QUALITY POLICY AND CONSUMER BEHAVIOUR TOWARDS FRESH MEAT

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1 This analysis is part of the project QUALITY POLICY AND CONSUMER BEHAVIOUR TOWARDS FRESH MEAT Project coordinator: Tilman Becker Institut für Agrarpolitik und Landwirtschaftliche Marktlehre, University of Hohenheim The study has been carried out with the financial support from the Commission of the European Communities, Agriculture and Fisheries (FAIR) specific RTD programme, CT , Quality Policy and Consumer Behaviour. It does not necessarily reflect its views and in no way anticipates the Commission s future policy in this area. This manuscript presents only some of the results. Other studies can be downloaded from

2 Analysis of consumer behaviour and private quality management for fresh meat and implications for marketing and management A market oriented quality and safety management within the supply chain has to start with the needs of the final consumer. In particular for small and medium enterprises (SME), such an in depth analysis of consumer needs, as undertaken in the project, is far too ambitious. To a large extent, the SME's have to rely on public research and information, as generated within the work of this project. The investigations are of great interest for any stage of the meat supply chain, in particular for product development and quality policy, price policy, promotion and advertising policy, distribution and placement policy. And as such for the development of an integrated marketing policy for high quality meat to meet consumer needs. The investigation and analysis covers beef, pork and chicken and the countries Germany, Ireland, Italy, Spain, Sweden, United Kingdom - seperately and in comparison. The results of a consumer survey are analyzed. The structure of the meat supply chain in these countries is described in detail for each meat, from the agricultural sector to the final consumer. In addition, all national quality schemes with a market share of more than one percent are analyzed in detail. The shortcomings of existing quality schemes in meeting consumer needs, as asked for in the questionnaire, are pointed out. This gives useful information for actors of the meat supply chain to improve quality management and policy, in particular for enterprises interested in setting up or improving a quality scheme. Exporters, targeting with their exports to one of the countries investigated, may find it very useful to have information on the particular market, as well. The analysis undertaken covers in detail: 1. Consumers meat purchasing and consumption behaviour 2. Consumers perceptions and expectations towards meat quality attributes 3. Causes for a decline in meat consumption 4. The structure of the meat supply chain 5. Existing meat quality policy schemes and their failure to meeting consumer needs 6. Implications for marketing and management The analysis is based on information not general available but generated by the project work. In March 1997 a consumer survey was conducted in Germany, Ireland, Italy, Spain, Sweden and the United Kingdom by phone. The focus of the questionnaire was on consumer meat consumption and purchasing behaviour, meat quality perception and information, attributes and attitudes. The survey results are of interest for breeders, farmers, abattoirs, processing industry, retailers, traders and other enterprises involved in the fresh meat supply chain. The answers of the following questions intend to summarize the results of the consumer survey and to provide the information needed for a successful private marketing and management policy. Where is the meat bought by the consumer? -Butcher shops are by far the most important places of purchase for beef and pork in all of the partner countries, except for Sweden and the United Kingdom. In Sweden, butcher shops hardly exist. -In all of the countries, except in Spain and Italy, megamarkets, hypermarkets and supermarkets are of major importance to consumers when purchasing chicken. In Spain some specialized shops exist for the sale of chicken. Which meats are consumed?

3 Irish, Spanish and British consumers prefer chicken to beef and beef to pork, while Swedish and German households prefer pork most. Italian households prefer beef to chicken and chicken to pork. How has the meat consumption changed on household level? -Approximately half of the German, Irish and British consumers have reduced their beef consumption during the last five years. This percentage is lower in Spain, where on the other side a considerable number of consumers have increased their beef consumption, and likewise Sweden. -Pork consumption has undergone less changes. Among the partner countries, Germany and Spain have the highest proportion of respondents, about a third, who have reduced their pork consumption. -Of all meats chicken consumption has increased most significantly, especially in Ireland, Italy and the United Kingdom. Who are the heavy and who are the low meat consumers? -The percentage of heavy meat consumers is particular high in Spain and low in Germany. The percentage of medium meat consumers is particular high in Sweden. The percentage of low meat consumers is highest in Germany. Spain has the lowest percentage of low meat consumers of all the countries analyzed. -Heavy meat consumers tend to come from comparatively large households with an above average number of children and with higher than average household income. Why has meat consumption changed? Meat consumption seem to follow long term trends. Beef consumption is declining, chicken consumption is increasing. These long term trends are correlated with the concerns of consumers regarding the quality and safety of the particular meat. How will meat consumption change in the future? Despite any scandals, the consumption will follow the long term trend, mentioned above, though at a decreasing rate. 2. Consumers perceptions and expectations towards meat quality attributes How important is the place of purchase for quality perception? The place of purchase is used to indicate both, the quality/safety perception and the quality/safety assessment. Traditional butchers play a very important role in several of the countries where consumers expressed a trust in 'their' butcher. However, in Sweden, butcher shops tend to have no importance at all, though the trust in butchers is large. Over 60% of the Irish, German, Italian respondents usually purchase beef at butcher shops, but only 3.4% of the Swedish. How important for the consumer are the different extrinsic and intrinsic cues - brand/label, place of purchase, price, country of origin, colour, leanness, marbling - received while shopping to predict the sensoric experience in eating the meat (eating quality)? At the average 'colour', 'country of origin' and 'place of purchase' are on the average regarded as being most helpful in assessing the eating quality of beef and chicken. In the case of pork, 'leanness' takes the place of 'country of origin'. The price of meat is of least importance for consumers as an indicator of quality.

4 How important are the different sensoric attributes - colour, leanness, texture, smell, tenderness, juiciness, free of gristle, flavour - for the consumer? The results of the consumer survey confirm that quality perception varies according to the type of meat. While it is very similar for the red meats, we can observe distinct differences in the case of chicken: 'Flavour' and 'tenderness' are the most important attributes for the eating quality of beef and pork. For chicken 'flavour' and 'smell' are the most important quality attributes. How important are the extrinsic and intrinsic cues - feed, brand/label, name of producer, country of origin, price, free range for chicken; freshness - for the consumer in predicting the safety of the meat (credence quality)? 'Freshness', 'country of origin' and 'free range' (only for chicken) are regarded as being most helpful for assessing the meat safety. The 'price' and 'name of producer' are of least importance for the respondents. How important are the credence quality attributes - hormones, antibiotics, fat/cholesterol, salmonella, BSE (for beef only) - for the consumer? -Consumers are on average most concerned about Salmonella in the case of chicken. For all other meats consumer are most concerned about antibiotics, hormones and Salmonella. -Matters of concerns for consumers vary with nationality. While hormones in beef, pork and chicken is a special feature in Spain and Italy, it is not a very important concern in Sweden. BSE in beef is the most worrisome issue for both German and Swedish consumers. Fat and cholesterol seem to be no important concern at all for European consumers. Which quality symbols do consumer look for, when buying meat? -The Italian consumers are hardly taking care of quality labels and symbols. The large majority of Italian consumers (83% for beef and for pork, 65% for chicken) do not look for quality labels, when buying meat. To some lesser extent, the same holds in Spain (beef 71%, pork 74%, chicken 67%). In Germany (beef 54%, pork 57%, chicken 51%) and the United Kingdom (beef 51%, pork 62%, chicken 53%) it is a slight majority of the consumers. In Ireland 67% of the respondents do not look after quality symbols for pork, 56% for beef and only 40% for chicken. The Swedish consumer are the consumers with greatest interest in quality labels. Only a minority ( 42% for beef, 38% for pork and 41% for chicken) do not look after any symbols or labels when buying fresh meet. The Irish chicken consumers and the Swedish meat consumers in general tend to look for quality labels in particular. For all other consumers quality labels seem to play no important role. -In Germany, the vast majority of answers relates to the origin of meat. It is the most important factor for beef. More than half of the respondents only mentioned 'origin', while others explicitly named 'German' or a certain German state or region. Brand names only played a role for chicken, more than 10% of all answers referred to a certain brand. The most common quality labels, the CMA and DLG label, were mentioned just by few respondents. -The Irish consumers mentioned Irish produced meat as the predominant symbol for pork and particularly for beef. The 'Q' mark is following. For chicken, most Irish consumers look after brands and whether or not it is free range produced. -The extremely high frequency of missing answers in the Italian sample can be explained by the fact that meat in Italy is still a highly undifferentiated product. With the exception of label AIA for chicken, only a few respondents mentioned quality marks and labels of origin. -In Spain, only a very small proportion of fresh meat is sold with labels or brands. Accordingly they have minor importance for the consumer, although labels of origin and a slaughterhouse stamp are more widely used for chicken meat.

5 -For Sweden, origin appeared as one ot the key factors, particularly for beef and pork. The vast majority of answers when referring to origin was 'Swedish', while 'locally produced' was of rather minor importance. The second most mentioned label is a commercial brand, which is of most importance for chicken meat. -In the United Kingdom, the most frequently mentioned mark or label in the case of beef, pork and chicken was the 'country of origin', in particular 'British' or 'Scottish'. The most important labels for chicken, apart from 'origin', were 'free range/outdoor geared', 'grade' and retailer name. Whom do consumers trust most regarding information on meat quality and safety? -In an open-ended question, the consumers were asked whom or what they most trust when looking for information on the safety of meat. For each country, independent retailers/butchers and butchers in the supermarket are placed first respective second. Consumers in Ireland and the United Kingdom put their own opinion on the third place, while in Italy and Spain the Department of Health was placed third, which coincides with the importance of these institutions in national public quality policy in these countries. German consumers regard consumer groups whereas Swedish consumers use newspapers as the third most trusted source of information. -This clearly shows that the information received at the place of purchase is of utmost importance for the consumer. Newspapers and other media seem to have hardly any importance as a trusted information source. This is less counterintuitive than it may appear. Butchers emerged very significantly as the source consumers trust most, even in Sweden and the United Kingdom, where butchers do not play an important role on the market. Furthermore, several attitudinal statements had to be judged by the consumer during the interviews: You can assess the quality of meat just by looking at it. This statement is rated for each meat separately. Most consumers agree to this statement for all meats. Those consumers, who regard themselves as being able to assess meat quality through visual inspection are on average older than those who perceive themselves as being not able to do this. In general consumers of the first group rely more on intrinsic characteristics than consumers who do not think that they could assess meat quality by visual inspection. I would never serve a meal without meat. This statement gained the agreement of a majority of the Irish consumers, but for all other countries the level of agreement was between 20% and 40%. Meat is an essential part of a meal. The majority of the consumers agreed to this statement with the exception of Germany, where only a third of the consumers agreed. In Sweden and Italy even two thirds of the consumers agreed to this statement. I prefer to buy food which is produced locally. The Irish, German, Spanish and Italian consumers showed a high preference for local foods; about 90% of them agreed strongly or agreed slightly with the statement: "I prefer to buy food which is produced locally". In Sweden and in the United Kingdom this percentage is lower, although here the majority still agrees with this statement. It is important to know the country where the meat I buy has been produced.

6 In all countries 80% to 90% agreed to this statement, with the United Kingdom being an exception with only 60%. I am confident that food in the shop is safe. Swedish and Spanish consumers are the most confident that food in the shop is safe. Also the majority of all the other national consumers agreed with the statement: "I am confident that food in the shop is safe", though the degree of agreement was comparatively low in the case of the United Kingdom, Germany and Ireland. Price is the main thing I consider when buying meat. For the majority of respondents, in particular for all those consumers with a household income above average, price is not the main thing they consider when purchasing meat. 3. Causes for a decline in meat consumption The dataset of the interviews has been analyzed in detail with econometric and multivariate methods to investigate the determinants of the frequencies of the meat consumption -The smaller a German household, the lower is frequency of beef consumption. A high importance of 'place of purchase', 'price', and 'country of origin' is positively correlated with a high consumption frequency. The most important factor is the perceived status of meat: the higher the perceived status of meat, the higher the beef consumption. -For Irish consumers the most important determinant of the frequency of meat consumption are concerns about BSE: the more consumers are concerned, the lower is their beef consumption. -Italian consumers consume the more often beef, the higher they rate smell of beef as a eating quality attribute. -In the case of Spanish consumers, employed consumers tend to have a lower beef consumption than unemployed consumers. -In Sweden, the respondents' education has a significant impact on the consumption frequency: the higher the education, the higher the consumption of beef. -For British consumers the most important determinants is the perceived helpfulness of the producer's name as an indicator for the safety of beef. The higher it is rated, the lower is the household consumption. -Pork consumption of German households is determined by the size of the household: the larger the household, the higher the frequency of pork consumption. -Those Irish consumers who attach to 'origin' a high importance tend to have a lower pork consumption frequency. -Only the education of the respondents has a significant effect on the consumption frequency of Italian consumers: the higher the education, the lower the pork consumption. -In Sweden, the older the respondents are the more rarely they consume pork. -For the British sample the interest in food information was identified as an important determinant of pork consumption. -Compared to beef and pork, the frequency of chicken consumption is less influenced by attitudes, but to a greater extent by the ratings of the extrinsic and intrinsic cues and attributes. Further it is striking that nearly in each country safety indicators play an important role as a determinant of the frequency of chicken consumption. 4. The structure of the meat supply chain

7 The investigation of the private quality schemes in the fresh meat sector leads to the following results: The retail structures of Spain and Italy appear to be similar. Traditional shops (independent butchers) account for a relatively high proportion of fresh meat sales (approximately 45 per cent currently), although the trend is for an increasing share of larger retailers. The retail structures of sales for red meats are very similar, but traditional retailers account for a smaller share of chicken sales. In addition, direct sales from farms in Italy are still an important source of trade, especially in rural areas. Sweden and the United Kingdom have retail sectors dominated by large supermarkets/ hypermarkets. Although the structures are different with respect to the market share of retail co-operatives, multiple retailers currently account for approximately per cent of total meat sales in both countries. In terms of differences between the three meat types, the data available for the UK indicate a similar structural pattern to that for Italy and Spain. In the UK, a higher proportion of chicken sales than of beef and pork is done via major supermarkets: in 1995, nearly one third of sales of beef and pork was traded by independent butchers, in contrast to only 10 per cent of poultry sales. Germany and Ireland have features common to both of the above groups. The German retail structure has a higher percentage of discounters than other partner countries which, in 1995, accounted for 26.3 per cent of beef and pork sales and 48.2 per cent of poultry sales. Traditional retailers (including butchers) had over 40 per cent of beef and pork sales, but both hypermarkets and discounters have an increasing share of sales. As for other countries, the poultry retail sector is markedly different, with a much higher share from hypermarkets and discounters and a much lower share from butchers. In Ireland there are large differences between sales of pork and beef. The structure of pork sales is very similar in the United Kingdom, being dominated by supermarkets which currently account for 66 per cent of sales. In contrast, 45 per cent of beef sales were from independent butchers, a similar structure to Spain and Italy. In conclusion, the traditional outlets are more important in Southern Europe than in Northern Europe. Reasons for such differences may be due to a combination of demographic, economic and cultural effects. Independent retailers and other traditional types of outlets tend to be relatively small, `stand alone' units with little or no vertical co-ordination and low buying power and control over the supply chain. As a result, they are not able to individually dictate policy to the supply chain, but may join a federation or retail association in order to increase market power. Such organizations, however, may not be national and tend not to be able to introduce highly specific quality policies. Large, multiple-retailers tend to have national coverage and higher levels of vertical coordination, buying power and control over the supply chain; they are, therefore, more able to dictate policy to the supply chain. Hence, it is more likely that retailers will be in a position to create their own quality assurance schemes and impose these conditions on their suppliers. This ability is especially important in the United Kingdom where `due diligence' requires retailers to take all reasonable steps in ensuring that the own-branded food they sell is safe.

8 Evidently in all countries, either independent butchers or butchers in supermarkets (or both types) are major places of purchase; therefore, due to the trust placed in them, they are in a position to effectively communicate safety (and quality) to consumers. Although some organizations (such as the MLC and Bord Bia) regularly send promotional literature to these outlets, the extent of effective communication is more difficult to quantify. There do not appear to be significant different sources of trusted information in countries which have recently experienced serious health scares with regard to fresh meat (e.g. in the UK). A striking observation affecting the majority of study countries is the relatively low level of trust given to public sources of information on safety of meat, despite the obvious importance of governments and other public or quasi-public bodies in deciding safety policy for fresh meat. Although a large number of voluntary quality and safety initiatives advertises their schemes to consumers by use of labels, in all countries but the UK, consumers did not identify labelling as being a `top-six' trusted source of information with regards to meat safety. 5. Existing meat quality policy schemes and their failure to meeting consumer needs A striking feature of voluntary quality policy in all partner countries is the time they have been in operation. The majority of schemes were created in the late 1980s and early to mid- 1990s. It appears that the earlier schemes were created primarily due to marketing concerns, whereas more recent schemes have been introduced in response to general hygiene, traceability and quality assurance concerns in the European Union meat sector. This is especially true fo those national quality assurance schemes found in the United Kingdom and Ireland. The majority of quality schemes in each country set product and/or process standards in the areas of animal welfare, safety and eating quality. Differences between schemes and countries occur in the specificity of standards for particular areas of welfare and safety. It have also to be noted that a consequence of attaining a certain standard in one area may be the improvement of standards in another area - for example, animal welfare standards affecting eating quality. There appears to be a larger number of quality schemes for beef in every country than for pork or chicken. For example, the majority of Italian and Spanish schemes are for beef only, whereas, those in the UK and Germany are more likely to cover beef and pork within the same schemes. The larger number of beef schemes is not, however, too surprising considering recent events in the EU beef sector, and the need for the meat industries to improve sales of meat by increasing consumer confidence in the supply chain. Whilst not attracting as many quality policy measures, pork is still very much closer to beef, in terms of policy, than to chicken. Two major reasons may account for the smaller number of pig/pork schemes in most partner countries: pork has not been as adversely affected by BSE; and the European pigmeat industry structure has a higher degree of vertical co-ordination and concentration of supply than the beef industry - this is supported by the data gathered in the project work. Hence, traceability is relatively easier and thus there is a reduced need for specific schemes to improve traceability.

9 There are relatively few chicken quality schemes. The chicken industry structure in every country is far more integrated/concentrated than for beef/pork, with many markets dominated by large slaughter-processors. The use of contracts is pervasive, as demonstrated by the data gathered in the project. As a result, voluntary quality/safety controls tend to be highly specific to particular vertical relationships; there is no need for regional / national quality policies. In nearly all cases across countries, conformity assessment is performed by agencies/third parties. The key factor here is that such assessments are independent of the scheme administration - an important factor where a main aim of many voluntary schemes is to increase consumer confidence in meat. Several schemes have recently changed their structure due to fears regarding the partiality of the previous scheme assessors. A common trend throughout all the countries' schemes is the lack of consumer representation, even at an informal level. Only Sweden and Germany appear to have any kind of representation in a minority of their schemes. This is in contrast to the marketing of the schemes to the final consumer, in terms of labels and other advertising. Farm assurance schemes tend not to be advertised directly to the consumer. Rather, they are communicated within the supply chain. 6. Implications for marketing and management Many implications emerge for the management of quality in the meat supply chain by private quality policy. In principle all information is generated, which is needed to design a consumer oriented marketing policy including the product-, price-, placement-, and promotion strategy. In the following only the general implications for private quality management and policy in the fresh meat supply chain are presented. -The demand for beef and pork is decreasing in most countries, not only as a result of scarces and scandals. There is every indication that there are other, long term reasons for the declining importance of meat in the diet. -As shown by the survey data, there is not only an observable reduction in beef consumption, but also a distinctly declining pork consumption. Considering that most of the quality schemes in the six countries investigated refer to beef, it seems advisable not to lose sight of quality policy efforts for pork. -'Origin', 'place of purchase' and 'colour' were shown to be the most important factors for assessing meat quality in the shop. Leanness of beef and pork was also among the most important factors for Irish and British consumers. Generally, 'labels' were not considered to be very helpful. The labels already on the market are too manifold and confusing, not only for consumers but even for highly specialized experts. 'Origin' and 'place of purchase' seem to act as substitutes for labels. -Private quality policy is well advised to try to separate the market by focusing on these important factors. Accordingly, a successful private quality policy has to focus on these cues. The country of origin is among the best marketing arguments. -Furthermore, private quality is well advised to invest in the education of the personnel. The place of purchase, in particular the butcher shop design, may improve consumer confidence. Private quality policy should invest in educating the selling personnel. The survey clearly demonstrated, that this is the most trusted information source for the consumer. Not only

10 'country of origin' and 'place of purchase' are important for consumers, but as well the information received from the selling personal. -Since the ability to assess meat quality 'just by looking at it' was rated very low by German and Swedish respondents, quality policy in these countries should focus more strongly on extrinsic quality cues, such as 'country of origin' or labels. -Colour seem to be important for the experienced consumers and should be addressed in marketing. Existing schemes rarely take this into account. -The survey reveals a strong need for more and better consumer information on meat quality. Aside from 'country of origin' a considerable number of consumers, particular those in Italy, were interested what the animals were fed. This is obviously connected with a notable concern over hormones and antibiotics in beef, pork and chicken. -Though the survey took place at the time, when the link between BSE and Creutzfeld-Jacob disease was in the centre of consumer interest, concerns over hormones and antibiotics are not less than for BSE. Salmonella concerns for chicken are rated even higher by the consumers than BSE concerns for beef at this peak of the BSE crisis. Private quality policy should clearly address these issues to a larger extent. -Existing schemes have in general no consumer orientation. Here a lot has to be done to integrate consumer needs. -Regional origin of food is regarded as being very important by most of the respondents, except in Sweden and the United Kingdom. For Swedish consumers not the region, but whether it is Swedish meat or not is important. Private quality policy in Spain, Italy and Germany focuses largely on regional aspects, while Irish and Swedish quality policy places more emphasis on the national origin of meat. In order to meet the needs of Irish consumers, it would be advisable for the private quality policy to give greater stress on the regional origin of meat. -Butchers are the most important and trusted information source for consumers. All public bodies responsible for quality policy do not have any important role for the consumer. Private quality policy has to rely more on the communication by selling personnel and less on labels or brands. -Existing schemes are that numerous, that it seems that there is a need for agreeing on an standard which is devloped on the political market and accepted by the good market.