Competitiveness and Geographical Indications: the case of fruit spirits in Central and Eastern European countries

In 2004 and 2007 twelve countries joined the European Union (EU), bringing about significant changes in the field of European agriculture. One of the major changes was the transformation of the agri-food trade of these countries. This paper analyses the effects of EU enlargement on the competitiveness of fruit spirits in six Central and Eastern European countries (CEECs), especially regarding geographical indications, by using the theory of revealed comparative advantages. Although the majority of the studied CEEC fruit spirits was both competitive and had a comparative advantage in the EU-15 beverages market in the period 2001-2011, during this time the competitiveness in terms of quality and price of fruit spirits in the region declined. The results indicate that these countries are losing their market positions in their traditional fruit spirit sector in the EU-15 beverages market in spite of the fact that the majority of these products have a geographical indication. These changes are in line with the overall trend of an increasing trade deficit in the overall beverages, spirits and vinegar market of the six CEECs with the EU-15 after 2003. By contrast, the well-known grappa of Italy is shown to be competitive in terms of both price and quality during this period. It is clear that such products with geographical indications can be competitive in European markets.