September 26, 2008 Play It Safe

Volume 4 | Issue 3

Food safety remains a top concern with consumers.

“Health is Wealth…No compromises please.” – Anonymous. Deloitte Food Survey, 2008

Food produced from the 2008 farming season is likely to be the most scrutinized ever. With good reason. Consumers have become particularly wary due to the growing number of articles discussing food recalls and contaminations. Families are also out information about the food they consume. The ease with which information can be obtained from the Internet is helping the public become more vocal about these issues.

Consumers’ concerns, in fact, extend to just about every item that is consumed, whether it is crops, meat, seafood, product ingredients or food additives. With total U.S. food and beverage sales of $1.33 billion last year, there is a lot at stake. The need for companies to be vigilant about their food supply chains and to ensure the safety of their product has never been greater. A recent study by Deloitte Consulting LLP in fact found that one-half of manufacturers across all industries who experienced a recall in recent years said they saw “very significant” direct financial costs.

To help companies better understand consumers’ concerns around the food they eat, Deloitte LLP commissioned a survey of 1,110 consumers in April 2008. Several of the results suggested strong concerns from consumers. In particular, large percentages of respondents expressed food safety fears and many wanted to see more information on the foods they purchased. The quote at the start of this article is just one of several comments made by respondents who added their specific food related concerns at the end of the survey. A relatively high 15 percent of respondents made a comment, indicating the elevated level of interest on this topic.

In one of the more important findings from the survey, roughly three-quarters, 76 percent, of respondents said they are more concerned today than they were five years ago about the food they eat. Concerns were slightly higher among females and the 45-60 age group (boomers), but all groups had high levels of concern, ranging from 70 percent to 82 percent.

SAFETY AND CHEMICALS TOP CONCERNS

The top three food concerns were the healthiness of the ingredients, the possible use of chemical ingredients that are “detrimental to my long-term health,” and the safety of the ingredients. Roughly half or more listed these issues as being their top concerns. Further down the list, roughly 20 percent were concerned about the country of origin of the product or contracting a food-borne illness. The reported rise in allergies in the U.S. correlated with the 16 percent of respondents who said that “possible allergenic reaction” was one of their top concerns.

Although the survey was conducted before the recent salmonella outbreak related to tomatoes, a large 73 percent of respondents felt that the number of food related recalls had increased, relative to several years ago. Beef and chicken recalls were of highest concern, followed by fresh fruit and vegetables, and dairy.

As noted earlier, the financial costs to companies from recalls can be large. One of the longer-term issues for companies is the loss of customers who shy away from foods that are perceived to be tainted. The federal government recently reported that it is undertaking a study to determine the impact on consumption from the 2006 spinach recall. Deloitte’s survey results showed that 57 percent of respondents had stopped eating, either temporarily or permanently, a particular food because of a recall. Boomers, daily food shoppers, and respondents with young children at home were the groups most likely to have abstained from eating these foods.

IMPORTS ALSO IN QUESTION

Concerns were also high around imported foods. More than half, 56 percent, thought imported foods were not safe or only somewhat safe. In fact, out of a list of 10 food items, imports received the highest level of concern from respondents. Consumers likely are becoming more watchful now that imports have become an important contributor to our food supply. In 2007, imports of manufactured foods and related products reached $35 billion, which was nearly double the figure for 1999, according to U.S. Census Bureau data. This figure does not include fresh produce, meat or seafood.

Related to their concerns around food sourcing, consumers seek access to more locally produced foods. Nearly nine out of 10 respondents wanted their food stores to sell more fresh fruits and vegetables that came from local farms. In support of this interest, more than two thirds of respondents said they would be willing to pay slightly more for those locally produced items.

Country-of-origin labeling was another area in which consumers expressed strong preferences. Roughly four out of five respondents wanted fresh meat, fish, and fruits and vegetables to be labeled to show the country of origin of the item being sold. Even packaged foods came under scrutiny: 69 percent would like to see the country of origin for all the ingredients used in those foods.

Packaged foods, in fact, received several less-than-favorable reviews from the survey respondents. Packaged foods were third on the list of items that consumers had concerns about, behind only imports and fresh fish. As noted earlier, there was a level of unease over the healthiness of the chemical ingredients used. Further, nearly three out of five said they only understand about half or less of the list of ingredients found on packaged foods. And, large numbers of consumers wanted to see healthier packaged foods from companies: 69 percent wanted more food products available for sale that were high fiber, 66 percent wanted more low-sugar products, 65 percent wanted more low-calorie options, and 64 percent wanted additional low-salt products. With two-thirds of Americans overweight, and with rising levels of diabetes and hypertension, consumers appear to be looking to food companies to help them become healthier. Questionable multi-syllabic ingredient names seem to only be adding to consumers’ frustrations.

Consumers also appear resistant to new technologies that change the basic nature of foods. More than a third, 37 percent, was extremely or very concerned about eating genetically modified foods. An additional 40 percent were somewhat concerned. And half felt that meat from cloned animals should not be sold in the U.S. Only 18 percent thought that it should be sold, with 32 percent unsure on the issue. Slightly less than half, 49 percent, said they wouldn’t purchase meat from cloned animals even if it were available in stores.

The majority of these survey findings suggest that food companies today still have more to do in allaying consumers’ concerns. In addition, the recent publicity over the salmonella outbreak involving tomatoes increases the likelihood of food safety becoming an even hotter issue with boards of directors, senior management, investors, shareholders and consumers. For many companies there is a growing urgency to do all they can to address the problem head-on. The risk of today’s consumers dropping a product if they believe the company is not doing what it takes to protect them and their families is not something to take lightly. It is essential for companies to take a total approach to ensure the safety of their brands, all the way from the source, to the supply chain, the store shelves, and even the consumer’s home.

Pat Conroy is Vice Chairman and U.S. Consumer Products Leader, Deloitte LLP.

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms have any liability for each other’s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names “Deloitte,” “Deloitte & Touche,” “Deloitte Touche Tohmatsu,” or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.

Deloitte LLP is the U.S. member firm of Deloitte Touche Tohmatsu. In the United States, services are provided by the subsidiaries of Deloitte LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte LLP.

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