The Market For Health-Enhancing Foods

Meike Guenther & Caroline Saunders

There is evidence that health-conscious consumer groups are becoming more and more important. This group has increasing expectations that food products carry health enhancing attributes such as additional minerals, vitamins, peptides, fatty acids, dietary fibres etc. Products carrying these attributes are often called functional or fortified foods, and worldwide the markets for these foods have been growing significantly over the last two decades. In Europe, the market share of functional foods was estimated to grow from less than 1% in 2000 to approximately 5% in 2013, and between 2004 and 2007 the sales of functional products in Western Europe experienced a growth rate of more than 10%. Japan is one of the world’s largest markets for functional foods, with nearly 970 ‘functional food certified’ products available on the domestic market in 2011. Also in developing countries health enhancing foods are on the rise. For example, in China, the nutrition and health food industry is expected to reach an output value of around Rmb 1 trillion by the end of 2015, with an average annual growth rate of 20%. Given this increasing global demand for health enhancing food attributes, it is important to investigate consumers’ preferences for these attributes as they may differ between countries. This is especially important for a country like New Zealand that is heavily dependent on its agricultural exports in order to gain a premium for their commodities by targeting their products according to consumer preferences in their export markets.

Commissioned by the Ministry of Business, Innovation and Employment, the Agribusiness and Economics Research Unit (AERU) at Lincoln University is undertaking research that examines consumer preferences for health enhancing attributes (among others) in food and beverages in overseas markets. This study is part of a wider research programme Maximising Export Returns (MER) which aims to explore how export firms can capture price premiums by including and communicating credence attributes in products for overseas markets such as China, India, Indonesia, Japan and the United Kingdom (UK). Credence attributes are qualities believed by a consumer to be present in a product even though they cannot be identified, experienced and inspected by consumers whether before or after purchase. These include health enhancing benefits. In this study, the targeted consumer groups are the middle and upper class consumers in each country who are expected to be more likely to be willing to pay a premium for these attributes in food and beverages, hence informing the New Zealand industries of possible opportunities for maximising their export returns, and building on previous work of the AERU .

In order to assess consumer preferences for health enhancing attributes (among others) in food and beverages in overseas markets a web-based survey was conducted with 1,000 consumers in each country in March/ April 2015. The surveys involved two developed countries (Japan and the UK) and three developing countries (China, India and Indonesia). The survey included a question to assess consumers’ attitudes and preferences towards ten attributes when shopping for food and beverages. These attributes included basic food attributes such as quality, price, food safety, and nutritional value but also social and environmental attributes such as health enhancing foods, animal welfare and environmental condition. In this question, respondents were asked to rate the importance of nutritional value and health enhancing foods when shopping for food and beverages (among other attributes) on a scale varying from ‘very important’ to ‘not important at all’. Results showed that the nutritional value in food products was the third most important of the ten attributes in all countries (after food safety and quality). Sixty-six per cent of Indonesian and Indian respondents, each found this attribute ‘very important’. It was further shown that 43% of UK participants and 21% of Japanese rated this attribute ‘very important’. For health enhancing foods, participants in the developing countries rated this attribute higher in importance than participants from the developed countries, especially in Indonesia and India. In contrast, Japanese participants placed the lowest importance on this attribute compared to the other countries, with only 12% stating this to be ‘very important’.

Then, a more detailed assessment of the importance of underpinning factors for human health enhancing foods was conducted. Participants were asked to rate the importance of a set of factors they associate with health enhancing foods on a scale ranging from ‘very important’ to ‘not important at all’. These factors included energy and endurance, weight management, mobility, digestive health, heart and cholesterol health, blood nutrients, bone health, memory/brain health, child health, baby health, immune system, and skin health. Results showed that preferences for factors associated with health enhancing foods differed between countries, however importance for all factors was significantly higher for respondents from the developing countries of India, China and Indonesia than from the developed countries. Across all countries, the factors of heart and cholesterol health, digestive health, and child health were the most important factors in relation to health enhancing foods. Cross-country comparisons showed a large variation in preferences for these factors. While Chinese participants placed highest importance on the factors of digestive health, immune system and baby health, Indian participants rated child health, baby health and the immune system highly important. Indonesian participants rated heart and cholesterol health, child health and digestive health as very important. Japanese participants reported bone health, digestive health, and heart and cholesterol health were important factors in relation to health enhancing foods while their fellow UK participants rated heart and cholesterol health, digestive health and child health as most important. Mobility as a factor related to health enhancing foods was among the least important factors across all countries. In addition, weight management was low in importance for participants from the developing countries while energy and endurance was low in importance for participants from the developed countries.

To conclude, health enhancing attributes in food and beverages are important to consumers in overseas markets. In many cases, consumers in developing countries rated these attributes more important than those from the developed countries. However, preferences differed significantly between countries. Hence, New Zealand exporters need to obtain country-specific information on which health enhancing food attributes consumers value in the respective export market in order to gain a price premium for their exports.

The full study can be accessed here.

Categories: Agriculture, Food, Health
Meike Guenther & Caroline Saunders
About the author

Meike Guenther & Caroline Saunders

Research Fellow & Professor, Director of Agribusiness & Economics Research Unit - Lincoln University
Meike has been a Research Fellow at the Agribusiness and Economics Research Unit (AERU) at Lincoln University in New Zealand since 2008. She has experience in consumer surveying and market watch and is also involved in research focused on regional economic development. Currently, Meike is researching the impacts of changes in diets and various trade policies in China and India on New Zealand trade and the environment. Meike holds a New Zealand Masters in Applied Science and a German Postgraduate Degree in Economics and Social Science (Diplom-Őkonomin). Dr Caroline Saunders has 30 years research expertise in the UK and New Zealand. She has over 300 publications specialising in sustainable economic development. Her current research includes an assessment of international markets and their policies and their impact on development. She has undertaken research for a wider range of private and public bodies both in NZ and overseas. These include the EU Commission, DEFRA, FAO, OECD, MPI, MFAT, Treasury, MFE, MBIE, Fonterra Industry and various other sector groups and firms. She is on the Biosecurity Ministerial Advisory Committee and the Council of the Royal Society. She was awarded economist of the year in 2007 and made an officer of the NZ order of merit in 2009.