also is completely compatible with the WTO. The new regulation published by the European Union is more restrictive in sanitary safety, surpassing previous expectations in this field. The diversification of offer and the reduction of production costs resulted in an increase of the number of products available to the consumer and in a demarcation of the use of different labels, but also in close cooperation with hypermarkets which develop their own signs of quality. Today 34% of French farms produce more than one labelled food product, and in 2001 43% of French consumers knew about Label Rouge, 18% about Organic Label and 12% about the AOC (CREDOC-INC 2001). The number of labelled products increased substantially after this period, which resulted in a strong diversification and in an apparition of specialized brand such as “Reflet de France” (Carrefour) or “Nos regions ont du talent” (Leclerc). The concept of « Terroir» store brand consisted of regrouping of several regional specialties under a store brand, which is increasing due to the French agro-food market. Some brands use a lot of marketing efforts to differentiate their products. Concerning the valorisation of the labelled products, some unions of producers also use this method. The communication around the image “Terroir” was a lot of used, since it seemed to reassure consumers on the origin and quality of the product, perhaps reminding them the level of quality of products in the past and using its nostalgia to valorise the product. As we could see in this report, marketing attempted to explain what the decompositions of this “Terroir” image are, and thus, to be more efficient and to adapt the advertising campaign to reduce the cost of them.

Résumé La France produit de nos jours plusieurs types de produits locaux mettant en valeur la région de production, pour des raisons d’origines politiques mais aussi de diversité des territoires. Mais les signes de qualité français furent créés il y a presque un siècle, pour promouvoir, protéger et défendre ces particularités. De très nombreuses législations soulignant le lien entre les produits et leur lieu de production furent instaurées de manière à protéger juridiquement cette richesse culturelle . Dans ce rapport, nous utilisons la notion de produits locaux de manière très large, comprenant tout produit qui d’une manière ou d’une autre possède un lien géographique ou traditionel avec un lieu donné, tels les produits certifiés AOC, CCP 2 . La certification de la qualité alimentaire par les labels inspira l’Union Européenne, qui créa le PDO (Product Denomination of Origin) en 1992. Beaucoup d’autres labels français mettent en évidence la qualité supérieure des produits alimentaires, comme par exemple le « Label Rouge », le label concernant le respect de l’Environnement, le label « BIO » « AB, Agriculture Biologique », « La Certification de Conformité Produit, CCP » le label « Montagne », qui réfère à une production se réalisant en altitude, ou encore les « Labels Régionaux » qui renvoient à la région administrative de production. L’IGP (Identification Géographique Protégée = IGP / PGI) comme l’AOC (Appellation d’Origine Contrôlée, AOC = PDO) concernent à peu près 120 000 producteurs en France soit plus de 20% des agriculteurs professionnels et plus de 80% du chiffre d’affaires du secteur Viti-vinicole. Aujourd’hui la réglementation concernant les AOC, IGP et STG (Spécialité Traditionnelle Garantie) est sous le contrôle de l’Union Européenne, non seulement pour la France mais pour tous les pays Européens. De plus, la gestion de ces signes officiels de qualité concerne aussi leur insertion dans l’OMC pour leur garantir une protection mondiale et non plus européenne. La motivation Européenne pour valoriser et protéger les « produits locaux » est particulièrement visible depuis les Négociations de Cancun acceptant l’inclusion des signes de qualité dans la politique agricole mondiale. Afin de satisfaire les obligations imposées par l’OMC, l’attribution des aides et subventions à une agriculture extensive plutôt qu’intensive a été décidée avec l’apparition de la Politique Agricole Commune du Second Pilier, concernant le développement local et la protection de l’environnement. La promotion des « produits locaux » par le développement des signes officiels de qualité peut s’avérer un moyen de convertir l’agriculture européenne fortement quantitative en une agriculture plus qualitative, et d’assurer aux producteurs une meilleure valorisation de leurs produits grâce à une plus-value. La dernière modification de la loi concernant les AOC et IGP datant du 20 mars 2004 , simplifie les procédures de demande, affermit les réglementations en matière de sécurité alimentaire et d’augmentation des exigences. Dans les supermarchés et commerces de proximité, l’abondance, la disponibilité et la ressemblance de tous les produits alimentaires d’une même catégorie obligent les 2

Nous nous réferons ici à la définition commune du projet franconorvégien “Consumers conceptions of Local Food” ainsi qu’aux trois signes sofficiels européen : Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) and Traditional Speciality Guaranteed (TSG).

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consommateurs à trouver un critère de choix, voire une motivation pour prendre leur décision d’achat, notamment en ce qui concerne les produits de « terroir » souvent plus chers que les produits dits « standards »… Cette augmentation de l’offre en produits de « terroir » ainsi qu’en produits sous Signes officiels de Qualité résulte en grande part des différentes crises alimentaires apparues depuis 1996. Conjoncture et médiatisation aidant, le consommateur fût plus enclin à s’intéresser aux procédés de fabrication et à l’origine des matières premières alimentaires. Certains consommateurs sont intéressés par les produits labellisés, non pour l’assurance d’une typicité mais plutôt pour la reconnaissance d’une qualité et d’une traçabilité clairement certifiées. Le pouvoir d’achat et l’intérêt guidant ce nouveau groupe de consommateurs diffèrent de ceux des consommateurs originels de produits de « terroir » ou labellisés, qui les achetaient pour leur saveur et étaient conscient de la valeur de cette exclusivité de goût. Le consommateur à la recherche de qualité certifiée aurait plutôt tendance à penser que la qualité ne doit pas être à l’origine d’un surcoût, mais doit être accessible à tous… Il semble finalement qu’à la fin de ces crises alimentaires, la majorité des consommateurs recherchaient plus dans les produits labellisés la garantie de la sécurité alimentaire que leur goût typique. La diversification de l’offre et la réduction des coûts de production entraînent une augmentation du nombre de produits disponibles pour le consommateur , et une forte différence quant à l’utilisation des Signes Officiels de Qualité (SOQ) créant un intérêt nouveau des Grandes Surfaces, qui ont développé leurs propres signes de qualité, ce qui résulte dans l’apparition de marques spécialisées dans ces « produits locaux » comme « Reflets de France » ou « Nos régions ont du talent ». Le concept des marques de distributeurs « terroir » consiste à regrouper sous une même marque de distributeurs plusieurs spécialités régionales, ce système s’implantant rapidement dans le marché Agro-Alimentaire Français. Aujourd’hui 34 % des exploitations agricoles françaises produisent au moins un produit labellisé, et en 2001 une étude a démontré que 43% des consommateurs français connaissaient le « Label Rouge », 18% le Label BIO et seulement 12% l’AOC (CREDOCINC, 2001). Pour réaliser leur différenciation par rapport à leurs concurrents, les marques utilisent le marketing, qui est aussi, à une autre échelle, employé par des syndicats de producteurs pour valoriser leurs produits. L’utilisation de l’image « terroir » constitue l’un des piliers de la communication marketing, car elle semble rassurer le consommateur qui cherche l’origine et la qualité, lui rappelant par la nostalgie, la qualité des produits d’antan. Le marketing essaye de comprendre et de décomposer l’image « terroir » pour être plus efficace, tout en adaptant les campagnes de publicité et en réduisant leur coût.

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Introduction

“We cannot govern a country with more than 258 different cheeses” said Charles De Gaulle. France has occasionally appeared as a reference for food and food culture. This reputation, mainly attributed to the wine and cheese sector and also by the lifestyle to produce these products, allows France to be the second leading exporter of food in the world. The structure of the food sector is paradoxical enough with large distributors (i.e. Leclerc, Carrefour, System U) as well as an omnipresence throughout the country of small stores, butchers, bakers and other open markets. The second main characteristic of this food sector is the wine sector and its power, taking into account the economics or number of producers. Historically and culturally, wine is a pillar of the French lifestyle and tradition. The diversity of production between the small local producers and the large distributor brands must be considered in an analysis of the French food sector. This variety of food products, thus, led and in some ways obliged France to protect this product diversity and richness. France has a strong industrial and service sector, with less than 6 % of the national turnover created by the Agricultural sector, despite the fact that the agricultural power is still relatively strong and often represented in the European Union (EU) for agricultural support. However, to produce food products, one does not only need Agro-food companies but also producers. Therefore, this is the reason for realising a sectoral description in order to understand the mechanism of this part of the French economy. To further understand this food sector, this study investigates every dimensions of the sector, from the production to the commercialisation, pointing out the exchange and the link between each step of the sector. This report presents an description of the French food sector as well as the main official signs of quality, detailing the type, management, and policy. Then, the new local marketing is taken into consideration followed by an identification of the local food consumers. First, the French food sector is difficult to initially characterize. Indeed, it is a very old sector with an implication of food in most areas of the French culture, although there have been recent modifications due to the food crisis of the 1990’s. The organisation of the production, distribution, and commercialisation was totally renovated, due to new consumer expectations as well as from changes to National and European regulations. Sanitary regulations, managed by the French sanitary system, required important improvements in the condition of production, manufacturing, and distribution processes. These adaptations are also a result of new consumer expectations. Currently it is possible that Consumers want much more assurance about the safety of products as well as about price or taste maybe in a lot of part influenced by media and their mediation of food crisis... In order to answer to this new consumer demand, the number of labelled products exploded, ensuring quality and traceability. The application and management of those official signs of quality can be quite complex, since they are grouped according to time, companies, producers, agricultural unions in a limited territory. National committees organise this attribution of labels, PDO or PGI. However, the complexity and the time needed to create an appellation result in the current prestige of those official signs of quality. PDO and PGI, edited by EU, are excellent tools for rural development, and since one aim of the EU is to transform its agriculture towards a qualitative one, the use of PDO and PGI also improves the valorisation of farming products. Official signs of quality,

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particularly PDO and PGI, may be a means to unite producers and local companies in a common project around a typical local food product. One interest of the quality signs is to create a “micro-economy” in local and rural territories, thereby establishing positive change in some rural territories which have declined for 50+ years and contributing to “rural drain”. Second, we cannot expect that the food sector for local products is simply only from producer to consumer. Alternatively, the local food sector is just as complex as the regular food sector, and may be more complex in some cases. Originally, the local food sector was a descendant market, that is, from producer to consumer where the products were produced and then chosen by consumer. This type of distribution still occurs in the direct market, open market, markets at farm stands, and even in small stores like a butcher or baker. During the last 10 years, new distribution methods have appeared with an entry in the local food market of big distributor brands, such as the creation of the very well known “Terroir” store brands in France. The main evolution in the last 10 years has been the appearance of big “store brands” with a national or international area of commercialisation concerning local food markets. The change in consumer expectations and attempts to identify the “real” consumers of local food is resulting in a new science, termed “local Marketing”, and a new approach in the food sector, which is an ascendant interpretation from consumer expectations to the producer. The addition of a management science in a part of traditional agriculture may appear paradoxical, but as revealed in this report, marketing can bring new tools to improve and extend the diffusion of those local products and raise their valorisation.

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Agro-food industry

2.1

Presentation of French food sector

As of 2004, the food sector in France is composed of approximately 600 000 producers, 10 000 food companies, several hundred thousand small shops (butchers, bakers, etc.) and 250 000 restaurants. In addition, six main distributors make 90% of the food trade with hyper and supermarkets, where these hyper and supermarkets account for more than 80% of the global food sales (Figure 2.1). With regards to the food companies, 90% of them are relatively small with less than 20 employees. Type of Market (2001)

Turnover (billions €)

% of total market

Annual growth

Mass Market

94

75%

0-1%

Health products Market

6

5%

15-20%

Terroir products Market

25

20%

5-10%

Total

125

100%

1-2%

Figure 2.1: French food market (Rastoin, 2001) In the economic food sector, local food represents 20% of the global food market with a very important growth. However, half of these 20 billion turnovers is within the wine sector. The French food market is still a mass market with 75% of the global turnover (Figure 2.1).

2.2

Local Food sector

In this report, we use the notion of “local food product” in its broad sense, which is typically a food product linked to an identified location either by geography or by tradition (i.e. products using SIQO like regional food, food with PDO - Protected Designation of Origin- or PGI - Protected Geographical Indication- 3 , small scale food etc) 4 . In 2004, there were 884 brands registered by the INPI (National Institute for Intellectual Protection), which is 20% greater than in 2001.This sector has exploded since the beginning of 2000. The local 3

We refer here to the definition used in the French Norwegian project “Consumers conceptions of Local Food” financed by the French Norwegian Foundation and to the three official European signs: Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) and Traditional Speciality Guaranteed (TSG). 4 This is further discussed in Amilien and al 2006, page 2

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food sector is very difficult to extend, however, generally due to the fact that the main companies involved are quite small; incorporating them in an union or organisation is difficult, although it is the only means to reduce the cost of promotion and to be competitive in this mass market. Individualism and the lack of innovation are the main characteristics of this sector. To develop these small local food companies, owners have to develop networks with other companies to create new organisations for development and to have a counter-power against the main distribution brands. (Rastoin JL, 2001) Therefore, only companies which are profitable in this sector are innovating companies. Innovation seems to be a bit paradoxical when you mention tradition and old culture for local products, but the innovation of packaging and especially the sale location will be the foundations for the profitability of this type of company. These companies were also successful since they understood that consumer needs are in “contact” with the producers. This underlines and explains why only small companies make local food. It is impossible to have an international brand making local food for consumers. In some companies like Raymond Geoffroy with regards to “la brandade de morue de Nîmes” or Marius Bernard “la bouillabaisse”, consumers can directly visit the company and discover how the product is produced. In this way, it resembles the close proximity which is possible when one can visit production on a farm, for example.(Rastoin JL, 2001, 1999)

Producers are more affected and involved with the process of labelling than transformers or distributors, who generally are not compatible with the policy of CCP, which is more adapted for supply chain than production.

2.3

The Terroir companies

Three main types of manufacturing of local food exist. One type involves manufacturing directly by the producer, which often lacks labelling since in most cases it involves a direct sale on his/her own farm or in a cooperative. This producer may discuss and ensure the product and its quality to the consumer, as opposed to conventional quality-assurance methods represented by the Official Signs of Quality. Currently, there are more than 120 000 producers who manufacture a PDO or PGI product, which represent approximately 15% of the professional producers in France. However, it is also possible that there are a lot of other producers of local food who are not using appellations, making it difficult to know the real number of producers who directly sell on their farm without the Official Signs of quality. The second type of manufacturing involves organisation within a Union of producers which also manages the product’s commercialisation (i.e. Roquefort PDO). This organisation with an administration board can be a means to counter-balance the power of distributors when the products are not sold by the producers themselves. It also manages advertisement with a common budget, as well as future orientations for the appellation or products. Finally, local companies may also manufacture local food, with local or regional area influence (territory where the raw materials are bought). However, these companies may also produce products for store brands, which explains why some local companies have increased their production capacity since the introduction of these store brands.

Agro-food industry

2.4

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Terroir® store brands and “Reflets de France”

The concept of Terroir® store brand (“labeled product”) is increasing on the French market. This brand uses several regional specialties which are regrouped under a main store brand which responds to restrictive specifications (Fig 2). Each retailer then establishes contract with a SMC (small and medium company) in the origin production areas. In general, store brands are very difficult to classify since they do not directly manufacture a product, but rather they can purchase the product at smaller companies or unions of producers and ensure the product’s commercialisation in their hyper markets (Lapoule,).

Consumer Store brand = guarantees of origin, quality and a good qualityprice

Manufacturer Scale economy Know-how valorisation

Marketing and relational competences

Distributor Profitability Differentiation

Figure 2.2: Decomposition of a Terroir Store Brand As of 2004, the “Reflets de France” is composed of 300 food references (67% of fresh products, 24% of groceries, 9% of liquid), which equals a turnover of 315 M€. Eighty percent of the partners are small or medium size companies of less than 30M€ of turnover. This brand is distributed in more than 3500 different places nationwide. In addition, “Reflets de France” brand is also developed in other European countries and labelled “Made in France”. Each month, all commitments concerning these products are negotiated. Carrefour, owner of this brand, helps small companies invest in production and establishes multi-year contracts with them. “Reflets de France” is also a partner of the French culture Ministry. Store brands give consumer three guarantees: origin, intrinsic quality and extrinsic quality (Fig 3).

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Capacity to analyse the market

Success of Terroir® store brand

Capacity to commercialise quality products

Capacity to organise partnerships with producers

Figure 2.3 Competences needed for Terroir® store brand

Currently, there are still not any leaders in the local food market, and it is still an important market that is open. In order to evaluate the success of these store brands in the local food market, a more specific analysis of Lapoule (Negocia) reveals three important factors, shown in the previous diagram (Fig 3). In conclusion, those involved in the manufacturing are the local producers themselves or small companies who use local raw material normally produced by local producers to be in accordance with the specification of the label or the appellation. The increased level of power associated with the Terroir® brands can be frightening. This explains why networks like “Bienvenue à la Ferme” - “Welcome to the farm” – are created and supported by the Agricultural Chambers. Through this national network, product quality is guaranteed, and also develops a means of communication and regulation to protect the use of words “farmer”, “farming” and “peasant” by an association with the FNAPF (National Federation of Associations of Farming Producers).

2.5

Producers

France, with more than 660 000 farmers, is the second largest exporter of food products in the agricultural world. Many producers are not professional, and therefore they may have another job in addition to small food production. Moreover, a lot of retired farmers continue to be involved in a production activity. French producers may be members of different organisations complementary to their professional activity. The majority of this population is between 40 and 60 years old. Newer generations are not interested by this type of job, as it is not very valuable and typically lacks a high-income salary in our urban and modern society. To defend and ensure the durability of their job, producers are organised into unions or associations. The first goal of those groups is to reduce the falling number of farmers to influence the global policy and finally try to improve the value of their products. The two main organisations where producers are presents are The Producers Unions and The Agricultural Unions.

Agro-food industry

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2.5.1 The Producer Union The Producers Union is an association of producers who wants to develop a common project and often tries to give value to their products with solidary action. The aim of this union is linked more to the commercialisation or the promotion than other unions, which typically do not have any policy role or representation in a council, are totally autonomic. The most famous of these unions called “Bienvenue à la ferme” - “Welcome at farm”- was created by the Departmental Chamber of Agriculture to support and help farmers to develop tourist activities on their farm, such as Bed and Breakfasts or restaurants. The brand “Bienvenue à la ferme”, since this name is registered like a brand, brings to the consumer an assurance of quality and control. This is not a label, but the policy of this union includes private controls since every member has to sign the quality charter to adhere to this union. Currently, different activities are managed for its members like the “producer open market”, “farm open market” and the development of tourist-run activities to make visiting the farm interesting.

2.5.2 The Agricultural Unions The Agricultural Unions are “the political parties” in agriculture. Their goal is completely different than the one of the Producer Union. The aim and the role of this union is to represent the producer members in an administrative councils of the state (Chamber of Agriculture) or in private organisation and union of producers, for example, in some companies. These political organisations are managed like typical political parties, with a national management and a central direction with offices spread on all territories. You can be a member not only in a Producer Union, but also in an agricultural union, as a citizen member of a political party and at the same time with an association.

3

French Official Quality Signs

The creation of “AOC” in 1919 for wine was a means to point out the typicity of the different French wines. The extension of this system and the opportunity to ask the AOC occurred in 1935 for cheese, such as the establishment of the INAO, National Institute for the labels of origin which has been granted to all farming products since 1990. The Ministry of Agriculture and Fishery has contributed to the emergence of a Community system for the protection of the quality products that was materialized by the setting up of the Protection of the Designation of Origin (PDO) in July 14th 1992, the Protection of Geographical Indication (PGI), the Traditional Specialities Guaranteed (TSG) and also by the establishment of an European regulation about the organic mode of production. On January 3rd 1994, a French law confirmed the principles which will allow the application of this European legislation: only the AOC can claim to be transformed in a PDO or AOP. The AOC indicates a product originating in a determined place, whose characteristics are due exclusively to this geographical environment. The National Institute of the Labels of Origin (INAO), the public administrative establishment, proposes the recognition of the PDO and ensures the control and the approval of the products profiting of a PDO. PGI indicates a product originating in a specific area, as well as of its quality, and a reputation or another characteristic perhaps allotted to its origin. The production and/or development takes place in a definite area. PDO and PGI privilege the link to time in the criteria of attribution. To have this appellation, the product must have a reputation made by history. (Bérard & Marchenay 2004, p.59). The national label is indicated under the term "Label Rouge", of which the name and collective mark is property of the Ministry of Agriculture and Fishery. The presence of the Label Rouge (created by the Agricultural Regulation in 1960) attests that the product is of a higher quality and that this quality is directly perceptible by the consumer. Label Rouge, PDO or PGI do not concern only food, but also all agricultural products like seeds or grass, for example.

24

Figure 3.1: Table Label PDO in 2004 Wine

# of PDO

# of Farms

Part of the production

470

75 000

43,00%

% of the PGI in 2004 total value

# of PGI 31

81,00%

Poultry

17,30%

Fruits and vegetables

14

Sheep meat

6

Milk

5

Cheese

45

30 000

Other products

32

10 000

Olive

11

Fruits and vegetables

9

Bovine meat

5

Meat

5

Pig meat

4

Honey

2

Salted meat

3

Condiments

1

Fish

2

1

Baker's products

2

Cider

2

Honey

2

Fodder Essential oil TOTAL

3.1

15,00%

1 547

115 000

Pasta

1

TOTAL

78

# of Farms

25 000

Attributions of labels and appellations

For more than thirty years, the Ministry of Agriculture and Fishery has held a policy to promote and recognize the quality of foodstuffs due to food know-how, which is definitely a part of a cultural inheritance which should be identified and valorised. In order to do this, the Ministry of Agriculture and Fishery has set up a system of official quality guarantees (i.e. Label Rouge, Agriculture Biologique, Certificat de Conformité) issued after advice from the National Commission for the labels and certifications of agro-food products (CNLC), for which it ensures the secretarial work. The CNLC is composed of three sections: “Examination of the referential”, which advices on all specifications and labelling, labels, CCP, protection of geographic indications and certificate of specificity. “Organic agriculture”, which advises on specifications about the organic mode of production of animal products and products of animal origin, and on the projects of regulating organic agriculture. “Registration for the certification bodies”, which advices on registration requests of certification bodies who issue a label, the certificate of conformity (CCP) or the organic mode of promotion (AB). Each section is composed of boards which ensure the representation of all the protagonists implied within the certification: producers, agricultural inputs and food suppliers, process-makers, distributors, manufacturers, consumers, administrations. More over, this Ministry also takes part in the policy for the protection of the registered designation of origin (AOC, PGI), and the National Institute for the labels of origin (INAO) is in charge of its recognition. To apply for PGI or TSG you must have a Label Rouge or a CCP before you can apply for a PGI or a TSG. (Bérard & Marchenay, 2004, p.51-54) In the case of the Label Rouge, Regional Label or PGI, the professionals must initially create an interprofessional structure called "grouping". The grouping works out a schedule of the conditions and chooses an organization certifier. All labels and PGI are evaluated by the CNLC (The National Commission for the Labels and Certifications of Agro food products). Before attribution of a Label Rouge, a sensitive analysis is required. It is only the quality signs which introduce taste as an essential parameter for the products in its definition.

French Official Quality Signs

25

For a label or a CCP, the specification of the product is submitted to the expertise of specialists, and then examined by the section “Examination of the referential” of the National Commission for the labels and the certifications of agro food products (CNLC). In the case of the Label Rouge, the schedule of conditions must show the level of higher quality of the product and is accompanied by the results of the tests of tasting. For the organic mode of production (AB), the specialisations of the product is submitted to the expertise of specialists and then examined by the section “Organic Agriculture” of the CNLC. For PDO, the INAO is competent for the recognition of the AOC with the delimitation of the geographic areas of production and registration (Figure 3.1). For PGI, the grouping works out two schedules of conditions: one to show the level of quality of the product (higher quality in label, specific characteristics for the certification of conformity CCP) and the other to show the bond in the geographical origin (Figure 3.2). Today in France, there are 23 certifying organizations which have an activity in Label and PGI. They are all approved and accredited. All the certifying organizations must be approved by decree of the Ministry for Agriculture and Fishery and the Ministry in charge of consumption. This approval is allotted after an opinion of the section "approval of the organizations certifiers" of the CNLC. For PGI, the accreditation and approval are supplemented by a convention of control passed between the INAO and the organizations certifiers.

26

Figure 3.2 Demand of PDO by union of producers

INAO services

National committee with the nomination of a study commission composed by members of National Committee, by professionals (out of the region involved) (This commission goes to region and interviews producers)

Revision of a report with some orientations concerning conditions and areas of production

National Committee (presentation of the report)

Decision concerning the attribution

Nomination of a delimitation Commission Reports

National Committee Approbation of the delimitation by experts

Transmission of the proposition of regulation to the Minister and publication in the “Journal officiel”

Fig5. Procedure to ask a PDO

Demands by the Ministry of Agriculture and Fishing (Study of admissibility)

CNLC-SOC (Control plan)

Favourable advice of the SOC

CNLC-SER (Sign of quality)

Favourable advice of the SER

INAO (PGI)

Favourable decision of the National Committee of PGI

Return to the Ministry of Agriculture and Fishing Decision and sending of the PGI to European Union for registration

SOC: agreement section of certificatory organisms SER: Referential exam Section CNLC: National Commission of Labels and certifications for Agro-food products

Fig6. Procedure to ask a PGI

French Official Quality Signs

3.2.

27

Reduction of the diversity of labels by the French Government to prevent credibility loss

To prevent a total loss of consumers between all these labels, French regulation has forbid the creations of new “Regional Labels” since 1994. Only 6 regions have been allowed to keep their “Regional Labels”, and the others which have requested one have been redirected through an equivalent, the association of a “Label Rouge”. Then, a PGI can guarantee the same quality and the typicity of the food product. This reaction points out the comprehension by the national authorities of the dangers created by an ‘out of control’ increase of label types.

3.3.

Wine: French particularity

In the agricultural sector, France differs in comparison with other agricultural countries like the USA by the power of its wine sector. Agricultural areas used for wine represent more than 1,74% of the French territories (3,23% of agricultural areas) as well as more than 53% of all agricultural areas in 2004. Wine does not require large areas, but represents an important part of the agricultural economy. The wine sector creates more than approximately 15% of the agriculture richness annually (Figure 3.3). Figure 3.3: Economical table label Data of 2004

106 €

% of total production

Agriculture

57468

Vegetable production

32463

56%

Wine (part of vegetable prod)

9495

29%

PDO wine (part of wine)

7792

82%

Wine producers have significant power in the orientation of Appellations, and especially of PDO. Many producers are members of a PDO union, with 470 PDOs (Total PDO’s = 547), which represent 43% of the wine quantity produced. However, this 43% of the production represents 82% of the value created by wine producers. Having an appellation seems to be very profitable for producers, but this observation does not concern all vineyards. Very famous vineyards like Bourgogne, Bordeaux, have never mentioned PDO in their communication, and they prefer a medal in a competition, for example, than a PDO. We could then think these regions do not need to have a guarantee of quality: their reputation is stronger and older than this one of PDO. However, the use of PDO allows the protection of the name and guarantees producers that nobody can make Bordeaux in another part of Europe. The use of PDO in the vineyard of Languedoc-Roussillon is a totally different scenario. Roussillon vineyard was a mass vineyard for the blue collar workers of Northern France until 1980. The only thing which interested the large group-owners of vineyards in this region was to produce quantity rather than quality. However, the consumption of wine has evolved in France with a diminution since 1980, as consequences of road security repression and also a new desire not for quantity but for the quality. This is the reason why some producers began to change vine plants to produce quality. However, the tradition of production has influenced consumers for a long time, and it was difficult for producers to communicate about the quality in Languedoc-Roussillon because of consumer perceptions about this vineyard which was negative and only linked to quantity. To change this vision and underline the quality of their products, producers started to create a PDO. They wanted to use the vision of quality from PDO to change the perceptions of consumers concerning their wine. This is the explanation why producers of Languedoc-Roussillon use more PDO, which

28

is mentioned on every bottle, than producers of Bordeaux or Bourgogne, consequence of past and tradition of production. Today the vision concerning Languedoc wine starts to change even if the production of quality has begun since 1980, and this vineyard is regularly in the middle of a large crisis with reduction of vineyard area. Only producers who changed their production towards a quality production, and not quantity, can have a profitable company today.

3.4.

Critics of PGI

One problem of PGI is the lack of strict definition and clearness. Only a particular quality, reputation or another characteristic is necessary to obtain it. The danger is to know what exactly a reputation is. It seems to be completely different than the short recognition realised by a good campaign of advertising. Today the delimitation of a PGI area is, in most cases, functions from the economic reality more than the traditional area, typical production or localisation of producers. PGI is born where there was an economic production to sustain it, and it seems to be a tool for rural development. (Bérard & Marchenay, 2004, p.77) The lack of adaptation of PGI for the small producers, many of whom have difficulties making their production or manufacturing place meets sanitary norms, indicates an immediate need for change. (Bérard & Marchenay, 2004, p.137) PGI is influenced by the label or CCP needed in association to have a very high level of sanitary quality, which is in some cases impossible with the traditional know-how. It is resulting in a standardisation of the products often manufactured by companies rather than by the producer himself. This high cost to put all the equipment in norm is resulting in a disappearance of small producers and a manufacturing industrialisation of PGI. Also concerning the association with Label Rouge, PGI appears in a second time for consumers, the notoriety of Label rouge reduces the effect of Appellation. Consumers are more familiar with Label Rouge than PGI. The association with Label Rouge is better for PGI than with CCP, since Label rouge is more well-known than CCP, even if the cost of CCP is lower.

3.5.

Labels and local species

Labels are often accused of reducing the diversity by strict regulation. However, this seems like a generalisation because the use of seeds or local varieties is managed differently between quality signs, for example. PDO allows the use of local seeds, multiplied by producers themselves, like bean seeds for the PDO Haricot Tarbais. For Label Rouge, CCP and PGI, it is a totally different situation. Producers can only use registered seeds or species in the definition of Appellations or labels. (Bérard & Marchenay, 2004, p.96) In the definition of Appellations, one of their goals concerning species is to protect the biodiversity, for example, by facilitating the protection and the use again of old and local races. (Bérard & Marchenay, 2004, p.98-99)

3.6.

Appellations and rural development

PDO can be a tool for rural development federating producers, allowing environmental and economical development of the area. Local races valorised in a PDO are always linked to a typical social organisation of producers. This explains that when local races are protected, the social organisation of the territory and the local economy are also protected. The reintroduction of local races can also be a means to promote Appellations since producers can communicate a lot about their tradition and the typicity. Local species represent a passport or an identity tool for a specific area.

French Official Quality Signs

3.7.

29

Private signs of quality

For producers who want to organise themselves with a quality sign, there is another possibility to improve their sales: the creation of a local label, with its proper rules of organisation and quality. This is totally opposed to the Official Quality Signs, because local labels look more like a brand than an Appellation or a Label Rouge. Producer members of a local label organise themselves on the control of quality, and thus, there isn’t any official insurance concerning the respect of the rules, even if these local label are supported by the European program LEADER for the rural development. Labels and Appellations seem to appear like a perfect means to promote rural development, helping agriculture and changing the means of production to satisfy the obligations of WTO concerning direct subsidies. This vision wouldn’t be totally true without underlining the recent modifications in the regulation of European Signs of Quality. Nowadays, France does not manage PGI, PDO or TSG: Europe regulates them instead. The policy of the European Union seems to be increasing the expectations of sanitary safety. Producers and companies are obliged to make a lot of modifications in their production or transformation infrastructures. This cost is already high for big companies, and therefore impossible for small producers. That is the reason why some producers begin to leave Appellations. For French producers, there is incomprehension about this modification of the Appellation regulation. They have a lot of problems understanding how these regulations, which were formerly designed to help small quality producers, can be transformed by Europe in a new means of creation of a monopoly in the food sector with big industries.

30

4

Management and Costs of Official Quality Signs

4.1.

Management of labels and appellations

Administration boards for each appellation or label is composed of producers, transformers and distributors, but the presidency is made by the producers and transformers for CCP. This represents the two different philosophies of these two groups of quality signs. Finances also defer between labels/appellations and CCP. Labels/appellations are principally financed by contributions from producer union members (64%) as well as by national departments and regions. On the other hand, CCP is financed mainly by sales, other allowances and through European financing, and contributions by producers only represent 7% of the budget. The exact goal of the PDO is very important to identify, and is often a subject to debate. For example, some members of a PDO envision a means to protect certain areas, old methods and tradition. These persons are often producers who want to work in a traditional way, keeping an area like a sanctuary of tradition. On the other side, other members have a vision of a PDO as an economical means of development. In a same union there can be both of these visions: the first one supported by producers and the last one supported by companies using raw materials from the producers. Sometimes the importance of brand members of a PDO can be superior in term of notoriety. It is possible that a brand member of a PDO is more well-known than the PDO, which was created before the brand. The area of notoriety of a PDO is often smaller than this one of a national brand when the owner of this one is already a national company or a well-know one. An example of PDO-Ossau Iraty (Cheese of South West) and the brand Etorky: This opposition appeared in the management of the PDO Ossau-Iraty between conservative producers and the big cheese group Bongrain, owner of the brand Etorky. This conflict on the use of new manufacturing technologies by Bongrain resulted in its departure of the PDO. Bongrain preferred to keep its technologies, allowing it to produce a cheese adapted to consumer desires. Bongrain preferred to also communicate on its brand Etorky more than on the PDO 5 . This choice resulted in a considerable success of this brand, surpassing that of the PDO.

4.2.

Price policy

In most cases, price is parallel to both the reputation and prestige of a quality sign. The most famous brand also has the most expensive PDO. Label Rouge is the second most expensive than PDO, while the last one is CCP( Agreste Primeur, N°128, May 2003). We should also remember that some brands are more expensive than the “equivalent” labelled product. One example of this involves the Etorky brand of Bongrain Group and the PDO Ossau-Iraty4. In general, the price of a PDO is approximately 30% (INAO 2006, 23% concerning wine) more expensive than a Label product. The arrival of Ter5

Extracted from Valor 2006, organised by Dr. Pascale Maizi, CNEARC.

32

roir® store brands changed the organisation of prices on local food. Store brands are always cheaper than national brand for most products commercialised in these large stores. The association between a label and an appellation raises the price of local products. This is also the case between a Terroir® store brand in association with a label and a national brand without a label or appellation. A study of Hassan & Monier-Dilhan underlines this fact and which price consumers are willing to pay for a national brand or a store brand with or without a label. The store brands allow a large distribution area for their products, not only for the region of production but also for the whole of France and exportation. To advertise, store brands prefer to communicate about the brand rather than about the product, which allows, for example, “Reflets de France” to use one advertisement for more than 300 products and they can share the price of promotion in each product. The cost of communication per product, often more than 20% of the total price, is reduced and allows store brands to be cheaper than normal brand. French consumers are not always ready to pay more for quality. A study by the CREDOC (Centre of Research for the Study and the Observation of life Conditions)-INC (National Institute for Consumption) in 2001 reveals that consumers with a low purchase power are not ready to pay more for health risk or quality. This is not surprising, but it is interesting when we analyse the types of products for which consumers are ready to pay more. For example, some consumers will pay more for a quality label in meat (75% of consumers interviewed agree to pay more a quality assurance label) or poultry (71% of consumers interviewed agree). Concerning eggs and cheese, only the half of consumers are ready to pay more for a quality signs, and only 30% for milk. The high consumption of labelled poultry seems to support these results. Concerning prices, as we can see with the example of the PDO Ossau-Iraty and the brand Etorky (which doesn’t use the PDO), and Etorky is more expensive than the “traditional PDO product”, Ossau-Iraty. To understand this difference we have to look at the beginning of this PDO and the interaction between the brand Etorky and the Union managing the PDO. In 1980, there were three regions which produced sheep milk, Aveyron, Corsica, and South West. The most Important Company manufacturing sheep cheese was Roquefort and Lactalis, in Aveyron. Roquefort bought the milk also in the South West to produce its cheese. Those Producers who have more independence and a better valorisation of their products choose to create a new PDO, l’Ossau-Iraty based on traditional know how of this region (grouping two valleys of two different departments). The creation of this PDO was an initiative of producers but also of a big company member of Bongrain Group. At the beginning Bongrain commercialized their product with the PDO but after a short time they noticed that with a brand management and not only a global PDO promotion, they could raise the valorisation of their product. After few years, Etorky, the brand of Bongrain a competitor company of Lactalis was better known than the PDO Ossau-Iraty and its price was also higher (16€/kg for Etorky and only 13€/kg for the traditional PDO). Moreover, the participation and the financing of the PDO appeared too high for Bongrain , as well as the conditions of the PDO too strict to have a brand management: they could then left the PDO Union, their brand was sufficient to sell their product but they don’t want to leave the PDO because for us it can represent a good way to buy quality milk directly with the producers of the Union. In this case the brand management and the strength of an international brand allowed being more efficient in the creation and the valorisation of this new product.

5

Distribution Areas and Networks

5.1.

Types of sellers

A French particularity on local food commercialization is the possibility to have different scales of distribution, and currently there are approximately four different scales : direct sale at farm, open market, small shop and supermarket The first one is direct sales at a farm, which is a real success supported by citizen interest. The second one involves small shops like butchers, bakers, etc. This means of distribution allow the sale at a farm to have a direct interaction between the seller and consumer, where the farmer can explain the product(s) and interests the consumer. This is why local food was first sold in small shops and farms, which ensured a direct promotion of the product, in contrast to industrial products. Small stores maintain the proximity and interaction between the consumer and seller, including stores where the owners are also the producers. The most important percentage of added value is created by the producer, but with respect to importance, however, it is created by the seller. This is the reason why some producers create their own store while keeping their job as a producer and at the same time also recuperating added value created by the sale. Some butchers in medium-sized cities and localised in rural regions, relatively close to campaign efforts, were created with this store model where the owners are also the producers (Agreste Primeur, N°128, May 2003). The apparition of producers’ network or associations of producers have also changed the environment of the commercialisation of local food. The association AMAP (“Association pour le Maintien d’une Agriculture Paysanne”, Association for the Defence of a Peasant Agriculture) contributes to help the small producers, creating proximity partnerships between a group of consumers and a farm. This association takes often place near an important city, in an urban periphery, functioning by subscription and direct sale. This association is excellent for the commercialisation of lot of products as especially fruits and vegetables. The third type of distribution scale is composed of supermarkets in close consumer proximity, such as a town where there is still contact with the consumer. Finally, the last type of distribution is the hyper market distribution. It has appeared since the early ninety’s and has risen significantly since the beginning of this century. The part of these hyper markets in the local food distribution is currently rising very quickly. Today, hyper markets are the largest sellers of local food, even when all types of network are considered. This seems to be the result of the store brand success (Reflets de France, Nos régions ont du talent, etc), whose owners are the main chains of hyper markets (Leclerc, Carrefour…).

5.2.

Influence areas of labels and appellations

The PDO and PGI are especially distributed on a national scale, due to the SME’s (small and medium companies) system of commercialization, even if this is totally compatible with a regional commercialisation, especially for the small appellations. In reference to the product quality, CCP is used more on national or international commercialisation scales. Furthermore, a reduction of the distribution network also involves labels which are sold more in a regional area. The previously described pieces of information are all extracted from the Agriculture Ministry (Agreste n°128, May 2003). Concerning

34

products sold with a CCP or a label as a sign of quality, there is a national area of diffusion as well as diffusion within hyper markets (82% for CCP and 50% for labels). Small shops are the second most important places of commercialization for labels, with 36% of sales (Agreste n°79, 2005). The sales of PDO are more international, with approximately 10% for the EU and 10% for all other countries. In addition, PDO, opposite to the other signs of quality, can be sold not only in supermarkets but also in open markets or in small stores. This is the result of improvements in safety quality in each product. This also guarantees product quality, resulting from the brand’s reputation and numerous controls organised by the French control services (DSV, DGCCRF).

6

Promotion

6.1.

Advertising

The means of promotion for each quality sign are principally leaflets and flyers directly in the sales place, like a supermarket. However, PDO also uses more written media than the other signs of quality. For example, 2/3rds of managers used advertising for the promotion of PDO and labels. Furthermore, less than half of the persons in charge of a CCP used it. Advertising seems to be more and more important, shown in the rise of the number of quality signs. However, even if a PDO is well-known by consumers, it still does not insure a total commercialisation of the products. Arguments employed by each quality signs are different. For instance, appellations like PDO or PGI mainly use typicity and traditional quality, as well as geographical origin and taste. The policy of labels is principally axed on geographical origin, typicity and tradition, and then finally on taste. In the study of Agreste n°128, PDO use is based principally on tradition and typicity in their communication policy and labels the geographical origin. On the other hand, managing the promotion of CCP is totally different because this label is principally to ensure sanitary quality; not only an insurance of safety quality of production but also of manufacturing. Furthermore, it refers to the geographical origin and as well as the tradition and typicity. Only Label Rouge uses arguments which seem different to its first prerogative. For instance, Label Rouge principally uses taste and not origin for communication purposes, while PDO uses more origin than tradition to be totally in coherence with the definition of these quality signs. However, for appellations like “Champagne”, “Poulet de Bresse” or “Roquefort”, it seems to be logical to further promote tradition than origin, since origin is well-known to most people. For Label Rouge, it also appears normal to use origin for communication, since many of them are old regional labels, often created before 1994. Except the organic AB Label, no label promotes the environment, which is often in the definition and prerogatives of their label or appellation. 6 The use of a logo for a quality sign concerns only 2/3rds of products and half of PDOs. Wine producers often prefer the mention of an agricultural competitive examination medal rather than a PDO.

6.2.

The Terroir® image

Marketing strategies have tried to break down the Terroir® brand into different attributes in order to understand the main attributes which attract consumers. François d’Hauteville (2006) defines the concept of Terroir® and typicity in its marketing. Terroir® seems have three parts. The first one is a tangible reference to an agronomical-geographical area (climate, soil, etc), while the second part is intangible and refers to know-how. The last part is an historical reference. These three characteristics define the typical production places for Terroir®. In addition, Fort and Fort (2006) have also analysed the 6

More information in Amilien, Ferras, Fort, 2006

36

image of Terroir. They decompose it in two parts: geography and culture-history. This analyse is similar to that of D’Hauteville and Sirieix (2005), who present Terroir as a combination of geography, trade skills and time-culture. However, Sirieix brings new information concerning this analysis of Terroir image, since she suggests that the main factor of definition for consumers is time and culture. These three analyses of Terroir point out the fact that this typical word is very difficult to define in order to agree on consumer expectations. It is interesting to compare these diagnostic analyses in order to compare the reasons product choice by consumers.

In a study by the Centre of Research for the Study and the observation of life conditions (CREDOC, 2001) for the INC, reasons of consumer choice have been demonstrated. The first consumer expectation for labelled products is taste, while the second expectation is sanitary quality assurance. This study was conducted in 2001 shortly after the Mad Cow crisis seemed to underline consumer traceability research of. It is indeed possible that as of 2006, consumer expectations have changed in light of the recent crisis concerning H5N1 virus which may have affected new consumer serenity. However, emergence of new sanitary policy, like the creation of AFSSA, has reassured consumers. This preoccupation concerning research of sanitary quality has decreased. Today, it is possible that many consumers buy more labelled products in order to adhere to a certain social vision of production or agriculture, or to be assured of product typicity rather than to have another proof of sanitary quality. Consumers are looking for typicity, but still what exactly is this new part of Terroir?

6.4.

Use of the Terroir image and tradition

In France, the use of the Terroir term and image emerged at the beginning of this century. Some studies associate this with food crises like Mad Cow and Creutzfeld Jacob disease. In addition, consumer fear has resulted in a demand of food products with greater quality insurance (CREDOC 2001), specifying origin, although others have linked this emergence to a social identity crisis, the WTO negotiations or to new European agricultural policies. Regardless if consumers desire or achieve guarantees and quality, they obviously use quality labels like Label Rouge, PDO/PGI or AB organic agriculture, which have exploded in the last ten years. To make them efficient and well-perceived by consumers, a new marketing strategy has appeared to help local food producers to commercialize their products to these new consumers (Fort Fort, 2006). The use of advertising for local food is not only a means to raise their sales, but also a means to communicate a sign of quality, labels and guarantees. Therefore, the image of Terroir is a way to valorise a food product (Aurier 2004). The nostalgia concerning a “golden age”, based on a belief that methods of production and food products were better in the past, attracted marketing due to the possibility of this promotion. Marketing is then used to inform the consumer and to promote local food simultaneously, principally through leaflets and flyers. Terroir is a typical French dynamic concept that takes time, space and human beings into consideration at the same time (Bérard et Marchenay, 2004, p. 112). It is the main concept used in marketing for local food products. The Idea of Terroir emerged with considerable strength in 1980 and 2002, with both the policy of decentralisation and the regionalisation of political decisions in France. Some authors perceive Terroir as a correlation between an origin (geography, climate), culture (time and tradition) and know-how (D’Hauteville 2006 and Aurier, Sirieix, Fort 2004, Dekhili, D’Hauteville 2006). This last description of Terroir, composed of cultural and geographical parts, is characteristic of local food advertisements, as demonstrated by the TV ad for “Roquefort” presenting an old cheese tradition in a typical territory - the Larzac. Marketing for Pélardon refers to tradition, know-how and also the typicity of the place, in such an important way that those concepts are mentioned in every page of the leaflet. Lagrange et al., (1995) explained this contradiction while suggesting that the territorial reputation of a product is often more the result of communication messages multiplication rather than a real geographical culture of the consumer.

Promotion

37

Even though Terroir and tradition are often used in food advertisement, they do not necessary reflect a reality of production. Looking at both regional and national magazines, we noticed that the majority of references to tradition were found in advertisements for national and international brands. The same type of observation emerged from different websites for food products. For instance “Chaumes cheese”, which is a brand of Bongrain SA, has a website based on terms like “typicity”, “authenticity” and “rusticity”. This could be surprising when we know the industrial way this cheese is manufactured, but the marketers have succeeded in the establishment of a local image through images and concepts linked to origin and tradition (The advertisement of “Bayonne salt” based on local nature and know-how, in the number 108 of “Cuisine et vin”, is a also amazing as this salt is owned by the brand “Cérébos”, which is not typical of the Basque country). During the period 1980-2000, Scheffer, 2002, has observed an increase in the number of protected brands mentioning “terroir” at the INPI (National Institute of Industrial Propriety) which increased from 10 in 1980 to 70 in 2000. The image of Terroir reveals to the consumer the geographical origin, history of the product (time and culture) and ancestral know-how, and is also used by small unions of producers which usually emphasize local nature and space they are close to. However, arguments employed by each quality signs are different. Appellations like PDO or PGI are generally based on concepts like typicity and traditional quality then refer to geographical origin and finally taste. Tradition and typicity are usually used in PDO communication policy, on the other extreme, the promotion of CCP is principally built on the sanitary quality, then geographical origin and finally tradition and typicity.

6.5.

Proximity

Some large brands with a national sale area such as “Poulets de Loué” use signs of quality to give an image of quality, linking to the ideal of a small producer. Those brands as well as the store brand Terroir do not have any empirical credibility. They have to create this image of proximity in the form of adapted advertisements, and a wonderful example is seen in the advertisement for “Société”, the “Roquefort cheese”, when they use conservation cellars in the advertisement that just cannot be used in reality. One of the most beautiful successes in local food advertising is by some distributor brands. “Carrefour” with “Reflets de France” and “Leclerc” with “Nos régions ont du talent” have totally disturbed the local food market. Their growth of turnover was more than 13% in 2004. Their products are various, with more than 300 for “Reflets de France” and more than 200 for “Nos régions ont du talent”, and are also well-distributed. The concept of Terroir creates, then, a new dimension, such as with “Reflets de France” where advertising does not concern the different products but only the global brand. Unions of producers which have a Label Rouge or PDO also try to reduce their cost of communication due to global advertising of their label. Distributor brands become the most powerful ambassadors of local food products through the concept of Terroir, since a strategy which allows small regional production companies to extend their area of commercialisation and to improve their sales. However, the concept of local evolves depending of the context and the target segment of consumers. For instance, the presence of the geographical indication on the label carries specific messages to the consumer about the process of production as opposed to information on the inherent qualities of the product. Finally, advertisements using the idea of tradition, know-how and origin and are also the distributors own brands are actually far from the concepts they promote. The local aspect of the product is not real, but rather hyper-real. On the other hand, the “real” product sold on the local market does not need any brand or marketing. Benkahla has demonstrated that the Pelardon PDO is not well used to enhance the cheese positioning by small scale producers when it is sold in local market. However, when the cheese is sold outside of the local market, the PDO signs permits an added value (+30%). This means that local consumers do not care about the PDO label since they know and trust the producer who sell his own production. However unknown Terroir products require a producer to build up a reputation for quality category production, and although communication becomes an essential element, synergy be-

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tween the different approaches of economic development must be emphasized and the collective management of the Terroir image becomes crucial. This ambivalence is particularly exciting due to 1) the conception of mass distribution itself is totally opposed to the one of Terroir, and 2) standardization and loss of typicity and proximity that necessarily increase when the distributor brands improve their turnover. How do the consumers perceive this dilemma? Some analyses of French research conclude that promotion is essential in a very large area of commercialisation, but the costs are not adapted to companies which produce these products- small or average companies. The publications made, for example, by JL Rastoin underline that there are two types of advertising in local food. The first one creates a typical picture based on a normal product and appears with a large brand which can fund the communication (packaging, advertising) to build this vision of Terroir around the product. The second type of local food advertising is based on a reduction of the communication costs by scale economy which consists of federating small companies or unions of producers, or the two together, to conduct a common advertising campaign about only the product and not the brand itself. The current problem is the rise of this cost, since there is increasing competition between these Terroir store brands, which is resulting in an increase of prices. Today consumers pay the cost of this advertising, but if it continues to rise, the consumers will not continue to pay for this. Then, it is possible that this rise in advertising will eventually reduce the purchase price and the producer will reduce the final price for the consumers, becoming more competitive. This situation is what has happened with most large brands.

7

Success

To evaluate the success of labels or appellations, we should not only look at the economical results but also at consumer perceptions.

7.1.

Some economical data

In the previous presentation of the food sector in France, we have shown that local food occupies approximately 20% of the food market with a current growth of almost 10%. This growth is due to confidence mainly attributed to the official signs of quality and also to the recent sanitary safety crisis. The Terroir store brands have increased their annual turnover at 15% per year. This success is shown by the increase in the number of products now available to consumers. Today local food companies are very profitable, but small producers have also increased their sales thank to this increase in consumer demand. Unfortunately, data concerning the economical aspects are very scarce. Nevertheless, it is interesting to evaluate the success of labels and appellations by investigating consumer perceptions in this sector.

7.2.

Success in consumer perceptions

According to a survey by the CREDOC (Centre of Research for the Study and the observation of life conditions) conducted in 2001 and directed by the National Consumer Institute (INC), French consumers tried to find new cues to reassure themselves on food quality following the Mad Cow crisis in 1996. At that time, nearly all media have evocated this crisis with scientific reports and much pessimism concerning the sanitary quality of food. However, in 1996 the sanitary control in France was quite confused and managed the situation with a definite lack of efficiency. The disorganisation of controls and this amplification of the crisis by the media resulted in a total loss of confidence in the food system from the French public. The only products which were completely guaranteed for the quality were the labelled products, especially Label Rouge products since it already ensured quality even before this crisis, and products with autonomic controls. In this period of crisis, the appellations, PGI and PDO, did not signify quality since they could not really make this. This is because appellations can not prove the quality of their products since they are not independent controls of quality realised by PDO or PGI. The only sanitary controls at that time were the produced by the French government by special administrations, like DGCCRF or DSV. The Mad Cow crisis lasted several years and was even been followed by another crisis, the Ovine Spongiform Encephalitis. This second crisis lasted until the beginning of the 21st century. Communication for more than 4 years about the dangers of food changed consumer expectations. After these crises, the relation between consumers and food was a relation of fear. The communication of Label Rouge presenting quality as the main factor for this label was successful, as we can see in the study of CREDOC-INC in 2001 (Figure 7.1), Label Rouge is the famous and well-known signs of

40

quality in France. Perhaps the insurance of quality certified by Label Rouge was totally in accordance with the expectations of consumers in this period.

Figure 7.1 Study of CREDOC-INC 2001 However, the appellations valuing tradition more than certification of quality were not so successful, and perceptions were not identical for all consumers. Young people were probably more influenced by the media and without point of reference concerning quality compared to older consumers, and who also had only one solution to be insured of the quality- the certification by label (Figure 7.2).

Figure 7.2 Relation between age and labels (Study of CREDOC-INC 2001) As seen in the previous figure, the older persons had a perception and some points of reference, developed by their own experience, and were less influenced by these food crises. Therefore, older consumers needed less certification of quality. Although it is difficult to draw many conclusions from only one study and it seems important to emphasise the link between the consumer’s preference to have quality assurance during this period and the increase of Label Rouge’s success. However, this is not the only explanation that can be made to explain the difference of notoriety between Label Rouge and appellations. For example, and as mentioned previously, appellations and labels do not concern the same products. In fact Label Rouge can be possible for all products, even industrial products. Large brands like “Poulet de Loué” can also have the Label Rouge if their quantity and means of transformation look like more like at an industrial product than at a farming product. Having this type of product

Success

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combined with a very large quantity produced and a national area of commercialisation in all supermarkets allows Label Rouge products to be mass products concerning the quantity, but can also be products with sanitary and taste quality certificated. Although it is relatively new for appellations to be sold in supermarkets, a large portion of food purchases is made in supermarkets (75% of food purchases concerning mass products). This difference between a national area of diffusion for the majority of Label Rouge products and a local area, due to a means of distribution for appellations, influenced consumer perceptions, especially with the knowledge that 80% of the French population live in towns (and approximately 10 million live in Paris). With this urban population structure, it is understandable that it can be difficult for city dwellers to have easy access to local products.

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8

Consumer

8.1.

Knowledge of consumers on local food

There currently exits two types of consumers: the local consumer who knows the product and its territory, and those who are ignorant about the product. Local consumers prefer seasonality in their products. Waiting time is an added value for this consumer. Therefore, it can explain the very rapid increase in the number of open market of producers. For instance, the creation of the brand Marché de producteurs de pays by the Aveyron Chamber of Agriculture has been made to organise local open markets which guarantees quality and proximity to consumers, thanks to the adhesion of the producers to a quality charter. The relationship between typicity and means of commercialisation is very strong, and therefore a product does not really have the same “local” meaning if it comes from a local market, a farm or a hyper market. This is why a lot of producers want to create open markets or markets at farms in order to sell their products directly to consumers, although there is a risk when transferring a job between a producer and a seller. To avoid this loss of identity, networks of producers develop charters to regulate the open market which are organised by themselves and their members. The network Bienvenue à la Ferme, for example, is creating a partnership with the brand Marché de producteurs de pays to able to use their charter for their open markets to prevent the possible loss of identity and quality if the producers only become sellers.

8.2.

Conviviality and consumption habits

The means of consumption influence the choice of a product in many cases. Conviviality and sharing can be a justification for labelled products assimilated to quality of life and pleasure. Eating labelled products can also be a means to show culture Nevertheless, there are also decisions based on consumption habits: when you know the product, when you are familiar with consuming it, you will buy it easier than a consumer who is unfamiliar with this product, since food products express all their interests only when you taste them. Marketing is a means to inform consumers about the characteristics of the product, while taste is the only means to keep a consumer purchasing the product. A consumer who had a positive experience with the product will buy it again. However, if the taste does not correspond to consumer expectations, it will be nearly impossible to make he or she buys this product again, even with the best marketing. Taste is important today, but factors like packaging also play a key role in product choice. For no-local consumers, regularity of taste is also important. Consumers want a predictable product that is without variation and surprise. Consumers from newer generations (less than 25 y.o.) seem to have another vision concerning a respect of tradition. Only 35% said that agriculture must respect traditions compared to 63% for consumers greater than 65 y.o. (BVA survey 2003)

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9

Conclusion

The presence of a strong wine sector, a culture of food and recent crises have draw the current agro-food sector in France. The interest in food quality has long been important, due to the typical richness of the French agriculture. The wine sector influenced the organisation of the Agro-food sector, thanks to its financial influence in the food market. However, the last food crisis completely modified the expectations of consumers. Food quality has appeared as a main factor of product choice, even before price for certain food products. The poultry sector and meat sector are particularly more influenced by this evolution. Government policies have tried to reassure consumers, but the creation of all these labels and appellation have resulted in a certain confusion consumer’s. The emergence of Terroir® store brand, managed by large distributors, have answered to consumer demands and also resulting in a new discipline, the Terroir® Marketing. The diversity of products, of brands and now of labels obliged label owners to demarcate themselves. However, the cost of advertising obliges the small unions to federate themselves to share the cost, although Terroir store brands solved this particular problem by promoting not the product but the brand. The danger is to create a monopoly of store brands in the local food commercialisation out of their areas of production. Terroir marketing can help the federation of small producers by increasing marketing efficiency. Traditional marketing is not adapted to valorise local food (Fort, Fort, 2004). The knowledge of the essential cues, which result in purchase decisions, could explain the success of these local products. To better understand the real Terroir image in purchases could allow better communication only on this fact and reduce marketing costs.

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Literature Amilien V. ; Ferras N. and Fort F. From local to local: Local Products between Local Places and Global Myths – Paper proposed at the ESF workshop « Local food in Europe ». 14-16 June 2006. Bordeaux. France Aurier, P. ; Sirieix, L. Le marketing des produits alimentaires Paris : Dunod, 204 p Aurier, P. ; Fort, F. Effets de la région d’origine, du produit, de la marque et de leurs congruences, sur l’évaluation des consommateurs : application aux produits agroalimentaires Recherche et Application en Marketing, vol. 20, n°4, décembre 2005, pp. 29-52 Aurier,Fort, Sirieix Exploring terroir product meanings for the consumer Anthropology of food, issue 04, May 2005 Barjolle D. ; Sylvander B. Facteurs de succès des produits d’origine certifiée dans les filières agro-alimentaires en Europe : marché, ressources et institutions INRA Pro. Anim., n°16, pp. 289-283 Berard L., Marchenay P., 2004, Les produits de terroir : entre cultures et règlements, Paris (FRA), CNRS Editions, 229 p BVA 2003 : Enquête : Imaginaire de l’agriculture. Agrobiosciences. Août 2003 Boizot-Szantai C. ; Lecocq S. and Marette S. 2004, Common Labels and Market mechanisms Document de travail n. 05-04, INRA CORELA. Ivry. Codron, J.M. ; Giraud-Heraud, E. ; Soler, L.G. Minimum quality standards, premium private labels, and European meat and fresh produce retailing. Food Policy, vol. 30, n° 3, 2005, pp. 270-283 Codron, JM. ; Sirieix, L. ; Reardon, T. Social and Environmental Attributes of Food Products in an Emerging Mass Market : Challenges of Signaling and Consumer Perception, With European Illustrations

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Agriculture and Human Values, Summer, vol. 23, n° 2, 2006, Final version accepted April 2005 (forthcoming 2006)* CREDOC (Loisel J.P. ; Couvreur A.) Les français, la qualité de l’alimentation et l’information INC-Journée du droit des consommateurs, August 9th, 2001 Deckhili ; D’hauteville Les dimensions perçues de l’image de la région d’origine. Cas de l’huile d’olive. Working paper MOISA Fort, F. ; Fort, F. Alternatives marketing pour les produits de terroir Revue Française de Gestion, vol. 32, n°162, mars 2006, pp. 145-159 Fort, F. ; Couderc, J.P. Le terroir : un avantage concurrentiel à l'exportation ? Le cas des entreprises agroalimentaires du Languedoc-Roussillon Hassan D. ; Monier-Dilhan S. Signes officiels de qualité : faut-il avoir peur des marques de distributeur? INRA Sciences Sociales, n°6/04, Avril 2005 Lapoule P. Le succès des marques terroir de distributeurs : un modèle par les compétences NEGOCIA Perrouty ; D’Hauteville ; Lockshin The influence of wine attributes on region equity: An analysis of the moderating of consumer’s perceived expertise Working paper Moisa Rastoin J.L. ; Vissac-Charles V. Le groupe stratégique des entreprises de terroir Revue Internationale des PME, vol. 12, N°1-2/1999, Montréal/Paris, pp 171-192 Rastoin J.L. L’Agroalimentaire entre local et global Economie Rurale, n°264, juin-juillet 2001 Rastoin J.L. Is the World Food System Compatible with Sustainable Development? Universidad do Algarve International Conference Traditional Food Processing and Technological Innovation Faro, May, 26th, 2006 Sirieix, L. ; Codron, J.M. Environmental and ethical consumers’ concerns for food products Advances in Consumer Research, vol.XXXI, 2004 Sirieix, L. ; Gurviez, P. ; Rohrig, C. Consumers and professionals responses to situations raising ethical questions Journal of farm management, vol.12, n°8, April 2006, pp. 499-509 SRSA (Service Régional de Statistique Agricole), DRAF Rhône-Alpes,

Literature

« Coup d’oeuil sur Rhône-Alpes » in Agreste,N°79, January 2005 SCEE (Service Central des Enquêtes et Etudes Statistiques), « A chaque produit son signe de qualité » in Agreste Primeur, N°128, May 2003 Université Saveurs & Savoirs “Ethique ou profit? Le terroir se met à table » Sopexa, Paris, November 28 th, 2005

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Appendix 1. French safety regulation 1.1. AFSSA (French Agency for Food Sanitary Safety of food) The AFSSA (French Agency for Food Safety Security) evaluates the safety of human and animal feed, and it is managed not only by the Health Ministry but also by the Agricultural Ministry and Economical Ministry (DGCCRF). It is a public organization structured into different fields such as scientific laboratory support (i.e. managing biological laboratories linked to food research), advice and veterinary products authorization. Its aims to control each step of the process, from the production to the commercialization of food (production, transformation, conservation, transport, storage and distribution). These evaluations are made for vegetable and animal foods but also for drinkable water and products used in food manufacturing (e.g. plant health products, veterinary medicaments, etc.). Another goal of the AFSSA is to evaluate the food nutritional risk, for other parameters than safety dangers, and animal diseases. The AFSSA is obliged to alert the Heath and Agriculture Ministries if there is a health risk for consumers. The AFSSA has to give its opinion and then publish recommendations for foods. This agency does not have any power in safety police, except in the case of veterinary medicine but can be implicated in the management of food crisis. These previously described roles also involve other organizations associated with safety police like the DSV (Veterinary Services Direction) or the DGCCRF (Competition, Consumption and Repression of Frauds General Direction).

1.2. DGCCRF (General Department for Competition, Consumption and Fraud Repression) Contrary to the AFSSA, the DGCCRF depends on the Ministry of Industry, Economy and Finance. The three spheres of activity of the DGCCRF are: - Competing regulation of the markets - The economic protection of the consumer - Consumer safety The role of the DGCCRF involves the control of the goods and services exchanged. It surveys and directly controls the market, such as, for instance, to control the temperature of the storage of perishable products in restaurants. The DGCCRF publishes advices and rules concerning the conditions of storage, ingredients used in food manufacturing process (i.e. consumption practice cards). Furthermore, the DGCCRF has a role of control: it can give infringements, close a shop/restaurant if the safety obligations are not respected. With respect to consumer safety, the objective is to preserve the physical safety and health of consumers. The DGCCRF intervenes on all products, on every level of food (production, importation, distribution).

1.3. DSV (Veterinary Services Direction) The DSV is not a state agency like the AFSSA, but rather it depends on the Agricultural Ministry (a delocalized service) and involves all aspects of animals used in food production. The

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DSV, technically DDSV (Departmental Veterinary Services Direction), is an administration managed on a departmental scale, contrary to the DGCCRF or the AFSSA which are managed in a national scale. Its roles are to control the application of the sanitarian regulations in farms and companies involved in production, transformation, transport or distribution of food. The aim of the DSV is to guarantee that a product is healthy, without harmful effects and without animal suffering. Figure 1 Public laboratories

AFSSA Manages research

Sanitary crisis

DGCCRF

Alerts

Provides recommendations

Publishes Regulations

Alerts and manages

Controls the applications of the regulation in places in direct liaison with the consumer

DDSV

Manages the sanitarian crisis (H5N1…)

Controls the applications of the regulation in farms or in companies

Concerning Animals

Concerning more precisely consumers