House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Supplementary memorandum submitted by the Institute of Grocery Distribution (IGD) (A64(a))

CONSUMER RESEARCH AND INTERNATIONAL BENCHMARKING

INTERNATIONAL HORTICULTURAL COMPETITIVENESS

The IGD study was conducted in 2000. It identified a total of 180 factors influencing competitiveness and then polled 200 experts across 17 countries for their views. These included the Netherlands, Spain, France, Eastern Europe, the Middle East, Chile, USA and Kenya. Four surveys were completed, for field vegetables, protected crops, fruit and ornamentals.

Although the verdict for the UK was not completely negative, it did highlight a large number of areas where we need to improve to reach world class standards.

UK	Greatest Strengths	Greatest Weaknesses
Field veg	Many efficient large-scale farms World class arable management Quality and safety control	Benchmarking of costs and exchange of best practice Recognised brands Labour availability
Protected	Integrated supply chain Category management skills Added-value products	Recognised brands Labour availability Established export markets
Fruit	Quality and safety control Category management skills Well enforced regulations	Availabilty of information Scale Labour availability

Three common themes stood out as priority areas:

— Overcoming staff and labour shortages at all levels of the organisation.

— Establishing better sources of reliable information and exchanging best practice.

— Developing stronger brands, especially for the export market.

INTERNATIONAL LIVESTOCK COMPETITIVENESS

The IGD study was conducted in 1999. It identified a total of 160 factors influencing competitiveness and then polled 275 experts across 16 countries for their views. These included the Netherlands, Denmark, France, USA, Argentina, New Zealand, Hungary and China. Five surveys were completed, for beef, dairy, lamb, pig meat and poultry.

Although the verdict for the UK was not entirely negative, it did highlight an overall competitiveness gap and a large number of areas where we must improve to reach world class standards.

UK	Greatest Strengths	Greatest Weaknesses
Dairy	Produced for specific supply chains	Extension services Recruitment Use of science International image
Beef	Animal welfare standards Farm management skills Strong and enforced legislation	Cost of winter housing Cost of feed Export barriers Disease status Lack of investment
Lamb	Labour availability Strong supply base	Lack of market focus Inconsistent quality Lack of automation Lack of benchmarking Complex supply chain
Pig Meat	Well enforced regulations	Production costs Extension services Management skills and training Confidence in the future
Poultry	Quality and safety control Professionalism	Feed costs Export links Branding Planning regulations

Several common themes stood out as priority areas:

— Overcoming staff and labour shortages at all levels of the organisation.

— The perceived low importance of agriculture as a national strategic priority.

— The lack of investment in modern facilities.

— The poor application of science and technology.

— The relatively high cost of animal feed.

— The lack of a poor international image, hindering exports.

CONSUMER CONCERNS: LEAGUE TABLE

The following table summarises the areas within which consumers would like more information about meat and fruit and vegetables. This does not directly measure the level of their concerns, but reflects the demand for information, and thus the areas of food production that are more closely linked with their purchase decision.

	Meat	%	Fruit and Vegetables	%
1.	Growth promoters	39	Presence of chemical residues (eg pesticides and wax coatings)	55
2.	Animal feed	38	Has the product been "sprayed" and why?	51
3.	Live animal transportation	37	Storage time (When was it picked?)	32
4.	Hygiene standards	34	"Checks" Who checks and how? (Demand for independent, random checks)	28
5.	Animal living conditions	30	Genetic Modification (Has it been genetically modified?)	27
6.	Has fresh meat been frozen?	26	Country of origin (general interest rather than concern)	23
7.	Existence of food safety legislation	25	Existence of food safety legislation	21
8.	Animal slaughter	24	Cost of organic	19
9.	Date of slaughter (linked to "freshness" of meat)	23	Farm gate price	14
10.	"Checks": Who checks and how? (Demand for independent, random checks)	20	What does organic mean	8
11.	Country of origin	20
12.	Accuracy of product label information	19
13.	Farm gate price	10
14.	Animal rearing standards outside UK	9
15.	What does free range mean?	9
16.	What does organic mean?	9
Source: IGD Consumer Watch, December 2001. Notes:

— Sample size of 1,000 respondents.

— Respondents asked to pick four main areas (meat) and three main areas (fruit and vegetables) on which they wanted more information.

— Respondents selected from prompted list, but the list was compiled from unprompted responses gathered through eight focus groups.

Key Points

1. There was greater demand for information about meat than about fruit and vegetables. This suggests that consumers have more concerns about meat production than fruit and vegetable production.

2. The over-riding conclusion was that some concerns might be alleviated if consumers had a better understanding of the processes involved in food production, correcting some of the misunderstandings that exist.

3. Many consumers thought that a better understanding of the legislation and other standards in place to ensure that set standards of food production are met, and the procedures used to check and enforce these, would be as much additional information as they required.

4. Although GM comes relatively low in the list for fruit and vegetables and does not appear for meat, this does not necessarily mean that it is not a concern. Rather this should be interpreted to mean that consumers are satisfied with the level of information and approach adopted by industry and other associated organisations to GM. However, if there was an increase in GM products, then the level of concern may rise.

SAFETY CONCERNS

Latest FSA Research

The most recent research into consumer attitudes to food safety was undertaken by the Food Standards Agency and published in February 2002. This found that:

— Consumers were most concerned about the safety of meat, with 73 per cent of consumers expressing concern.

— In 2001 (compared to 2000) there were significant drops in the level of concern over the safety of eggs (from 26 per cent in 2000 to 21 per cent in 2001), dairy products (30 per cent in 2000 to 25 per cent in 2001) and foods with genetically modified ingredients (27 per cent in 2000 to 21 per cent in 2001).

— As in 2000, food poisoning (59 per cent) and BSE (55 per cent) remained the major issues of concern (IGD qualitative research does not support this level of food safety concern about BSE).

— 44 per cent of those questioned thought that food safety standards had improved in the last year.

IGD Research

Generally IGD research shows that although consumers may express many individual concerns about food safety, they actually remain relatively confident in the general standards of food, particularly in food sold under major brand names (supermarket or manufacturer brands).

— 14 per cent of consumers say they are very confident in the safety of food produced in the UK.

— 53 per cent of consumers say they are relatively confident in the safety of food produced in the UK.

— 20 per cent of consumers say they are unsure about the safety of food produced in the UK.

— 12 per cent of consumers say they are not confident in the safety of food produced in the UK.

IGD: Winning The Mature Vote: October 2001.

This confidence is reflected in the fact that food safety standards are not a major determinant of choice of outlet.

— Food safety comes seventh out of a choice of nine for reasons behind store choice.

— Food safety is more likely to affect store choice, (although still 7/9) when buying meat, than when buying fruit and vegetables or other groceries.

IGD: Winning the Mature Vote: October 2001.

ENVIRONMENTAL CONCERNS

Summary

Findings from IGD qualitative research suggests that:

— Consumers rarely mention environmental concerns when discussing food production.

— The most common link between the environment and food production is the use of pesticides. Issues such as biodiversity, appearance of the countryside or sewage sludge are rarely mentioned without prompting.

— As such consumers' concerns about the environment do not tend to translate into their food purchasing decision.

— No consumers made a direct link between local food and environmental benefits. The main link was through reduced transportation and an assumption that "less conventional" farming practices were used. However the consumer benefits of these such as greater freshness and improved taste or quality, tended to be more prominent than environmental benefits amongst the consumers' responses.

Land Management

In December 2001, IGD sought consumers' views on farmers being "rewarded" for adopting "good" land management practices.

— In theory the consumers were in favour of this.

— Those consumers that were less positive about such an approach thought that farmers should be doing this as a matter of good practice without the need for additional incentives. They were also uncertain how such practices might be measured.

— Few consumers were in favour of land management approaches being reflected in the food price. Generally, this was because they wanted more time to think about it. However, given that most consumers remain uncertain about the justification for the price of organic food, this would probably be a difficult message to communicate.

Pesticides/Organic Food

The use of pesticides is the most common example for most consumers of how food production can impact on the environment. However their concern about pesticides is usually as equally focused on the food safety as the environmental implications.

When asked to list the three key benefits to organic food:

— 36 per cent of consumers asked thought it was healthier to eat.

— 36 per cent of consumers asked thought it was safer to eat.

— 34 per cent through the absence of pesticides (not technically correct) meant it offered environmental benefits.

— Only 7 per cent thought that there may be other environmental benefits.

ORGANIC FOOD

Continuous tracking surveys of consumers' actual purchases show that there has been year-on-year growth in the number of households who buy organic products and on the amount they spend on organic products.

Over 65 per cent of all households now purchase organic food, but 4 per cent of households account for over 50 per cent of the money spent. These households are typically in the AB social class, without children and aged between 45-64 years old. But this profile is becoming more like the average for the UK as a whole.

IGD surveys of consumers indicate that consumers perceive the main advantages of organic food to be:

— Healthier.

— Safer to eat.

— Bring environmental benefits—no pesticides.

IGD surveys of consumers indicate the following reasons for not buying organic food:

— Price.

— Shorter shelf life.

IGD expects the market for organic food to continue to increase. The table shows the main drivers and inhibitors identified in a recent IGD survey of organic businesses.

Drivers	% Respondents	Inhibitors	% Respondents
Food Scares	78	Price	89
Health Concerns	73	Availability	73
Avoidance of GM	58	Range	62

Source: IGD

Main inhibitors are being addressed:

Price:

— Increased Government support and payments will help increase supply.

— Research into organic farming systems will help improve productivity.

— Entry of established food manufacturers will increase efficiency.

— Retailing is very competitive.

Availability:

— All major multiples have increased the number of organic lines which they stock and the range of organic lines which are now available in all food categories including, most recently, ready meals.

LOCAL SOURCING

Local Sourcing has become an increasingly topical issue, driven largely by recent crises within the UK farming industry, pressure to reduce the number of food miles, and ever changing consumer demands.

IGD conducted primary consumer research on the topic of Local Food in February 2002.

Key Message

Consumers are interested in purchasing local foods but they are unlikely to compromise on quality, appearance, cost or product availability.

Ultimately, local foods need to compete in the current market place with the range of products already on offer.

Consumers recognise that local goods offer an additional attractive quality by enabling them to support the local community, but this would always be balanced against the extent to which the product met their needs in all other areas.

What "local" means to consumers

— "Foods that are grown or produced close to home".

— No food could be described as local or regional without meeting this requirement.

— This was above and beyond other considerations such as type of food, production method, company, ingredients or recipe.

— There was a closer association with local food and fresh produce rather than mass-produced processed foods.

— There was also a close association between local food, "natural" farming and small suppliers.

Current habits

— 30 per cent claimed to have bought foods direct from the grower (eg farmers markets or farm shop). (Ranging from 2 per cent that bought very often to 11 per cent that did not buy very often.)

— 70 per cent had never bought foods direct from the grower.

Consumer interest

— 59 per cent said they were interested in buying these products.

— 17 per cent were neither interested nor uninterested.

— 24 per cent were not very interested.

The consumer

There were no significant demographic predictors for propensity to buy local, but there was a slight trend towards:

— Women, older age groups, Wales and Midlands and people who already buy direct from growers.

Perceived product attributes

Respondents were asked to pick three descriptions from a given list, which they believed were best associated with the term local food. The three main descriptors to emerge were:

— 70 per cent of respondents listed "freshness" as one of the three key attributes of local foods.

— 50 per cent of respondents listed "good quality" as one of the three key attributes of local foods.

— 29 per cent of respondents listed "supporting the local community" as one of the three key attributes of local foods.

Generally consumers appeared to have a more positive than negative expectation of local foods.

Price

IGD asked the main shoppers in the household to think about any item of food that normally costs �1 to buy—and were asked how much they would expect to pay if it had been produced locally and to the same standards as normal.

— 61 per cent of shoppers would expect to pay more than normal (> than �1).

— 10 per cent of shoppers would expect to pay the same as normal (= �1).

— 29 per cent of shoppers would expect to pay less than normal (< than a �1).

There was a strong link between expectation of price and interest in buying local; this suggests that lack of interest is partly attributable to an expectation that local foods will be more expensive. Those who were not very interested expected to pay �1.07, whereas those who were extremely interested expected to pay �0.92.

ASSURANCE SCHEMES

Key Messages

IGD's latest research on food production (December 2001) showed that:

— Few people appear to consider food production methods at the point of purchase and if they do, these are more likely to act as a tie-breaker rather than main driver of choice.

— Products marked on the basis of food production techniques (ie through assurance schemes) will benefit if they are able to compete with other products on price, taste, shelf life, appearance and healthy eating aspects.

— There was greater desire for general reassurance that controls were in place and that these were enforced, than for specific information about the actual procedures used. This points to a good opportunity for assurance schemes.

— Consumers said that they wanted on-pack labels that guarantee that certain standards have been followed. However, there appeared to be low consumer awareness of assurance schemes (only measured qualitatively) and in particular of the messages that they are communicating. The three most commonly mentioned schemes were:

— Lion Standard.

— Quality standard for British Meat (MLC).

— British Farm Standard.

— Awareness of the BFS mark appears to have grown in the last year and is increasingly referred to by consumers, although there are still many who are unsure whether this is simply a country of origin mark.

Food Standard Agency Research

The FSA is undertaking a wide-ranging review of food assurance schemes. The FSA recognises that assurance schemes play a valuable role in raising standards but has concerns that they may be requiring additional resources, and possibly misleading consumers, without always bringing clear consumer benefits. They will investigate whether the schemes are impacting adversely on price or consumer choice or information.

The review, which will be UK-wide, comes after research by the FSA revealed low recognition and understanding by consumers of the schemes and confusion over the uses of logos and their meaning.

The FSA believes that assurance schemes can help to build consumer confidence if they are based on the following principles:

— Transparency.

— Higher food safety standards.

— Independent and regular verification.

— Consistent implementation.

— Clear benefits for the consumer.

This reflects the findings of IGD research (see above).

Institute of Grocery Distribution

12 April 2002