Zdeněk Juračka President, Czech Confederation of Commerce & Tourism

1. Conference on the Future of the Quality Policy ofAgricultural Products and Foodstuffs (QPC)Prague, 12-13 March 2009CZECH PRESIDENCYHigh-level conference

2. Conference on the Future of the Quality Policy ofAgricultural Products and Foodstuffs (QPC)Prague, 12-13 March 2009 Zdeněk Juračka President, Czech Confederation of Commerce & Tourism Chairman, Czech & Moravian Union of Consumer Cooperatives

3. Workshop A Demands on doing business and retail standards Sub-topic: Retail standards Basic issues • Definition of quality • Quality and its development in the CR • Quality of food retail chains • retailer’s point of view • manufacturer’s point of view • Relationship between quality and price

4. Definition of quality

5. Food quality evaluation as set by a standard • By quality we mean a set of measurable functional criteria for a product. • For many foodstuffs such as drinks or meat products the quality is set by a standard. • Quality evaluation of products manufactured according to a standard is based on the assumption that it meets at least the basic criteria, i.e. that it achievesstandard quality. • If a product surpasses the criteria set by the standard, it achievessuperiorquality. • If the parameters of a product do not correspond to the standard, it can be said to be ofinferior quality.

6. Foodstuffs difficult to evaluate for quality • For products where it is difficult to establish objective quality criteria, an EU quality policy is welcome that sets as its goal support for diversity of agricultural production, protection of designations against misuse and imitation, and helping consumers to understand the special nature of products, particularly through protection of geographical indications and designations of origin. • In this regard labelling information has particular importance for consumers, including added brochures containing not only the ingredients and production method but also information on its exceptionality and protection within the EU.

7. Quality and its development in CR

8. Czech retail after 1989 • Euphoria from the sudden “full shelves” of shops. • Consumer then starts calling for lower prices; does not pay much attention to quality of goods. Manufacturers and retailers adapt. • Later, influenced by increasing standards of living and being better informed about what is healthy and also good, consumers take a greater interest in goods with better functional parameters. • The behaviour of consumers was also positively affected by legislation, which gradually tightened requirements for production, packaging, labelling, transport, storage and sale of food products, particularly in connection with the accession of the CR to the EU.

10. Influence of price on selection of grocery store • I choose where I shop based primarily on price 2000 2002 2004 2006 2008 source: Shopping Monitor 2009 (INCOMA Research)

11. Quality from retailer’s point of view

12. Czech shops …as most of today’s population will never know them

13. National Quality Policy and retail The National Quality Policy affects the field of retail primarily in these areas: • support for business • support for certification of systems • projects for promoting quality • the Czech National Quality Award programme • the Czech Quality programme • consumer protection • legislation, laws • information for the public (information centre, qualitymonth, conferences and seminars, media support)

14. Role of the SOCR in the field of quality • Quality satisfaction of consumer needs, aimed at the prosperity of businesspeople in retail as well as the tourism and food service industry. • Harmonisation of the conditions for doing business in commerce and tourism in the CR and EU, and of the conditions for protecting consumer interests according to EU standards (while avoiding excessive restriction). • Support for all regular forms and goals of doing business in commerce and tourism with a view to the coexistence of small and medium enterprises with large multi-national corporations.

15. Food safety in Czech shops • regular food retailers in the CR meet the strictest hygienic standards in the EU • transition to European standards following accession of CR to EU without conflict (Czechoslovakia was already the showcase of Europe during the First Republic) • ensuring the quality and safety of foodstuffs is a priority task for the SOCR, which • is a member of the Ministry of Agriculture’s coordination group for food safety, • organises regular round tables with representatives of supervisory bodies, • helps create and publish the HACCP guides for retail and tourism.

16. Is quality the key to success for a retailer? • The retailer knows their end consumer best and adapts to their wishes and expectations. • The retailer helps create and influence quality, and offers it to the customer; has an interest in informing the customer about the products they are selling (supports choice of quality) and defends the consumer’s interests. • Customer perceives quality; influences it by their conduct • Retailer can primarily find out about low-quality products after the fact, on the basis of customer complaints, and can then not order those products. • Disfavour among customers more effective than fines. Conclusion: Yes, quality is the key to retail success!

17. Quality from manufacturer’s point of view

18. Quality from the point of view of primary agricultural production • relatively low number of large agricultural farms • large and homogenous batches • clear supervision • qualified labour force • superior standards • well organised system of checks • a basic condition for safety and quality is complex information about the product and being able to trace it back to the manufacturer. • Czech agriculture and the Czech processing industry is able to guarantee high food quality and safety without problems.

19. Quality from the point of view of the manufacturer • Do retailers understand quality the same way we do? • Why does a poor quality product receive a lower price and more space in flyers than a high quality product? • From the point of view of the manufacturer high quality products should have the same space set aside in shops as for example organic food. • Discount supermarkets undercut quality and price on the market.

20. Relationship between quality & price

21. Can cheap food products be quality? • A cheap product can be quality, but it is practically out of the question that it will provide superior quality. • Tests from renowned laboratories as well as our own experiences show however that more expensive products need not necessarily be of better quality, taste better, or be healthier. • If the relation between a product’s quality and price is maintained, the product will always find its consumers.

22. Is food labelling a part of quality? • It is very difficult for consumers to assess all the data given on a product. The dimensions of some products do not allow them to hold all the necessary information. • According to the European Food Information Council only 18 % of Europeans read ingredient information. • Careful monitoring of what foodstuffs are made from would however wake many customers up from their lethargy, according to Ivana Picková from the Consumers Defence Association. • see for example the recent findings of the consumers’ association TEST that children’s cereals are not the healthy breakfast they claim to be due to high sugar content. source: Týden 9/2009

23. Traffic light labelling supports retail graphic: Food Standards Agency (Traffic light labelling )

24. Conclusion • How will the world’s ongoing economic problems affect interest in higher quality but more expensive products? • If a customer becomes convinced about the quality of a project it will be hard to give it up.

25. From Retail Summit 2009 On the issue of the quality of products in retail networks the conference stated an interest in: • renewing negotiations with the Ministry of Agricultureon reviving the KLASA project, • initiating cooperation with supervisory bodies leadingto adhering to the declared product parameters andquality control. The key interest of Czech commerce is to put quality ahead of other attributes.

26. Thank you for your attention