What credence do you give claims about food?

I recently read the report “Maximising Export Returns” published by the Lincoln University Agricultural Economics Research Unit. It’s not a light read, clocking in at 114 pages (plus references and appendices). You can read about the overall project that AERU are undertaking here.

The report investigates the different value that consumers in the UK, India, China, as well as Indonesia and Singapore, place on “credence attributes” of foods.

You may be wondering what “credence attributes” are. My layman’s summary is that any item you may purchase will have a number of attributes:

  • Things like colour, size, shape, and perhaps firmness are things you can evaluate before you can purchase. These are often referred to as “search attributes” because you can look at these things before you purchase and they help you decide if this is the item you want.
  • Some attributes you don’t know until you purchase and consume the product. Is the meat tender? Does it taste good? Does it cook well? These are referred to as “experience attributes”. These are the things that will impact whether we buy the same brand or type of product again, and what we tell other people about it.
  • Finally, there are a range of attributes that you can’t really assess even once you’ve eaten the food, but to which we attach some importance. Someone selling these products may tell us about these “credence attributes” or put them on a label, but we really have to take on faith what they mean.

Examples of credence attributes are things like food safety (this one is at least partially experiential if we get sick after eating), grass-fed, organic, carbon-neutral, animal welfare, local, fair trade, and environmentally sustainable.

A large part of the Lincoln study was a literature review, understanding and summarising previous studies and reports. The plan is to carry out consumer choice studies in these countries, and some initial work was done to test the approach. I’m sure we’ll hear more as the project progresses and results come in. However, the existing literature and previous work still shows some interesting results.

The report reveals that consumers in all countries discussed attach some level of importance to a number of credence attributes, and choice studies show that consumers are actually prepared to pay more for some of these (of course choice studies are different from actual purchases, so are not market validation).

The other key take-home for me is that the credence attributes valued vary by country. Perhaps we’ll also discover that it varies by demographic within country as well.

  • British consumers are likely to put value on attributes that demonstrate trusted supply chains: food safety processes, country of origin, and local food. This may be linked to food safety and labelling scares such as Horsegate. They also value organic, fair trade, and animal welfare.
  • Chinese consumers place huge emphasis on food safety, and while they prefer government traceability and approval programmes, may be cynical about their effectiveness. Other credence attributes are often used as proxies: for example, country of origin, and organic or environmental labels (perhaps indicating less risk of pesticide residues).
  • Indian consumers also value food safety and traceability, but environmentally friendly and organics are important too, as well as animal welfare. Again the perception may be that these attributes reduce the risk of GM and pesticide contamination, but a Greendex survey also showed that Indians have a high perception of environmental impacts.

Interestingly, some studies have shown a higher willingness to pay for some of these credence attributes in India and China than in the UK.

There are of course lessons for New Zealand food producers. We need to tailor our messages for our markets, and not assume that consumers in emerging markets will have the same preferences as our traditional export destinations. We also need to consider how we get messages about the value of our products through to the consumer when our products may pass through others’ hands.

Finally, we need to ensure that our own programmes around food safety, traceability, and farm assurance work effectively, are auditable, and provide the information that supports our product claims.

All good stuff, and I look forward to further updates from the Lincoln AERU team.

[Image credit: New Zealand Story, Chris Williams]

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