Research - 20.03.2017 - 00:00 

Consumption in Switzerland: “regional” preferred to “organic”

How much value do consumers attach to the origin of a product? This is the question that researchers of the Institute for Customer Insight at the University of St.Gallen (ICI-HSG) investigated. According to the study, consumers particularly look for authentic products in times of globalisation.

21 March 2017. In the premium segment, prices are highest among cheeses and lowest among fruit and vegetables. The Migros label "From the region. For the region" is the best known. This is revealed by the current study on Regional products: what is the value of origin?

Big market potential of regional products

A better assessment of the possible potential of regional products can be achieved through a comparison with organic products. In the early 1970s, organic products were merely a marginal matter. Since then, the turnover of organic products has steadily grown and amounted to approx. CHF 2.3bn in 2015 – which is tantamount to a market share of 7.7 per cent.

The results of the current study show that today, more consumers look for regional products than for organic products. When asked whether consumers buy organic or regional products more frequently, most interviewees (43 per cent) indicate that they buy more regional products. Only 10 per cent buy organic products quite often. No differences with regard to the generally strong preference for regional products can be discerned in terms of gender, age or residential location. In contrast to this, organic products only appeal to subsegments of the market. "At present, regional products only account for about CHF 1.3bn of food turnover in Switzerland," says the author of the study, Dr. Stephan Feige about this development. He assumes that this turnover will grow disproportionately in the next few years.

Consumers pay more for regional products

As the study shows, the willingness to pay more for regional products is generally high. At the same price, 70 per cent of consumers nationwide would prefer regional products to other Swiss products of unknown origin. In the premium segment (upper quarter), Swiss consumers are prepared to pay 20-30 per cent more for regional products. Price premiums differ strongly depending on products. The willingness to pay more is highest with cheese, followed by honey, yoghurt, eggs, milk and meat. The willingness to pay more is lowest among fruit and vegetables.

The evaluations reveal that feelings of attachment, in particular, result in consumers being willing to pay more. In addition, important rational arguments are "support of the regional economy", "short transport routes" and "more enjoyment from consumption". Consumers are also willing to pay more if industrially produced foodstuffs and national brands use regional raw materials and declare this accordingly.

"As the study demonstrates, Swiss consumers attach great value to regionality and are also prepared to pay more for it. This makes the establishment and exploitation of regional connections in brand management fundamentally attractive. Regionality can also be used as a strong differentiator vis-à-vis competitors," says Roman Hirsbrunner, the co-author of the study.

Regional products benefit small and large enterprises

Regional products provide many producers of agricultural products with an opportunity to detach themselves from the "flood" of government subsidies and to establish marketing competencies of their own. For the large retail chains, regional products are primarily a profiling instrument.

Regional products are distinguished by a wide variety of labels, brands and organisations. Besides the retailers’ labels, regional organisations such as "natürli Zürioberland", "graubünden" and "Echt Entlebuch" run their own brands. Also relevant are products and brands with clear references to their region, like Appenzeller Beer, Elmer Citro and Zuger Kirschtorte.

Besides the established brands, there are also new actors around, particularly in retailing, which have specialised in regional products; Farmy (online farm shop), Buyfresh (products direct from the producer) and Buur on Tour (fruit and vegetable boxes) are cases in point.

Perception strongly shaped by tourism

Regional products also profit from tourism: consumers become acquainted with regional products while on holiday, like them and also buy them later if they are available. Furthermore, people who feel attached to a region – whether because of holidays spent there, familial connections or other reasons – accord a substantially more positive value to products from that region.

Regional products from tourism regions and particularly from mountain areas thus have a clear advantage on the market. In addition, regional origin is not relevant to foodstuffs alone. Manufacturers of products such as furnishings and service providers can also profit from declaring their origin. The study shows, however, that the impact of regional origin is lower in those industries than with foodstuffs.

Photo: Fotolia / HandmadePictures

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