The Australian state of Victoria is investing in a programme to identify new opportunities for its food and agriculture industries. As part of this initiative the government conducted extensive research to identify which attributes of a food product are most important to consumers, as Kate Barker found out.
Between 2003 and 2007, the government of the Australian state of Victoria is investing A$50m (US$39.4m) in a science-based programme called Our Rural Landscape (ORL), designed to identify new solutions and opportunities for the state’s agriculture and food industries. A key part of the programme is to develop new initiatives to improve Victoria’s access to international markets. The state’s Department of Primary Industries conducted extensive research in some of its main food export markets in order to help anticipate future trends and consumer demands and therefore assist its food producers and exporters to gain an advantage in increasingly competitive global markets.
As income levels rise and education levels improve, consumers around the world are becoming interested in more than just the price and quality of the food they eat. Indeed, some consumers are now willing to pay a premium for food with a special nutritional or health benefit. In addition, some consumers are also choosing food based on how it was produced, including the environmental and ethical impact of production. Victoria’s Department of Primary Industries designed and researched a report that analyses preferences for food products with “credence” attributes, specifically food safety, clean food, green food, animal welfare and ethical food production. The report also determines the relative importance of the five nominated credence attributes and evaluates their importance in relation to non-credence attributes, such as price and quality.
“Consumers are becoming increasingly discerning when making purchasing decisions, and Victoria’s ability to demonstrate the integrity of food products will be vital to maintain consumer confidence in priority export markets,” the report says.
Between February and June 2004, the DPI interviewed 280 food industry stakeholders, including retailers, wholesalers, foodservice managers, importers, distributors, and representatives of government, industry bodies and non-government organisations, in 21 of Victoria’s major food markets, including France, Japan, the UK and the US.
The research found, perhaps unsurprisingly, that price, quality and food safety were the most important factors for consumers, with each factor ranked as the most important by 18-22% of respondents. In fourth place, 8% of respondents felt taste/flavour was the most important attribute of a food product for consumers, while 6% thought freshness was most important, and 3% thought the appearance/packaging was most important. Health/nutrition, brand/image, and clean/chemical free were each considered most important by just 1-2% of respondents.
Food safety tops the list
Of the five specified credence factors – food safety, clean food, green food, animal welfare and ethical food production – food safety was ranked as being of high or very high importance to their organisation by 95% of respondents. It is not just consumers that food safety is important to, as one Japanese wholesaler observed: “It has taken a long time to build our reputation for reliability with our customers and just one accident would cause us to lose everything, especially if consumers are harmed.”
Clean food was ranked second in importance among the specified credence factors, with 90% of respondents rating clean food as being of high or very high importance to their organisation. However, just 63% of respondents said clean food was of high or very high importance to consumers. The survey also found that there was regional variation in the definition of clean food – some respondents thought it should include Halal production methods, while others thought clean food should also be free of genetically modified organisms (GMOs).
Ethics was ranked fairly high in importance to organisations, but was considered less important to consumers. While 82% of respondents rated ethics as being of high or very high importance to their organisation, just 31% considered ethics to be of high or very high importance to consumers. Another finding was that ethics included many of the other credence factors, as a German government representative pointed out: “This issue covers a little of everything. It depends on the producer [and on] the way people, animals and the environment are treated. It depends on personal values.”
Paying a premium for ethical foods
The researchers found that the importance of ethics varied according to what aspect was mentioned. The substantiation of claims made on product labels was considered to be of higher importance than issues such as workers’ rights, corporate responsibility and local sourcing, because it is an issue that impacts on the consumer directly.
Green food was ranked relatively low in importance, with just 50% of respondents rating it as being of high or very high importance to their organisation, and just 19% rating it as being of high or very high importance to consumers. Many respondents cited low consumer awareness and lack of consumer interest, and some said they believed consumers were unwilling to pay a higher price for green food products, reflecting the overall finding that higher importance is attached to factors that impact directly on consumers.
“Consumers claim to want the choice, but the category has been disappointing, leading to oversupply and price pressures for high cost producers. Price always seems to focus the Dutch minds,” said one global retailer based in the Netherlands.
There was also some variation in opinions about what exactly constitutes green food, with several respondents seeing it as synonymous with organic production. Of issues associated with green food, organic production was seen as the most important to consumers, while impact on the environment, ecosystem health, bio-diversity and environmental management practices were rated relatively low in importance.
Gap between theory and practice
Animal welfare was another low-rated credence factor, with 43% of respondents rating it as being of high or very high importance to organisations, and just 15% considering it to be of high or very high importance to consumers. Again, respondents pointed to low consumer awareness, lack of consumer interest and an unwillingness to pay a premium for “animal friendly” products. Many respondents also said there was a gap between what consumers say and what they do when it comes to purchasing behaviour related to animal welfare issues.
“This is a complex issue – it is of low importance to consumers in terms of translation into action, but high in terms of a discussion topic. A gap exists between theory and practice,” said a representative of a non-government organisation in India.
However, the importance of animal welfare could be raised if there was a perceived direct impact on the consumer, for example where handling or feeding regimes affect product quality or food safety, as an airline catering supplier in Singapore illustrated: “Animal welfare is important only in that it contributes to the quality of the product. The way the animal is treated and fed is crucial to the quality of the end product.”
Overall, respondents identified that consumers are more concerned about factors that affect them directly, such as food safety. Although consumers are considered to be generally less concerned about issues such as animal welfare and environmental management practices, these issues are not insignificant as they assume much greater importance when they have the potential to affect food quality or when public concern is heightened by specific interest groups or media reports.
According to Bob Cameron, Victoria’s minister for agriculture, the government’s aim in carrying out such research was to develop new approaches to improve Victoria’s access to international markets. It will be interesting to see how this information is used, and how it influences future product development.
To view the report, “Beyond Price & Quality”, click here.