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

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In this issue

In this issue

>> Focus on Australia

>> More about us

>> Green growth and market trends

>> Slippery business

7 Mar 2012 Mike Sweet

With food exports from Greece in the spotlight and the 'Go Greek' campaign on everyone's lips - there's no better time to tell the story of a relatively new product finding and then sustaining its place in the Australian mass market. That story belongs to Kalamata Balsamic Vinegar. Pro-duced by Papadimitriou S.A. from its factory in the southern Peloponnese, its success internationally is the result of the combination of a high-quality product, a creative producer, and a knowledgeable team handling distribution and promotion to the major retailers. With its distinctively designed label, Kalamata Balsamic Vine-gar sits proudly on the shelves of Coles stores across Australia. But its increasing popularity means that bottles don't sit around on the shelf for long. It's fast becoming a very popular item - notable say consumers, for its unique delicate, silky-smooth balsamic tones which sur-pass the quality of the leading Italian brands. Also sold in Victoria by Woolworths and with sales pick-ing up strongly, Woolies customers nationally should also be able to get their hands on Papadimitriou's best-selling product soon. It all bodes well for Christos Pa-padimitriou (31), Papadimitriou's young CEO and sales director, who was in Melbourne recently to get a feel for the Australian marketplace, and gauge what the future might hold for his company's other products down under. "80 per cent of our turnover is from exports and just 20 per cent is from the domestic market. Our company's

culture was built on exports," says Chris-tos, whose grandfa-ther founded the company back in 1938 in order to de-velop the potential of one local raw ma-terial - currants. "Kalamata is a very fertile region and currants were pro-duced there long before olives. "There was a tradi-

tional sweet dark vinegar produced there called glykadi which has many of the same qualities as balsamic vine-gar, so there's a long historical connection." 70 years ago, Papadimitriou began its pioneering busi-ness by exporting currants to Britain, and today it still supplies the major UK supermarket chain Tescos with that original product. It is only in the last 15 years that the company has diversified into producing derivatives. "Until the mid 1990s it was just currants, but my father who studied wine science in Bordeaux, diversified into balsamic vinegar," says Christos, who studied Business Management at the University of Pireaus and joined the

family business in 2004. (cont… page 4)

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

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No 3 April 2012

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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 Fan-

cy 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.

There is a tendency to view Export markets as a convenience

spot where you can indiscriminately sell your excess produc-

tion. Not all the markets are the same. Each country main-

tains a unique set of habits and practices. Brand owners tend

to be reluctant to adopt and buyers request maximum cus-

tomization 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 struc-

ture .

3– Category Analysis in USA to determine cooperation vs An-

nual 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 Eu-

rope 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

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

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 Sum-

mer Fancy Food Show in Washington in June.

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No 3 April 2012

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>> Retail tale….

>> Australian in store tastings a successful consumer approach Australia Olive oil industry upset

about supermarket discounting

Paul Miller, from the Australi-

an Olive Association, says pro-

ducers 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 com-

plain about heavy price dis-

counting at the two major

supermarkets Coles and Wool-

worths.

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 consum-er 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 tac-tics increase the overall profit-ability and a win– win rela-tionship 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.

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 increas-

ingly important role. The focus is on reducing carbon emissions or packaging, or creating higher wel-

fare .

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.

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 Vine-

gar.

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 inter-

esting 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.

Issue

No 3 April 2012

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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:

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 re-ceived 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.

Front page article part 2

"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, Papadi-mitriou 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 Ital-ian brands that have been synonymous with the product for generations. It's been six years since Kalamata Balsamic Vine-gar first appeared in Australia, following a trip by Christos' father and company chairman - Costas Padimitriou, to Syd-ney'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 Melbur-nian 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 Papadi-mitriou to establish the product in Australia. With the UK cur-rently the biggest importer of Kalamata Balsamic Vinegar, and Australia close behind, Papadimitriou's export manager, Dimi-tris Dousmanis, says that finding the right partners was cru-cial. "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 Austral-ia. As more producers in Greece look to overseas markets, due to the downturn in retail in Greece, Dousmanis says flexi-bility and attention to detail is key to breaking into new mar-kets, and staying there.

"It's not difficult for a Greek exporter if they are organised pro-fessionally. 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 pre-pared, 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 legis-lation, 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 del-isted. You have to do promotions, advertising and tastings. "We started in Australia in the first year with around 1000 [six-bottle] cases, now we exceed 30,000 cases. And it's getting big-ger," 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 busi-ness that has not only weathered the storms of Greece's recent and not so recent history, but continues to be a model of ex-port 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.

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No 3 April 2012

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

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, zero-carbon 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 2020; make sure any new store built between 2006 and 2020 has half the emissions of a typical store in 2006; cut emissions from its products by 30% by 2020; and to help customers halve their own carbon footprint by the same deadline. The bigger challenge Tesco faces, however, is in its supply chain and among its millions of customers. Its target to cut emissions from the manufacture and use of its products by 30% by 2020 is a tough one. To tackle it Tesco is looking to work much more closely with suppli-ers. Tesco says that the biggest impact it can have on spreading the low-carbon message is through working

with the shoppers who use its stores. It has set up greener living, a website to guide consum-ers, which receives some 40,000 hits a week. Research carried out by Tesco in February 2010, showed that 37% of people visiting the site had subsequently changed their behaviour, while 27% said they had bought a green product as a result of their visit. More importantly, perhaps, Tesco has carbon foot-printed 1,000 of its own brand products and put carbon labels on half of those, to help customers make better choices. Green clubcard points are also available on cer-tain products, including energy saving light bulbs and 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 trans-formed 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 con-tinuing 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 globali-zation, deception, and crime in the food indus-try from ancient times to the present – but it’s also an inspiring account of the artisanal pro-ducers, 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 arti-cle, 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 Mediter-ranean, it was analogous to petroleum in to-day’s world, literally shaping the economic, military and social history of the world. The third theme is the provincialism that sur-rounds 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 offer-ing 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.