Expo View Issue 03

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>> Slippery business A bi - monthly review of news, and key market trends - Issue No 3 April 2012

Expo-view current topics >>> 7 Mar 2012 Mike Sweet

Kalamata Balsamic Vinegar is taking the world by storm and there are lessons to learn from its success in the Australian market

With food exports from Greece in the spotlight and the culture was built on 'Go Greek' campaign on everyone's lips - there's no exports," says Chrisbetter time to tell the story of a relatively new product tos, whose grandfafinding and then sustaining its place in the Australian ther founded the mass market. company back in That story belongs to Kalamata Balsamic Vinegar. Pro1938 in order to deduced by Papadimitriou S.A. from its factory in the velop the potential southern Peloponnese, its success internationally is the of one local raw maresult of the combination of a high-quality product, a terial - currants. creative producer, and a knowledgeable team handling "Kalamata is a very distribution and promotion to the major retailers. With fertile region and its distinctively designed label, Kalamata Balsamic Vinecurrants were progar sits proudly on the shelves of Coles stores across duced there long Australia. before olives.

But its increasing popularity means that bottles don't "There was a tradisit around on the shelf for long. It's fast becoming a tional sweet dark vinegar produced there called glykadi very popular item - notable say consumers, for its which has many of the same qualities as balsamic vineunique delicate, silky-smooth balsamic tones which surgar, so there's a long historical connection." pass the quality of the leading Italian brands.

70 years ago, Papadimitriou began its pioneering busiAlso sold in Victoria by Woolworths and with sales pickness by exporting currants to Britain, and today it still ing up strongly, Woolies customers nationally should supplies the major UK supermarket chain Tescos with also be able to get their hands on Papadimitriou's bestthat original product. It is only in the last 15 years that selling product soon. It all bodes well for Christos Pathe company has diversified into producing derivatives. padimitriou (31), Papadimitriou's young CEO and sales "Until the mid 1990s it was just currants, but my father director, who was in Melbourne recently to get a feel who studied wine science in Bordeaux, diversified into for the Australian marketplace, and gauge what the balsamic vinegar," says Christos, who studied Business future might hold for his company's other products Management at the University of Pireaus and joined the down under.

"80 per cent of our turnover is from exports and just 20 family business in 2004. per cent is from the domestic market. Our company's (cont‌ page 4) Expo-view by

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>> USA: The first steps The first steps into one of the most demanding markets has been made early this year following our participation at Fancy Food exhibition this winter.

Expoaid along with MJM distributors work hand in hand to place the products of Papadimitriou s.a. and Agrosparta in the retail chains in the USA. The products have been listed with 2 major distributors, who have already started their positioning in the retail outlets on the East coast.

We are in the process of negotiation with 2 more distributors, and we expect to increase significantly our presence during the course of the next 4 months.

All producers are participating in a collective stand handled by MJM distributors at the Summer Fancy Food Show in Washington in June.

>> Export markets - they are not always the same...

There is a tendency to view Export markets as a convenience spot where you can indiscriminately sell your excess production. Not all the markets are the same. Each country maintains a unique set of habits and practices. Brand owners tend to be reluctant to adopt and buyers request maximum customization to cover fully the expectations of their clients—the end consumer. Let us look at some key differences between the USA and Europe to show you that one’s obvious is a very puzzling factor for the other.

1– USA supermarkets stock 40000 unique items vs. 18000 items in Europe— to be unique therefore requires more effort!

2– Terms and Conditions vary by retailer in Europe—while in USA in practice most of the retailers receive one price structure .

3– Category Analysis in USA to determine cooperation vs Annual Negotiations in Europe where demands on provisions are set

4– Private label is a big factor in Europe—dubious in terms of application and success in the USA 5- USA shoppers may visit 5-6 different retailers per week while in Europe this is restricted to 2.

6– Coupons, Loyalty cards, BOGOF, or EDLP in the USA vs more consumer marketing oriented promotions in Europe 7– Hard discounters represent a growth channel in Europe with small stores and low service while in the USA this is a mere 1% 8– European Food distributors offer extensive services while in the USA Food brokers play that intermediary role 9– Shelf Compliance is the key issue in the USA while in Europe when listed ample space is provided 10– Data transparency leads to fact based selling in the USA—while in Europe is a key negotiation factor

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Issue

>> Retail tale….

No 3

>> Australian in store tastings a successful consumer approach Tasting any vinegar is a great challenge. You call upon consumers to evaluate what they normally taste as an ingredient in a salad, as an independent food product.

The reactions vary, but with our Kalamata Balsamic Vinegar we have experience nothing but success in our tastings in Australia.

Consumers love to taste and compare and their comments are helpful and rewarding. They embraced the new products which we introduced as a trial—our Balsamic glaze and White Balsamic Vinegar.

Although a good majority shops on price and they tend to cling to the stereotype that balsamic vinegar must be from Italy, they are intrigued by the fact that Kalamata Balsamic vinegar contains no preservatives, mainly the ambiguous caramel ingredient. An interesting aspect is the appreciation of the production process— directly from sun dried currants which provide it with high content of antioxidants.

Stores with tasting stand sold out the available merchandise on the shelf. The sampling of the vinegar sachet opened a door to the more skeptical consumers to come back, if the sample will perform according to their expectations.

Innova Market Insights Announces Top 10 Food Trends for 2012 An interesting list of Innova Market Insights identifies10 key trends to impact the food and beverage market through 2012 and beyond. Some of the trends have been there for a while and are becoming increasingly important. Consumers are becoming more educated and concerned about what they eat, while the austerity measures have turned food into a treat and a luxury increasing the importance of quality and conscious choice. Here are the 10 trends briefly described: "Pure" is the New Natural. Natural products are becoming the rule rather than the exception in most western markets, despite ongoing issues with a clear definition of what "natural" encompasses. One way around this has been marketing the "purity" of a product.

Green is a Given. Corporate social responsibility and sustainability strategies have taken on an increasingly important role. The focus is on reducing carbon emissions or packaging, or creating higher welfare .

Location, Location, Location. Interest in where their foods are coming from has never been higher among consumers. There is heightened interest in supporting local suppliers, a desire for ethnic-style lines, and concerns over the quality and safety of imported products.

Premium Stands Out. Despite austerity measures a premium positioning provides many benefits. A premium treat can be justified as an affordable indulgence .

Seniors Draw Attention. Companies are starting to address the needs of an aging population, both in terms of packaging functionality and of general and specific health concerns.

Forty is the New Twenty. Consumers in the 40-65-year-old range are interested in products that will help them with their desire to maintain an active lifestyle.

Grounded in Science. Consumers are interested in seeing scientifically proven claims listed on their foods. This prompts a lot of consumer trust in food manufacturers.

Regulators Force a Rethink. With governments putting more pressure on food companies to rethink things like obesity, food companies are changing the ways they manufacture their food.

Immeasurable Niches. Markets where it is difficult to measure the size of the market -- for example, gluten free -- are helping smaller food manufacturers stay in the game Boom for Protein. Food manufacturers are finding new technologies driving plant-based proteins which has also helped meat-free alternatives to increase in the grocery shelves in the last few years.

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Australia Olive oil industry upset about supermarket discounting Paul Miller, from the Australian Olive Association, says producers can't compete with cheap imports and are being forced to sell below the cost of production. The olive oil industry is the latest to complain about heavy price discounting at the two major supermarkets Coles and Woolworths.

The comments come as the Senate Select Committee on food processing said it wanted suppliers to give evidence anonymously about Coles and Woolworths abusing their market power.

Both small scale and large scale producers struggle with the continues pressure on price and demand for strong promotions which many times run simultaneously inside one category.

Everyone wants to sell, but excess pressure turns consumer to shop on price mainly, opening the door to degrading quality products all in the name of numerical result.

In the end of the day however it is questionable if these tactics increase the overall profitability and a win– win relationship between the supplier and retail.

This is not the first time olive oil prices are discussed in the light of excess discounting.

Similar situation fuelled an antidumping investigation early in the last decade. What will happen now remains to be seen.

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Issue

Front page article part 2

No 3

"When we started producing we began selling just to the Greek market. Today we're the leading brand in Greece with 40 per cent market share." After success at home, Papadimitriou began exporting its vinegar to the Balkans, before Canada, Scandinavia, the UK and Australia. Today its sweet, tangy flavour is in 28 countries, taking on the traditional Italian brands that have been synonymous with the product for generations. It's been six years since Kalamata Balsamic Vinegar first appeared in Australia, following a trip by Christos' father and company chairman - Costas Padimitriou, to Sydney's Foodpro exhibition - one of the largest gatherings of food industry suppliers and buyers in the Asia Pacific region.

It was at Foodpro that Papadimitriou teamed up with Melburnian importer Archie Tsoukras of Tirnavos Imports, and retail guru - broker John Vasilipoulos.

The import and retail experts saw the product's quality, its potential in the marketplace, and began to work with Papadimitriou to establish the product in Australia. With the UK currently the biggest importer of Kalamata Balsamic Vinegar, and Australia close behind, Papadimitriou's export manager, Dimitris Dousmanis, says that finding the right partners was crucial.

"You need assistance from people who know the main retail market, not just the ethnic market," says Dousmanis, who was also responsible for bringing Minerva olive oil to Australia. As more producers in Greece look to overseas markets, due to the downturn in retail in Greece, Dousmanis says flexibility and attention to detail is key to breaking into new markets, and staying there.

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"It's not difficult for a Greek exporter if they are organised professionally. It's completely different than working with the Greek market. You need to be flexible," says Dousmanis.

"In order to work with the mass market you have to be prepared, you have to know how to create the labels properly, ensure the scanning label works properly. Every country has different legislation, so the producer needs to follow the legislation, and create the packaging to suit that legislation, not just put a Greek label on and send it abroad."

Christos Papadimitriou believes his company's own investment in marketing has been key to cementing the product's position in Coles and Woolworths. "You can't just sell the product by leaving it on the shelf, if you do, in six months you will be delisted. You have to do promotions, advertising and tastings.

"We started in Australia in the first year with around 1000 [sixbottle] cases, now we exceed 30,000 cases. And it's getting bigger," says Christos. Having checked out the Australian end of the business, Christos and his export manager left Melbourne for Auckland to catch up with Papadimitriou's progress across the Tasman.

Then it will be back to Kalamata - to continue growing a business that has not only weathered the storms of Greece's recent and not so recent history, but continues to be a model of export success. Papadimitriou is currently presenting three new products for the Australian market - Kalamata White Balsamic Vinegar (a light and refreshing alternative to traditional dark vinegars), Kalamata Balsamic Cream (already a huge success in Greece and Finland) and Organic Kalamata Balsamic Vinegar, made from 100% organic sundried grapes.

Report: The Rise of Smartphones, Apps and the Mobile Web A new tool with an interesting status as proved by Nielsen’s State of the Media: The Mobile Media Report which provides a snapshot of the current mobile media landscape and audiences in the U.S. and highlights the potential power of mobile commerce in the near future.

Key findings:

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The majority of 25-34 and 18-24 year olds now own smartphones (64% and 53% respectively);  The majority of smartphone owners (62%) have downloaded apps on their devices and games are the top application category used in the past 30 days;  The number of smartphone subscribers using the mobile Internet has grown 45 percent since 2010;  87 percent of app downloaders (those who have downloaded an app in the past 30 days) have used deal-of-the-day websites like Groupon or Living Social;  Younger groups text the most. In Q3, teens 13-17 sent and received the most text messages (an average of 3,417 each month).

This rapidly growing and versatile usage of mobile phones provides and interesting platform for application that goes beyond advertising to a personalized contact and customized communication between the manufacturer and the end user/ consumer.

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>> Tesco - Britain's biggest retailer targets green growth

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Tesco has grown into the UK's biggest retailer but has ambitious plans to become zero -carbon by 2050 without offsetting, and it's making headway Britain's biggest retailer is applying a simple but ambitious formula to its long-term expansion plans – future growth must be green growth. Huge cuts in emissions, zerocarbon stores, greener products and carbon labeling, are all part of the package. In the eight years to 2008 the retail giant successfully halved its energy use per sq foot of store space in the UK – no mean feat at a time of continued, relentless growth. Across the entire group, CO2 equivalent emissions were cut from 76.51 in 2005 to 54.3 in 2009. Now, with what it calls "the boldest climate change initiative in our sector", it has signalled its intention to go much further. The initiative – launched in 2009 – will, if successful, see Tesco become a zero-carbon business by 2050, without purchasing offsets.

On the way it intends to halve 2006 level emissions by with the shoppers who use its stores.

2020; make sure any new store built between 2006 and It has set up greener living, a website to guide consum2020 has half the emissions of a typical store in 2006; cut ers, which receives some 40,000 hits a week. Research emissions from its products by 30% by 2020; and to help carried out by Tesco in February 2010, showed that customers halve their own carbon footprint by the same 37% of people visiting the site had subsequently deadline. changed their behaviour, while 27% said they had The bigger challenge Tesco faces, however, is in its supply bought a green product as a result of their visit. chain and among its millions of customers.

More importantly, perhaps, Tesco has carbon footIts target to cut emissions from the manufacture and use printed 1,000 of its own brand products and put carbon of its products by 30% by 2020 is a tough one. To tackle it labels on half of those, to help customers make better Tesco is looking to work much more closely with suppli- choices. Green clubcard points are also available on cerers. Tesco says that the biggest impact it can have on tain products, including energy saving light bulbs and spreading the low-carbon message is through working home insulation.

Extra Virginity: The Sublime and Scandalous World of Olive Oil A brief review of an interesting approach to the virgin world of olive oil…. Showing us how even the purest thing can be transformed into scandalous—indecent affair in the wrong hands.

For millennia, fresh olive oil has been one of life’s necessities-not just as food but also as medicine, a beauty aid, and a vital element of religious ritual. Today’s researchers are continuing to confirm the remarkable, life-giving properties of true extra virgin olive oil. But what if this symbol of health and purity has become deeply corrupt? Extra Virginity is an explosive story of oil fraud – a story of globalization, deception, and crime in the food industry from ancient times to the present – but it’s also an inspiring account of the artisanal producers, food activists, chemists and chefs who are defending the extraordinary oils that truly deserve the name “extra virgin.”

When he was researching his New Yorker article, Mr. Mueller was struck by three key

themes in the world of olive oil. The first is the continuing relationship of olive oil and crime.

The history of olive oil fraud is as old as the story of olive oil itself. The second theme is the resonance of olive oil throughout history.

He recounted a revelation of the profound importance of olive oil in the ancient Mediterranean, it was analogous to petroleum in today’s world, literally shaping the economic, military and social history of the world. The third theme is the provincialism that surrounds olive oil. The production and use of olive oil tends to be profoundly bound, even suffocated, by tradition.

Olive oil industry should escape from the trap of pernicious provincialism, lack of transparency and animosity. It should focus on the importance of the good quality, affordable olive oil. The small artisan producer should not be viewed as a competitor but a complement to the large-scale producer offering something different and specialized but above all ethical and true. The way forward is to educate both producers and consumers to appreciated the true Extra Virgin Olive Oil product.

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