Memorandum submitted by the British Retail
Consortium
The British Retail Consortium (BRC) represents
the whole range of retailers including large multiples, department
stores and independent shops, selling a wide selection of products
through centre of town, out of town, rural and virtual stores.
In June 2003, the retail sector employed some 2.7 million people
(11% of the workforce) and retail sales were £230 billion
in 2002. Grocery retailing is significant in macro economic terms
and was valued in 2002 at £111.3 billion.
1. The British Retail Consortium (BRC) welcomes
the Environment Food and Rural Affairs Select Committee inquiry
into issues related to food information, which we understand will
examine the ways in which messages about food are communicated
to consumers by food producers and retailers, and by Government
and others.
2. This paper outlines how food retailers
provide information on food to their customers and considers how
consumers needs for information are best met.
EXECUTIVE SUMMARY
— The modern British food economy is
one of the most competitive in the world, with consumers having
a greater variety of food choices and at all price points.
— Eating out now accounts for around
one-third of all our spending on food and drink and is continuing
to grow.
— The British Retail Consortium (BRC)
supports the honest and open provision of information, including
labelling to provide customers with the meaningful and clear information
they are seeking.
— The food chain differentiates foodstuffs
across a wide variety of product characteristics including taste,
nutritional content, cultivation techniques and origin.
— Characteristics that are not easily
distinguishable involve "credence characteristics."
These are attributes that consumers cannot discern even after
consumption of the product, and can be split into content attributes
and process attributes.
— The development of a product with
a credence characteristic requires there to be a concise system
of traceability in place to monitor that specific characteristic.
It is not enough to rely on a system that has been designed to
ensure food safety.
— Traceability systems are used to
separate and identify foods with different characteristics. There
are two primary approaches to separating characteristics: Segregation
systems and Identity Preservation (IP) systems.
— All food marketed in the UK that
is properly processed, stored, and prepared is safe for general
consumption. Labelling is therefore not used as a standard tool
to alert consumers about inherently unsafe foods.
— Retailers believe it is vital that
consumer preferences and how changes to price can influence real
purchases are fully understood and appreciated. This applies as
much to the information consumers' use as to the flavour characteristics.
To ignore consumer requirements, or to think for consumers risks
adding cost, instead of adding value.
— Research in the United States showed
that where consumers were unwilling to meet the costs of additional
labelling on pork, the demand for pork fell by up to 7% and the
prices paid to farmers declined by up to 10%.
— We believe that the current regulations,
properly applied, are sufficient to avoid customers being misled.
Additional compulsory information requirements would undoubtedly
lead to increased packaging and systems costs, if sourcing flexibility
were to be maintained.
— Food retailers have led the way in
providing clear and helpful nutrition information and by labelling
foods well in excess of legal requirements.
— The suggestion that so called "traffic
light" system of nutrition labelling will do nothing to improve
the health of the nation, and may even lead to a less healthy
overall diet. This is because simplistic nutritional profiles
ignore the total nutritional content of particular foods.
INTRODUCTION
3. By way of background it will be useful
for the Committee to consider how the modern British food chain
operates and how food retailers source own-brand food products.
4. It is self-evident that British consumers
have better access to a greater variety of food choices than ever
before. Gone are the days of geographic or seasonal rationing.
With over 60,000 food-retailing businesses and over 35,000 businesses
running restaurants, bars and cafes, the modern British food economy
is one of the most competitive in the world.
5. Eating out, now accounting for around
one-third of all our spending on food and drink, is continuing
to grow. The largest eight multiple food retailers account for
43% of food spending, co-operatives around 4%, and convenience
stores 12%. The remainder covers discounters, specialist shops
and smaller supermarkets. The huge range of food outlets again
underlines the need for policy makers to consider the total food
chain and not focus on specific segments.
6. Retailers will only source own-brand
food products that meet their own specifications and requirements.
These requirements include food safety, due diligence procedures,
ethical trading standards, animal welfare standards, product assurance
and specific procedural matters.
7. Retailers use independent auditors in
addition to their own technical teams to inspect and approve farms
and processors to ensure that their own individual specifications
are met. This means that own brand food products sourced from
either inside or outside the European Union are produced under
equivalent conditions to those required of UK producers.
8. We do caution that the food chains own
auditing systems should not be seen as a way to check on the compliance
with all legislation by all parts of the food chain. This must
be the responsibility of government.
INFORMATION PROVISION
9. The BRC's members support the provision
of honest and open labelling to afford customers with the meaningful
and clear information they are seeking. Part of the food retail
sector's success can be attributed to its willingness to respond
quickly and accurately to changing consumer demands. Britain's
food retailers are constantly seeking to meet these changing needs
by developing own-brand products across a range of prices and
across a variety of characteristics, including taste, quality,
visual appeal and convenience.
10. Successful New Product Development (NPD)
requires the retailer to recognise that consumers want different
things. While the majority might be interested in price, taste
and quality[30],
there are others who do not share this view. The growth of the
organic sector, the introduction of "local foods", and
the development of healthy eating alternatives all provide testimony
to the wide range of products available today in food retailers
and to the flexibility of the market to serve the needs of all
customers. Given that NPD involves the effective capture of characteristics,
it is explicitly recognised that the process will involve communication
of those characteristics. In some cases the characteristics sought
by shoppers may be will be nutritional, production-related or
ethical. By engaging in NPD, food retailers are increasing the
choices available to consumers and assisting in the more efficient
allocation of resources within the market economy. Informed choice
is therefore a major business driver across the sector and is
provided in two broad ways—labelling and off-label information:
11. Labelling—Food retailers have
led the way in providing clear and helpful information on food
labels. These often go far in excess of legal requirements and
are introduced to meet the requirements of their customers and
to signpost product characteristics. For example, food retailers'
customer research led them to introduce nutrition labelling in
formats that were of use to real people. This included the Institute
of Grocery Distribution's development of the Guideline Daily Amount
(GDA) concept.
12. Off-Label Information—Food retailers
are expert communicators, in touch with millions of consumers
everyday through point of sale information, in-house magazines,
leaflets and websites. In addition, retailers communicate with
their customers through a variety of non-traditional channels,
which may include roadshows, customer care helplines and educational
packs for schools. Developments in technology may increase the
ability of retailers to provide off-label information, although
there are quite clearly cost implications.
INFORMATION SYSTEMS
13. When information about a particular
characteristic of a food product needs to be transmitted through
the food chain then a system of traceability will need to be established.
In theory information on an unlimited number of product characteristics
can be recorded and passed along the food chain. However, the
greater the number of characteristics that need to be collected
and transmitted the greater the resource required to do the job.
14. In practice, traceability systems are
used to separate and identify foods with different characteristics.
There are two primary approaches to separating characteristics:
(a) A segregation system separates one crop
or batch from another. Though segregation may suggest that specific
foods are kept apart, such systems do not necessarily entail a
high level of precision and do not necessarily require traceability.
(b) An identity preservation (IP) system
identifies the source and characteristic of the product. IP systems
are stricter than segregation systems and require traceability
to guarantee that specific characteristics are maintained.
15. Food retailers have three motives for
establishing traceability systems for their own-brand products:
to differentiate food products with undetectable quality attributes
(eg organic); to facilitate traceback for food safety or quality
reasons; and to improve supply-side management.
CREDENCE CHARACTERISTICS
16. The food chain differentiates foodstuffs
across a wide variety of product characteristics including taste,
nutritional content, cultivation techniques and origin. While
some characteristics are easily distinguishable (eg a red onion),
others differences involve "credence characteristics."
These are attributes that consumers cannot discern even after
consumption of the product, and can be split into content attributes
and process attributes.
17. Content attributes affect the actual
physical properties of a product, although consumers may find
the difference hard to detect. Nutritional fortification (eg folic
acid) would be an example of this.
18. Process attributes do not affect the
final product content, but refer to characteristics of the production
process. These characteristics often refer to issues of concern
to particular groups of consumers, including animal welfare, employment
conditions and environmental stewardship. Specific examples include
organic, free-range and fair trade.
19. The development of a product with a
credence characteristic requires there to be a concise system
of traceability in place to monitor that specific characteristic.
It is not enough to rely on a system that has been designed to
ensure food safety to deliver the transfer of information on whether
a crop has been grown with manure from Angora goats rather than
Jersey cattle. Information must be transferred at each part of
the identity preserved chain and that information must be robust.
20. The robustness of providing credence
information can be ensured in two ways. Companies can establish
a reputation for delivering the information they provide. In the
past, this was often done where a local supplier of meat will
base provenance claims on his reputation. Today the retail sector
typically utilises companies that provide objective validation
of quality attributes. Such services are provided by a wide variety
of entities, including consumer groups, producer organisations,
private companies and international bodies. Governments may also
provide verification services.
FOOD SAFETY
21. UK legislation is quite clear—all
marketed food that is properly processed, stored, and prepared
is safe for general consumption. Labelling is therefore not used
as a standard tool to alert consumers about inherently unsafe
foods.
22. However, traceability systems are used
to help the food chain reduce the time to identify and remove
foodstuffs, which have problems with either safety or quality.
Food suppliers have a strong economic interest to ensure that
such products are isolated and removed before such an item reaches
the consumer. All companies want to avoid the association of their
brands with either safety issues or reduced quality. Coded information
is typically used to identify product batches, with the food chain
using "one-up, one down" systems to trace ingredients
in complex foodstuffs.
23. Some products are manufactured to enhanced
safety standards above and beyond legislative requirements. For
example may retailers require food suppliers for their own-brand
products to be certified to the BRC Global Food Standard, while
others have their own requirements. The British Farm Standard
has integrated the BRC Standard into its requirements. One of
the main drivers behind the creation of such assurance schemes
was the Food Safety Act (1990) which required food retailers to
establish "due diligence" on their supply chains.
ADDING VALUE
24. Retailers believe it is vital that consumer
preferences and how changes to price can influence real purchases
are fully understood and appreciated. This applies as much to
the information consumers' use as to the flavour characteristics.
To ignore consumer requirements, or to think for consumers risks
adding cost, instead of adding value.
25. Extending the EU country of origin labelling
regulations on beef is an interesting case study. At first sight,
an extension of compulsory labelling might seem an attractive
proposition for the British food chain. However, the reality is
somewhat different.
26. Where retailers' customers want to know
country of origin information on beef products then retailers
provide it—voluntarily. Customers are happy and are willing
to pay the premium. This is adding value.
27. Retailers know their customers and therefore
know that most have little interest in seeing the beef labelling
regulations extended. To do so would simply add to the costs faced
by the beef industry through greater bureaucracy. With no beneficial
effect on consumer safety or perceived quality, the end result
is simply added cost devoid of real benefit to anyone in food
chain.
28. The Food Standards Agency found that
price was the number one factor in purchasing decisions for 46%
of the population, taste was the number one priority for 18% and
quality the number one priority for 17%. Country of origin labelling
came near the bottom at 3%.
29. Recent research[31]
in the United States showed that where consumers were unwilling
to meet the costs of additional labelling on pork, the demand
for pork fell by up to 7% and the prices paid to farmers declined
by up to 10%.
30. The extension of compulsory labelling
would also dilute the position of existing beef brands that have
been developed to provide added value to producers. This is because
product differentiation is more difficult to achieve in an inflexible
market where government regulates for marketing initiatives. The
BRC believes such creeping commoditisation would only add costs
to the food chain.
NUTRITION LABELLING
31. British food retailers have long been
committed to playing their part in providing a balanced and varied
diet for their customers. This has involved implementing innovative
strategies designed to overcome the barriers that discourage people
from choosing a healthy diet.
32. Food retailers have led the way in providing
clear and helpful nutrition information and by labelling foods
well in excess of legal requirements. According to FSA research
60% of consumers found information on food labelling easy to understand,
but 20% found some food labels "fairly difficult" to
understand. This suggests that greater emphasis needs to be given
to targeting the remaining population, and improve their awareness
of health and well-being. Currently the law requires labellers
to provide information on pre-packed foods only where a claim
is made. The BRC believes that the EU reviews of nutritional labelling
regulations need to recognise that consumer interests and market
developments have changed.
33. Research[32]
has identified that consumers perceive a number of barriers to
healthy eating. In response, Britain's food retailers have made
significant investments in producing convenient healthy eating
products that meet the needs of consumers. (There are currently
over 4,250 such retailer branded products—with sales exceeding
£1 billion). The development of ranges of healthy eating
products fits into modern lifestyles, with brand identities allowing
healthier options to be easily distinguished from standard options.
34. Healthy option branding has itself acted
as a spur to innovation in this area as the use of brand identity
acts as a "signpost" for consumers; making products
more easily identifiable and therefore facilitating purchases
given many consumers' lack of time. All food retailers' healthy
option brands include specific statements on why the product is
healthier.
35. A recent ICM Survey[33]
found that 50% of consumers considered that "healthy eating"
brands help them find products with lower levels of salt, fat
or sugar.
36. However, the BRC is deeply concerned
that overly prescriptive approaches could give rise to unintended
consequences, including discouraging product innovation by the
food industry. Such outcomes would clearly be undesirable as they
would be detrimental to consumers.
37. For example, we continue to caution
against any artificial segregation of foods into "good"
or "bad". This ignores the overall nutrient profile
of foods, including important micronutrients such as calcium,
iron and vitamin B12. Such wrong thinking has no scientific underpinning
and could lead, for example, to a further fall in iron or calcium
intake if meat or cheese were targeted. Indeed, the Codex draft
guidelines[34]
for use of nutrition and health claims state "food should
not be described as healthy".
38. The majority of food retailers believe
the use of high, medium and low descriptors for fat, sugar and
salt on foods is potentially confusing. Retailers support the
use of labelling to provide informed choice and often go beyond
legal requirements to provide their customers with relevant, useful
information. There may be conflicts between the absolute amounts
of fat and sugar and how these nutrient might be described in
terms of calorific intake for example, lettuce is high fat, "low
fat" yoghurt is medium fat.
39. We believe that the suggestion that
so called "traffic light" systems of labelling will
do nothing to improve the health of the nation, and may even lead
to a less healthy overall diet. This is because simplistic nutritional
profiles ignore the total nutritional content of particular foods.
It would also fall foul of the EU's proposal on Nutrition and
Health Claims.
40. Furthermore, there is no evidence to
suggest that this policy will promote healthier eating. A similar
nutritional key system in Sweden led to older people and children
not getting their correct nutritional balance as they were attracted
to "low" foods. There is therefore a danger with the
traffic light system that consumers will not eat a balanced diet.
We reiterate our call for all policy proposals to fully conform
to government's principles of good regulation and to be evidence
based.
41. The BRC considers that the mixture of
existing labelling regulations and retailers' voluntary initiatives
provide sufficient information to allow all consumers to make
informed choices and to benefit from the efficiencies delivered
by a competitive market for food.
42. We repeat our call for the Government
to develop a consumer education campaign with clear, consistent
messages in order to promote weight management as part of a healthy
lifestyle.
CONCLUSIONS
43. The British Retail Consortium (BRC)
supports the honest and open provision of information, including
labelling to provide customers with the meaningful and clear information
they are seeking. However, we are opposed to the development of
additional compulsory information provision, and believe that
the current regulations, properly applied, are sufficient to avoid
customers being misled. Additional compulsory information requirements
would undoubtedly lead to increased packaging and systems costs,
if sourcing flexibility were to be maintained.
44. Given that any requirement to increase
the compulsory provision of information may increase food prices
it is important for Government to undertake a full impact assessment
before these plans are further advanced at a UK, EU or International
level. In addition, the Food Standards Act introduced a requirement[35]
for the Food Standards Agency to take account in its decision-making
process of the likely costs and benefits associated with any particular
course of action. The BRC believes that such an assessment should
include an in-depth analysis of the increased costs on consumers.
19 April 2004
30 FOOD CONCERNS OMNIBUS SURVEY Prepared for Food
Standards Agency by COI Communications, 27 September 2001. Back
31
Dermot J Hayes and Steve R Meyer, Pioneer Chair in Agribusiness,
Iowa State University, Ames, Iowa and President, Paragon Economics,
Inc, Adel, Iowa, respectively. Published by the National Pork
Producers Council, 2003. Back
32
Institute of Grocery Distribution, various publications. Back
33
ICM Omnibus Survey conducted 20-21 August 2003, surveying 1,014
respondents. Back
34
Report of the 31st session of the Codex Committee on Food Labelling,
ALINORM 03/22A, May 2003. Back
35
Explanatory Notes to Food Standards Act 1999, Section 23. Back
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