Emerging food markets happy to pay more
An eye-popping result has emerged from Lincoln University research that environmental quality, animal welfare and recycling issues are more important for Chinese and Indian consumers of Kiwi food than the Brits.
Over the next three years more research will be done by the university's Agribusiness and Research Unit to come to grips with the willingness of consumers in emerging markets to pay more for food they trust.
Less surprisingly, New Zealand's food-safety reputation has a bigger selling pull for consumers in China and India than Britain, but backing this up with better labelling could contribute extra export returns of $480 million over the next six years.
Professor of trade and environmental economics Caroline Saunders said the Brits seemed less bothered about product attributes such as traceability, supply chains and country of origin in initial studies perhaps because they had a safe food chain and did not get food scares found in China and India.
The greater appreciation of consumers from the emerging countries for environmental quality, animal welfare and recycling had floored many people and had drawn a mixed reaction, she said
"People who have experienced these nations say 'yes, it's true'. Their environments are so stuffed and they wrap it around the quality of their food."
Chinese and Indian consumers were prepared to pay more for trusted food and producers could increase their earnings if they improved marketing and branding and provided evidence it was authentic, she said.
Food-safety labelling is expected to lift dairy and lamb export returns by $307m from China, India and Britain by 2020. This could rise to $480m by combining labelling of food safety with providing proof farm animals and the environment were being looked after.
Initial research was done before a series of food scares culminated in Fonterra confirming last year a botulism scare around dairy products was a false alarm.
Since the 2008 melamine scandal in China when infants died, and many more were hospitalised, after consuming contaminated milk products, Chinese consumers have been sensitive about buying only trusted food for their children.
Saunders said wealthier consumers at the premium end of the market were prepared to pay much more for food as long as it was safe.
She said this could be seen by Chinese buying cheaper infant formula in supermarkets here and sending it back home where it was more expensive.
"We have these people with their one child who are often separated from them for periods because they are both working and they are on infant formula and safety is paramount for them."
Chinese consumers were willing to pay 26 per cent more for foreign products than their own products and 50 per cent more for New Zealand products.
In India, consumers favour their own food and discount foreign food by 20 per cent except for New Zealand products which receive a 10 per cent premium.
Saunders said this showed how much Chinese and Indian consumers valued Kiwi food, and producers were probably undervaluing their food.
Many producers had already found the "buttons" that consumers liked, she said.