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EcoRange: Market-Oriented Environmental Certification for
Rangeland Pastoral Industries - 6. Market Research ReportPart of the EcoRange project report series
by Peter Twyford-Jones, Lester Pahl, Kylie MacNamara, Guy Newell and Kerry Miles November 2005
RIRDC Publication No 04/167 RIRDC Project No DAQ-276A
Market research undertaken by the EcoRange project aimed to determine the potential role of environmental assurance in marketing strategies for food and fibre products from the rangelands. If consumers of such products are prepared to include environmental criteria in their purchase decisions, environmental assurance could provide an opportunity for environmentally responsible rangeland enterprises to gain a competitive advantage.
Domestic market research
EcoRange conducted focus
group studies and a quantitative survey of 605 consumers, and qualitative
surveys of wholesalers, processors and retailers involved in meat and wool.
The results were used to develop strategies for marketing products produced
with concern for the environment.
The quantitative consumer survey indicated that there was a relatively high level of interest by consumers in the environmental aspects of food production, but confirmed that consumers are somewhat sceptical of the environmental claims made on products currently in the supermarket, with less than 1 in 10 feeling ‘very confident’ of such claims.
The results indicated reasonably strong interest in the concept of a certification/assurance scheme for meat guaranteed to have been produced with concern for the environment; the results for wool were less conclusive.
International market research
International markets are
of particular interest for rangeland producers, with the majority of wool
and meat produced in these areas being exported. The international market
research indicated that environmental issues have a higher profile in some
of the key export markets than they do in Australia, with concern for environmental
issues being higher in European markets than in the United States and Asia.
The large food retail chains in Europe, and the United Kingdom in particular,
have developed production protocols for the purpose of improving the environmental
performance of their suppliers.
Many of these firms have multinational linkages and through them are defining and driving requirements for food assurances in international markets.
Market analysis
Research undertaken by the
EcoRange project has indicated that to some degree the environment now
influences the purchasing decisions of mainstream consumers but it remains
the most important consideration only for a niche segment of consumers.
Generally the environmental impact of the production system is secondary
to price, safety, quality, style, brand loyalty, personal taste, national
loyalty and availability.
It concluded that there are some opportunities for developing environmental certification aimed at niche markets. The opportunities are probably greater for meat than wool, but they could be significantly enhanced for both products by greater education of consumers about the production systems in the rangelands. Those niche markets with the greatest opportunities are probably in Europe, although research has indicated that the United States and the Australian domestic market also provide some opportunities. It is likely to be some time before there are significant opportunities in Asian markets, but it is expected that the most affluent Asian countries, particularly Japan, will follow Europe’s lead.
This study does not clarify the type of environmental assurance scheme for meat that is required by markets. Some processors interviewed suggested a simple scheme that can be adapted to suit individual market requirements, which could be at least second-party and/or third party audited.
Others suggested that it should be part of a common standard for all on-farm assurances. However, for any scheme to be regarded as a success, it should produce a clearly differentiated product and add value at each point of the chain.
For wool industry businesses, chemical residues, waste and effluent disposal are the greatest environmental issues. Most of these wool businesses have developed their own environmental control systems and policies, with some using EMS (ISO 14001) and eco-labelling (ISO 14024). Very few wool businesses currently receive orders containing an environmental specification; those that do are involved in small amounts of organic wool trading/processing. Currently the greatest driving force to implement environmental assurance is Government regulation. Most of these businesses say that environmental assurance would not encourage the loyalty of current customers. However, in the future, most agree that this could change and that environmental assurance may be needed to attract new business. EU environmental legislation such as the IPPC Directive that comes into full effect in 2007 will cause EU wool processors to actively seek out low chemical residue wool.
Domestic marketing strategy The first challenge to overcome is the lack of consumer understanding of what exactly ‘environmentfriendly’ means in relation to food and fibre products, as this will make it difficult for ‘environmentfriendly’ products to be differentiated in the market place and to gain a competitive advantage. To be successful, an environmental assurance scheme will have to clearly communicate what it represents and the environmental issues it addresses. Consumers should be able to visualise the link between what graziers are doing and the product they are purchasing and, importantly, the benefits.
Targeting consumers who are already predisposed to ‘environment-friendly’ products, both in their purchasing behaviour and personal beliefs, will provide the easiest point of entry into the market.
However, this group is likely to be the most demanding in terms of the validity and credibility of any assurance scheme. Getting it right with this group can, however, provide a catalyst to the wider market.
A critical issue for consumer adoption of ‘environment-friendly’ products will be price or, more importantly, value (retail price and the quality and attributes of the product). The research indicated that 18 per cent of consumers would be prepared to pay a 10 per cent premium for meat produced with concern for the environment.
Any supporting assurance scheme must meet specific consumer criteria: it must be easy to understand, clearly identified on packaging, associated with a product that is widely and consistently available, regulated by a recognised and trusted source, and demonstrate validity and credibility.
In conclusion, the research indicates that consumer demand exists for an assurance scheme and the challenge lies in addressing the above issues and gaining consumer acceptance of the concept. The decision on which way to proceed from here must depend upon the level of support from supply chains and consumers. In terms of further research, there would be merit in testing proposed communication strategies and concepts with the target market, focusing on those who currently purchase ‘environment-friendly’ products and have concern for rangeland production methods.
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