Changing consumer preferences: what this means for KI producers and the brand

Prof. Wendy UmbergerExecutive Director, Centre for Global Food & Resources

University of Adelaide2 April, 2019

Stewardship & Accreditation Schemes for KI – Workshop 1

Overview

• Drivers of changing consumer preferences and behaviour

• General trends – changing consumer preferences and behaviour

• Australian insights from research– Secondary data

– UofA GFAR Australian Food Insights Quarterly (started in Sept 2018)

– Two Australian consumer meat studies examining values for production and process (credence) from 2015 and 2017

• Implications for KI “brand”

University of Adelaide 2

Food Consumption is changing

• Driven by – Increasing disposable incomes

– Globalisation

– Migration/Immigration

– Concerns about:

• Food safety,

• Health concerns,

• Impact of food production on environment and food system (e.g. animal welfare)

• Authenticity

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Value of Aussie household income & food consumption per person (1988-89 to 2016-17)

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Source: https://apo.org.au/sites/default/files/resource-files/2018/08/apo-nid188236-1196716.pdf

Aussie food expenditure per person, by main food type (1988-89 to 2015-16)

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Source: https://apo.org.au/sites/default/files/resource-files/2018/08/apo-nid188236-1196716.pdf

University of Adelaide 7https://theconversation.com/three-charts-on-australias-declining-taste-for-beef-and-growing-appetite-for-chicken78100Source: Wong et al and ABARES Get the data

Eating slightly less meatDeclined 3% from 2009-2014 (Euromonitor Intl.)Still high, average Australian consumed 92.5kg meat in 2015

Flexitarian / Semi-Vegetarian / ‘Vegetarians with benefits’

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• ~ 10% of Australians were vegetarian or vegan in 2013 (Roy Morgan 2014)

• 20% increase in vegetarianism from 2009 to 2013 (Roy Morgan 2014)

• Australia has the 3rd fastest growing vegan market (Euromonitor International 2018)

Changes have implications for Australian and KI ag/food industry

• Diet composition and relative food expenditures

• Increasing demand for information on ‘content,’ ‘where’ and ‘how’ food is produced – Nutrition information

– Origin/provenance (e.g. Kangaroo Island, Australian, etc)

– Production and process attributes (e.g. Organic, Free Range, Certified Humane, Grass-Fed etc.)

– Allergens and avoidance (e.g. gluten)

• Demand for organic food is growing (~5% per year)

• Functional food demand

• High value / luxury food

• Trust and governance of food system

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10

Source: https://www.eatforhealth.gov.au/sites/default/files/files/eatingwell/efh_food_label_example_130621.pdf

Front-of-Package Labelling Cues

Production claims

Certifications

Production claims

BRAND INFORMATION

‘Back-of-Package’ Information

Growth in Labelling Cues: “Credence Attributes”

Growth in Labelling Cues: “Credence Attributes”

Information age in food - good or bad?

• Increasing number of labels and claims

– health, safety, origin, production methods, quality

• Is “information asymmetry” increasing or decreasing?

• What is the role of industry, government, consumer?

• Information overload??

• Do consumers understand the claims?

• Cynicism is increasing

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16

Source and image: 2017 Australian Organic Market Report, http://austorganic.com/ao-market-report/

Australian barriers to buying more organics:

• 43% Lack trust in organic claim

• 27-23% Lack of reliable information that• Organic is better

for the environment

• Organic is healthier• Animals are treated

better on organic farms

• No GMOs

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University of Adelaide’s FoodIQ Studies:Insights into Australian food patterns

Food Insights Quarterly = FoodIQ

Online survey conducted quarterly Sept 2018 (n=1003), Dec 2018 (n=1103) & Mar 2019 (n=1076)

Food shoppers aged ≥18y

Nationally representative sample

Age

Gender

Location (metropolitan vs. other; and state/territory distribution)

Recruited by online panel provider

Survey Sampling International (SSI)

1. Screening questions

2. Household food expenditure

3. Personal food consumption

4. Changes to meat/protein consumption patterns and reasons for change

5. Food choice drivers

6. Attitudes and concerns regarding various food issues including food safety and novel production methods

7. Awareness and understanding of food labelling

8. Trusted information sources

9. Environmental attitudes and actions

10. Health and socio-

Australian consumption of animal products vs vegetarians and vegans(FoodIQ, Sept 18, Dec 18, March 19)

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77%

19%

4%0.60%

76%

20%

3% 1%

75%

19%

4% 2%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Omnivore: I eat most animalproducts including meat, fish,

seafood and/or dairy

Semi-Vegetarian/Flexitarian: Iam cutting back on meat but

not avoiding it completely

Full-time Vegetarian: I do noteat meat but am still eating

other animal products

Vegan: I do not eat any animalproducts

% o

f sa

mp

le

Which of the following best describes your current food preferences?

Wave 1: Sept 2018 Wave 2: Dec 2018 Wave 3: Mar 2019

What is important to consumers when purchasing food? (FoodIQ, March 2019, n = 1076)

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23 3 3 4 4 5

6 6 67

8

10

15

18

6

10

7 89

109

11 1210

12

1415

18

22

0

5

10

15

20

25Mean allocation of points

Australians’ confidence in the safety of their food supply(FoodIQ, Sept 18, Dec 18, March 19)

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Sept 2018Mean =

5.47N =1003

Dec 2018Mean =

5.53N =1076

March 2019Mean =

5.59N =1103

Australian’s opinions on 3 most important FOOD SAFETY issues? (FoodIQ, Dec 2018, n = 1076)

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Australian Consumer Attitudes: Safety, Quality, Provenance(FoodIQ, Sept 2018, n = 1003)

22

15

14

17

22

32

32

29

35

34

30

14

10

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

I prefer to buy food that has been produced inAustralia

I am satisfied with the eating quality of food productsavailable in Australia

I am satisfied with the safety of food productsavailable in Australia

Strongly disagree Disagree Somewhat disagree

Neither agree nor disagree Somewhat agree Agree

Strongly agree

81% are satisfied with quality

81% care that it is Aussie

76% are satisfied with safety

Australian Consumer Attitudes: Environment & Production Methods(FoodIQ, Sept 2018, n = 1003)

23

4

6

4

4

8

7

7

8

7

5

7

3

7

12

13

12

15

14

8

12

5

11

13

15

14

15

15

40

33

42

27

32

32

29

36

31

26

25

25

26

19

18

20

14

17

12

11

14

19

11

10

11

7

9

5

7

7

5

5

6

6

6

7

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Food production has significant negative environmentalconsequences

I am concerned that food production harms the environment (e.g. byincreasing greenhouse gases)

I would prefer to buy food products that are carbon neutral

The welfare of animals used to produce food products is as good ascan be expected in Australia

I am so concerned about the use of hormones…

I am concerned about the use of antibiotics ...

I am concerned about the use of pesticides…

I am concerned about the use of glycophosphate (Roundup)…

I am concerned about foodborne contaminants (e.g., Hepatitis A, Campylobacter, Listeria, salmonella, E. Coli)…

Strongly disagree Disagree Somewhat disagree Neither agree nor disagree

Somewhat agree Agree Strongly agree

Australian Consumer Attitudes: GMOs(FoodIQ, Sept 2018, n = 1003)

24

8

6

11

4

3

2

1

2

14

7

8

5

4

3

2

1

20

12

15

10

8

6

2

3

30

41

33

42

43

26

27

20

16

19

18

19

23

30

28

25

8

11

8

11

10

20

23

25

4

5

6

8

9

13

17

23

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

I feel sufficiently informed about biotechnology/geneticallymodified food

Genetically modified foods are safe to eat

I would have no concern purchasing food labelled as ‘GM’ (genetically modified)

There is a chance of eventually becoming ill from repeatedlyconsuming genetically modified food

Genetically modified foods pose a risk to the environment

I want to know more about biotechnology/geneticallymodified food

Genetically modified food should not cost more than non-genetically modified food

Labelling of ‘GM’ (genetically modified) food is important

Strongly disagree Disagree Somewhat disagree Neither agree nor disagree

Somewhat agree Agree Strongly agree

73%

68%

63%

42%

63%

32%

35%

28%

Australian Consumer Attitudes: Trust for Information(FoodIQ, Sept 2018, n = 1003)

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How much do you TRUST the following people/organisations to provide accurate information about FOOD SAFETY?

4.64

4.66

4.68

4.81

4.83

4.83

4.84

5.20

5.24

1 2 3 4 5 6 7

Food Industry Associations (e.g. Australian Food…

Environmental organisation (e.g., Landcare,…

Farmer Associations (e.g. Cattle Council…

Animal rights organisation (e.g., RSPCA)

Farmers (e.g. an individual farmer)

Dietitians and nutritionists

Consumer organisation (e.g. Choice)

CSIRO- Commonwealth Scientific & Industrial…

Doctors/medical professionals

Trust in different sources

Do not trust at all Trust completely

Australian Consumer Attitudes: Trust for Information(FoodIQ, Sept 2018, n = 1003)

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How much do you TRUST the following people/organisations to provide accurate information about FOOD SAFETY?

Do not trust at all Trust completely

1 2 3 4 5 6 7

Celebrity chefs

Supermarkets (e.g. Coles, IGA, Woolworths, Aldi)

Food Processors (e.g. dairy, meat or grain processor)

Animal protection organisation (e.g., Voiceless,…

Independent or local food stores (e.g. butcher,…

Family/Friends/Work colleagues

Universities

Government/government agencies (e.g. FSANZ-…

Trust in different sources

2015 & 2017 Australian Meat Studies

• Nationally representative – Roy Morgan meat buyer data

• Food shopper • Purchase meat at least monthly • Sample quotas, Age

– Gender– Location (States/Territories & City vs. Country)

• Also stratified by:– Education level– Respondent income – Employment

1. Screening questions

2. Meat behaviour

3. Awareness and use of meat product labelling

4. Choice experiment

5. Perception of credence claims

6. Concerns about meat

7. Knowledge of livestock management practices

8. Experience with livestock

9. Attitudes towards meat production and farm animal welfare

10.Socio-demographics

Funded by ARC Linkage (LP130100419)

Meat Cuts

Beef Chicken Pork Lamb

Mince

Preferred

Beef

Steak

Breast

Fillets

Thigh

Fillets

Leg

Roast

Loin

Chops

Leg

Roast

Loin

Chops

Meat Attributes & Levels

Production

method

Farm

Animal

welfare

status

Organic

status

Other

claims

Other

claims

Price per

kg

Beef & Lamb:

Pasture-raised

Chicken & Pork:

Free Range

Certified

Humane

Certified

Organic

Antibiotic

Free

No Added

Hormones 4 levels per

meat cut

Conventional None None None None

Credence claims

24%

29%

29%

23%

16%

31%

25%

34%

34%

32%

45%

46%

38%

43%

52%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

ALL SAMPLE

BEEF

CHICKEN

PORK

LAMB

Disagree Neither Agree

“The welfare of cattle/chickens/pigs/sheep used to produce meat is as good as can be expected” (n=1205, 2017)

Animal welfare attitudes (% agree /strongly agree, 2017): “Transport concerns? Impact on behaviour?”

Animal welfare attitudes (% agree /strongly agree, 2017): “Animal welfare has personal benefits…”

0%10%20%30%40%50%60%70%80%90%

100%

FreeRange

Organic

CageFree

GrowninAustralia

NoAddedHormones

RSPCAApproved

Grain-Fed/Finished

Grass-Fed/Finished

Anbio

c-Free

PastureRaised

2015 2017

Consumer Awareness of Claims in Meat, 2015 vs 2017

Growth in Awareness of Animal Welfare Claims? 2015-2017

Australian Consumer Perceptions of Claims (2017, n = 1205)

Australian Consumer Perceptions of Claims (2017, n = 1205)

Willingness to Pay for Credence Attributes

• No Added Hormones > all other claims (P<0.01)

WTP (95%CI)

Free Range/Pasture Fed $1.66 (1.29 – 2.03)

Certified Organic $1.33 (0.94 – 1.69)

Certified Humane $1.67 (1.30 – 2.07)

Antibiotic Free $1.38 (1.02 – 1.73)

No Added Hormones $2.55 (2.12 – 3.03)

Willingness to pay differs by meat type (2015, n = 1009)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Organic An bio cFree Produc onmethod

Cer fiedHumane

NoAddedHormones

WTP

($/Kg)

LambChickenPorkBeef

• Drivers of preference differences are difficult to determine using socio-demographics

Less likely to select than younger respondents

60+

Certified Humane

No Added Hormones

Certified Organic

Less likely to select than females

More likely to select than lower income

Higher than average income

Males

Consumers have heterogeneous preferences /values for credence attributes

3 Unique Segments: Class 1 (24%)

Credence motivated • Somewhat sensitive to price and cut• High premium for all credence attributes

1. No added hormones (*)

2. Free Range 3. Organic (*)4. Humane production5. Antibiotic Free (*)

• Highest % of consumers perceive benefits of credence cue, • particularly benefits such as taste, safety, health

• Most knowledgeable, concerned, and previously purchased credence-differentiated products

• City dwellers

3 Unique Segments: Class 2 (32%)

Animal Welfare & Cut important,

Price insensitive

• Cut drives the purchase decision, followed by animal welfare

• High premiums (WTP) for1. Humane production (*)

2. Free Range

3. No added hormones

• Discount organic

• Higher than average % of consumers perceive benefits

3 Unique Segments: Class 3 (44%)

Price sensitive skeptics• Price drives purchase decision

• Lower than average premiums (WTP) for

1. No added hormones

2. Humane production

• Low % perceive benefits from credence attributes

Summary and take home messages

• Australian consumers’ preferences for food and food attributes are changing, similar to global consumers

• The market is highly segmented and there are opportunities to target specific segments

• A “brand” is not enough

• Must understand the “values” of the individual consumer segments

• “Why” might people value KI? – Clean and green image?

– High quality?

• What is the relative value of KI vs other attributes?

• “Who” might value KI?

• How to maintain brand integrity?

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Take home messages (2)

• Growing confusion about claims

–Cynicism

–Misperceptions and information asymmetry are significant issues

• Credibility is crucial to maintain any “value” in credence attributes

• Standards for claims and certifications are needed for “credence”

Thank you!

http://www.adelaide.edu.au/global-foodhttp://www.adelaide.edu.au/global-food/blog/

wendy.umberger@adelaide.edu.au@WendyUmberger