Czech the food label

Business New Europe

Slow food, go local, agri-chefs – food trends are all about eating from your own backyard. In the Czech Republic, the movement is no different, with 47% of Czechs preferring domestic goods to imported ones, according to a 2011 survey by research group MML TGI. But with heavy supermarket competition, recent media reports of past “use by date” food being relabelled and rising food costs, Czech consumers are having to keep their eyes open to feed their stomachs.

The Czech Ministry of Agriculture commissioned a survey in late 2011 specifically to gauge how safe Czechs believe their food supply is. “The research objective was to determine how important for the consumer is food quality and safety, how consumer shopping habits were changing and how much they understood food labelling,” says Jindrich Fialka, director of the Agriculture Ministry’s food production and legislation department.

The survey found about two-fifths of the population look at information about a food’s origin. Some 73% of the respondents believe Czech food is safe, compared with 43% for imported food. When it comes to food quality, 71% believe Czech food is good, while 43% believe imported food is not high quality. Compared with a similar survey in 2005, foreign food has lost credibility by as much as 27%. For Fialka however, those results aren’t satisfying. “The main change in the survey results was the trust in imported foods, but it stayed the same for Czech products,” he says. “However, people’s interest in knowing more information about the food they eat has increased and the survey confirms Czechs prefer domestic products.”

Ales Kotera, executive director of Cesky Grunt, a line of small shops selling Czech-made food products from small and medium-sized farmers and producers, says Czech producers are fully capable of producing high quality products. “I can see great potential in their abilities, in their craftsmanship and corresponding skills for presenting and selling their products.”

Cesky Grunt opened in 2010 and already has nine shops throughout the country, with plans for additional growth through franchising. The shops sell exclusively made Czech smoked meat products, other meat, dairy products, bakery, fruits, vegetables, ciders, wines and more. While declining to give specific numbers, Kotera said Cesky Grunt has enjoyed double-digit growth since opening, despite overall food sales in the Czech Republic remaining constant, or in some cases even dropping. “A key element is our emphasis on high-quality food products prepared from the best ingredients for a reasonable price,” Kotera says. “This trend is supported by recent faulty management by some large foreign suppliers, however, a growing interest in our products is a long-term phenomena.”

He adds that patriotism plays a bit of a role as well. “Why buy a foreign product when we can buy ours as good or better?” asks Leo Koleckar, director of Cesky vyrobek, which grants use of the “Cesky vyrobek” logo on products, both food and non-food, that are guaranteed Czech made, meet certain quality and environmental standards, as well as adhere to Czech law regarding taxes, social and health insurance, among other requirements.

The company was formed in 2006 to better inform shoppers of where the food they are buying comes from. “We found there are customers who care about nothing but the price,” he says. “However, there are people who pay attention to other characteristics and in recent years, customers have begun to focus on buying Czech things.”

Cesky vyrobek has been conducting consumer surveys since 2006 and has found that the number of people who prefer Czech products has remained relatively stable or grew slightly, between 42% and 45%. Carrying the Cesky vyrobek logo means the product goes beyond merely being made in Czech. “The product must contain at least 50% of raw materials or components originating in the Czech Republic, or if there are products whose raw materials or components cannot be obtained in the Czech Republic, it is necessary to guarantee 100% Czech labour,” Koleckar says.

He explains that it’s the brand’s requirement of Czech labour that helps puts money back into the local economy. “Czech producers contribute considerable resources that are put back into the economy to finance health care for example, education, police and the like through employees’ tax, taxation of the companies, social and health benefits to employees, the companies’ social and health contributions plus the wages of employees.”

No will to grow?

Overall, Czech production of food, beverages and tobacco accounted for 2.65% of GDP in 2010, a slight decrease from 2.87% in 2009, according to the Agriculture Ministry’s Fialka. “Foreign trade in food products has a long-term negative balance,” he says. “The volume of turnover from the sale of Czech products and services regarding foodstuffs was CZK213bn in 2010, while the import of food products reached CZK92bn.”

He says the country has the capacity to produce more, but it is up to business. “We have the capacity to increase our numbers, but it seems low compared to other sectors like the car or steel industry,” he says. “Our beer sector is the most important, but production has decreased for the past two to three years. Non-alcoholic beverages have the most potential for growth, especially milk products. There’s a lot of innovation in meat, milk and beverage production.”

Fialka gives the example that less than 40% of the fruit and vegetables consumed in the Czech Republic are domestic. “About 75% of the retail sector is in about 10 retail chains, and their policy is often to import,” he says. “On the other hand, producers aren’t always able to meet stores expectations regarding deliveries, etc.”

Countering this problem has been the explosion in farmers’ markets in Prague since the first opened in 2010.

There’s not a lot the Agriculture Ministry can do to promote Czech products further, due to EU law. They support the Klasa brand, which is actually an EU-wide mark and is more a sign of quality than origin. Producers carrying the mark believe association with the brand is good for sales. A survey of Klasa mark holders by the Agriculture Ministry in January 2012 found that 72% confirm the brand has an impact on increasing sales of their products and 83% of them would like to extend the brand to their other products. A different survey, carried out by STEM/MARK found that when it comes to consumers, 48% try to choose food that carries the Klasa mark and more than half of the respondents are willing to pay more for food that is labelled Klasa. “The survey also showed that when it comes to food choice, freshness and quality is most important, followed by the price of the product,” Fialka says. “A big advantage for local products is their freshness.”

One of the problems that local producers face is cheap competition from abroad. “The difference in price is determined by the difference in quality and by the amount of subsidies provided by different countries,” Kotera of Cesky Grunt says. “We are attempting to support local producers of high-quality products by expanding the market for their goods.”

Fialka says while food laws are harmonized across the EU, the microeconomic conditions vary from country to country, “and we can’t control VAT, social taxes, etc.”

As for the future, Kotera is optimistic. “We believe there is a sufficient space on the Czech market for high quality products, therefore, despite external influences we anticipate dynamic and continuous growth for our company,” he says. “I believe positive trends will follow throughout this entire line of business.”