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• The Role of GI Products in the Hungarian Food Discounters

  3-18

  Lili Jantyik

  Áron Török

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  152

  More than 25 years ago, the European Union (EU) has established a sui generis system of geographical indications (GIs) for identifying the products which quality, reputation or other characteristics are linked to their geographical origin. By the end of 2018 the official register of the European Commission (the DOOR database) included 1448 registered food products with GI label, but their number is continuously increasing. For several reasons, we examined the discounters operating in Hungary in order to estimate the market size and price premium of GI foods in Hungary. Firstly, discounters’ share in the Hungarian food retail sector is continuously growing and reaching the majority of the average Hungarian consumers. Secondly, their typical feature is that their supplies are almost constant and limited, discounters target the price sensitive consumers, so the minimum level of price premium can be defined here. In this study, we would like to estimate from below both the market size of Hungarian GI products and the price premium of GI products compared to their direct substitute products. To gather real life data, we have gone mystery shopping for a year every month (January-December 2018) to an Aldi, Lidl and Penny Market retail shop located in Budapest. We collected data of available GI products and their closest substitute products which were available in the shop and then we analysed the dataset consist of several hundreds of observations. Our results show that the number of GI products available in the Hungarian discounters is very limited, however, their supply is quite permanent. The majority of GI foods available in Hungarian discounters are Italian and the average price premium was around 43% with remarkable differences. Our results show that currently GI food products have limited importance in the Hungarian food market as they are rarely available. On the other hand, a real price premium for GI products exists in the Hungarian market and an even higher price premium might be expected in less low-price oriented food retailers.

  JEL Classification: M31, M37, O13, O34, Q13