understanding consumers' perspectives on food labelling in india

Understanding consumers’ perspectives on food labellingin Indiaijcs_825 724..734

Jabir Ali and Sanjeev Kapoor

Centre for Food and Agribusiness Management, Indian Institute of Management, Lucknow, India

Keywords

Food labelling, packaged food, policy andregulation, consumer perspective, India.

Correspondence

Jabir Ali, Centre for Food and AgribusinessManagement, Indian Institute ofManagement, Prabandh Nagar, Off SitapurRoad, Lucknow – 226 013, Uttar Pradesh,India.E-mail: [email protected]

doi: 10.1111/j.1470-6431.2009.00825.x

AbstractThis study aims at identifying the factors influencing consumers’ perception on foodlabelling and its impact on food purchase decision making, through personal interviews of631 respondents using a structured questionnaire. To analyse the consumers’ perceptionson food labelling, factor analysis has been carried out to identify the underlying dimensionsamong a set of food labelling attributes using the principal component analysis. Based onfactor analysis, four sets of components/factors have emerged, that is, (i) serving method;(ii) quality and nutrition; (iii) production and storage; and (iv) product identification, whichexplain 66.271% of the variance. Logit regression analysis indicates that among thesocio-demographic indicators, the estimated coefficients for gender, education, income andlocation of residence are statistically significant. Similarly, information on quality andnutrition, production and storage processes, and basic information of the product is foundto be significant, implying that these factors are more likely to influence the use of foodlabels in making informed purchase decisions by the consumers. The findings of the studygive practical insights on food labelling issues for the food processors and policy makers.

IntroductionThe food and agricultural sectors in developing countries havebeen significantly transformed in terms of production, processing,marketing and consumption of food (Pinstrup-Andersen, 2000;Reardon et al., 2001; Deshingkar et al., 2003; Busch and Bain,2004; Henson and Reardon, 2005; Swinnen and Maertens, 2007).Historically, Indian consumers have preferred fresh and unproc-essed food over processed and packaged food; however, the recentchanges in consumption patterns, particularly in middle and high-income groups, show ample opportunity for strengthening pro-cessed and packaged food segments in the country (Ling et al.,2004; Chengappa et al., 2005; Mukherjee and Patel, 2005; Dein-inger and Sur, 2007). The changes in food consumption patternsare largely driven by income growth and demographic factors suchas rising income, increased urbanization, changing lifestyle,greater willingness to experiment with new products and flavours,desire for convenience and an increase in the number of workingwomen, leading to a strong growth in consumption of packagedand processed food products (Pingali, 2006; Goyal and Singh,2007; Regmi et al., 2008).

Food and grocery items have a larger share in the consumershopping basket in most of the developing countries includingIndia, but the share of packaged food products remains low amongconsumers in low-income countries. In developing countries,intermediate products such as vegetable oils, dry pasta and otherdried products account for the bulk of retail sales (Regmi et al.,

2008). However, market trends indicate strong growth in sales ofpackaged food products. On average, Indian consumers use 41.2%of total shopping basket on food products (Sengupta, 2008), andabout 7% of total food expenditure goes on packaged foods(Euromonitor, 2009).

Traditionally, Indian consumers purchase food and groceriesfrom nearby kirana stores called ‘mom and pop stores’, whichretain customer loyalty through benefits such as home deliveryservices, the convenience of being next door, availability of smallquantities of goods, interest-free credit and personalized services(Sabnavis, 2008; Sengupta, 2008). Studies indicate that traditionalretailing constitutes over 95% of total sales in the country(Vijayraghavan and Ramsurya, 2007; Goswami and Mishra,2009). There are about 9 million small independent kirana storesin India, which account for over 70% of total retail value sales offood and grocery retailing (Sengupta, 2008; Euromonitor, 2009).While the share of these outlets in total sales volume is decliningover time because of the emergence of modern retail formats, suchas supermarkets/hypermarkets and convenience stores, these inde-pendent stores still continue to be the backbone for packagedfood retailing. In the process of retail modernization, the largefast-moving consumer goods manufacturers such as HindustanUnilever, Dabur India and Marico provide support to small in-dependent grocers by refurbishing their stores and modernizingthem, so that customers can move around the shop and pick upproducts as they can in supermarkets/hypermarkets (Sengupta,2008; Euromonitor, 2009). Reliance Fresh is another example,

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inviting small retailers as well as individuals to become a franchi-see on a revenue-sharing basis (Sengupta, 2008).

Low market penetration rate in food and grocery segmentcoupled with huge market potential has induced large businesshouses to invest in different formats of food retailing (Sengupta,2008). The acceleration of retail expansion by various national andinternational players is resulting in changes in the way packagedfood products are sold in the country (Euromonitor, 2009). Theeconomic reforms of the 1990s, which strengthened the process ofliberalization, privatization and globalization in the country, havebrought new opportunities as well as challenges for food retailersand processors. To meet the emerging demand for processed andpackaged food products, both national and multinational foodprocessing and retailing organizations have sought to capture thehuge and exponentially growing food market by adopting sophis-ticated technologies to facilitate innovations in food product devel-opment, packaging and labelling (Bogue, 2001; Stewart-Knox andMitchell, 2003; Wells et al., 2007).

Food product packaging and labelling have numerous importantroles to play in the emerging market environment. Food labelsperform important third-party roles in the food marketing systemthrough their impact on product design, advertising, consumerconfidence in food quality and consumer education on diet andhealth (Caswell and Padberg, 1992). Food labels are designed topromote and protect public health by providing accurate nutri-tional information so that consumers can make informed dietarychoices (Lin et al., 2004). Several empirical studies indicate thatthe label is an effective instrument that reduces the asymmetricinformation problem between producers and consumers (Caswelland Padberg, 1992; Loureiro and McCluskey, 2000). This impliesthat the food label is an important medium to fill the informationgap between the producers and the consumers. The trends towardshealthier eating have increased the consumer demand for detailed,accurate and accessible information on food safety and qualitycovering nutritional content, ingredients and health claims. Con-sumers also demand product information, such as production andexpiry dates, storage and cooking instructions (Abbott, 1997).Food label is one of several information channels available to theconsumers, including mass media, books, advertising, educationprogrammes and medical advice (Caswell, 1991; Abbott, 1997;Wandel, 1997; Baltas, 2001). Among these, food label is consid-ered to be the most appropriate source of information by whichconsumers can acquire knowledge about the food they considerbuying at the point of purchase.

As claims on a food label create expectations regarding itshealthfulness among consumers, they need to be confirmed andenforced through proper regulatory mechanisms (Ford et al.,1996; Keller et al., 1997). Consumers need help in distinguishingbetween accurate and false/misleading nutritional information.In most countries, food regulators have been reluctant to rely onfree market mechanisms for providing consumers with adequateand accurate label information on food products (Caswell andPadberg, 1992; Variyam et al., 1996; Marette et al., 1999). This ismainly because of the credence nature of food products. Based onthe availability of information on product attributes, products canbe categorized into three types: search goods, where a consumercan obtain full information about product attributes prior to pur-chase; experienced goods, where product characteristics can onlybe determined after its purchase; and credence goods, where

product characteristics become known after a long lag and producthazards cannot be determined with certainty (Darby and Karni,1973; Caswell and Mojduszka, 1996; Marette et al., 2000; Fultonand Giannakas, 2004; Roe and Sheldon, 2007; Bonroy and Con-stantatos, 2008). Several studies argue that one of the practicalmethods for addressing the information deficit in credence andexperience goods is proper labelling coupled with an effectiveregulatory mechanism for implementation and certification offood labels (McClusky, 2000; Marette et al., 2000; Loureiro et al.,2006; Roe and Sheldon, 2007; Bonroy and Constantatos, 2008).

The regulatory scenario for food processing industries in Indiais fast changing with the introduction of the Food Safety andStandards Act (FSSA). During the last 5 years, India has beenthrough many dilemmas in relation to the reform process of thecountry’s food safety administration because of multiplicity infood legislations, duplication in regulations, lack of coherence andcost-ineffectiveness (FICCI, 2007). Food labelling regulations inIndia are at a transitory phase where the old – the Prevention ofFood Adulteration Act, 1954 – and new – the Food and SafetyStandards Act, 2006 – regulations exist simultaneously. Thecurrent state of food labelling regulations is passing through con-flicting viewpoints regarding the information to be revealed on thefood labels. Conflicts arise because of poor integration in labellingobjectives of various stakeholders such as manufacturers, consum-ers, and regulators and enforcers; non-consideration of the con-sumers’ views; and multiplicity of regulations. At present, thereare more than 15 laws that deal with food products and safetystandards, and most of these laws overlap and lack synergies(Patnaik, 2005; Deininger and Sur, 2007). Multiplicity of laws,unclear guidelines and overlapping of regulations create confusionin the minds of consumers, traders, manufacturers and investors.

While food processors use labelling primarily as a marketingand product promotional tool, the government intervention in foodlabelling is often undertaken with the aim of achieving social goalssuch as improving human health and safety, mitigating environ-mental hazards, averting international trade disputes, or support-ing domestic agricultural and food manufacturing industries(Golan et al., 2001). Considering India as an emerging processedand packaged food market, the analysis of consumers’ preferenceson labelling attributes becomes important. This paper analyses theconsumers’ responses towards food labelling, its informationcontent and the importance of the functional characteristics oflabels in making informed purchase decisions. The study aims toprovide practical implications and guidelines based on consumers’perspectives, not only for food processors, retailers and packagersfor designing effective food labels to win the consumer’s confi-dence, but also for the policy makers at a time when the govern-ment is in the process of finalizing the operational guidelines forimplementing the Food and Safety Standards Act in the country.

Data and methods

Data collection

This study is based on an urban consumer survey of 631 respon-dents through a structured questionnaire, administered duringthe last quarter of 2007, covering six districts of Uttar Pradesh(India), namely, Agra, Allahabad, Gorakhpur, Jhansi, Lucknowand Moradabad, under an externally funded research project. Four

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residential localities from each district headquarters were selectedto ensure geographical coverage of the city. A random samplingapproach was adopted to select the representative households forthe study, irrespective of their residential status, that is, owned orrented house. While selecting the respondents from a household,emphasis was laid on interviewing those respondents who wereactually responsible for food shopping in the family. The surveyquestionnaire was comprehensively structured to capture variousaspects of food consumption behaviour. However, under thisstudy, only two sets of questions were included. The first partincluded questions related to food labelling on a five-point Likert-type scale to analyse the level of importance of various labellingattributes (1 = not at all important, 2 = somewhat important,3 = important, 4 = very important and 5 = extremely important).The second part included questions about the socio-demographicinformation of the respondents such as age, gender, family size,education level and household income.

Data analysis

The collected data was entered in spss spreadsheet and simplestatistical analyses were carried out such as descriptive statisticalanalysis, cross-tabulation, frequency distribution and chi-squarestatistics to assess the consumers’ perceptions on food labelling.To identify the important aspects of food labelling, factor analysiswas conducted to identify the underlying dimensions among a setof food labelling attributes. Principal component analysis wasdone using varimax rotation criterion. The Kaiser criterion wasused to retain only those factors with eigenvalues greater than 1.Finally, a logistic regression model was estimated to predict thelikelihood or probability of food label usage at the time of foodpurchase by consumers. A logistic regression model is a form ofregression where the outcome variable is binary or dichotomous,and the independents are continuous variables, categorical vari-ables or both. An empirical model was developed to estimate therelationship between socio-demographic characteristics and theeffect of food label information on consumers’ food purchasedecision. A question asked of consumers – Does the food labeldetermine what food to buy? – was transformed into binary vari-ables, which was used as the dependent variable. A set of socio-demographic factors – gender, age, education, income andgeographical location along with factors extracted by the principalcomponent analysis – was used as explanatory variables. Theempirical model is defined as:

Y Xi i i ii

n

* = + +=∑α β ε

1

(1)

whereYi* is an unobserved perception held by a consumer towardsfood label, Xi is a matrix of explanatory variables comprisingsocio-demographic factors and perceived preferences regardingfood labelling attributes, b is a vector of unknown parameters, a isthe intercept and ei is the error term.

Based on the variable used in the present study, the empiricalmodel was specified and estimated as follows, to predict the like-lihood or probability of the factors influencing purchase decisionbased on food labelling,

Y SM QN PS PI GND AGEEDU OCCUP INCO

i* = + + + + + + ++ +

α β β β β β ββ β β

1 2 3 4 5 6

7 8 9 MM LOC i+ +β ε10 (2)

The first four variables in equation 2 were extracted from thefactor analysis, used for reducing consumer preferences of foodlabel attributes, that is, serving method (SM), quality and nutrition(QN), production and storage (PS), and product identification (PI),and the remaining six variables comprise the socio-demographicprofile of the respondents such as gender (GND), age of therespondent (AGE), education (EDU), occupation (OCCUP),income (INCOM) and location (LOC).

The logit model is based on the cumulative logistic probabilityfunction and is specified as:

P F Ze i iX

= ( ) =+( )− +( )

1

1 α β (3)

where Z determines a set of explanatory variables X; F(Z) is thecumulative logistic function; e represents the base of natural loga-rithms and P is the probability of success when the explanatoryvariable has the value X. Logit models are interpreted using oddsand odds ratios. Odds ratio can be obtained by exponentiatingthe logit coefficients. The odds ratio indicates the multiplicativeimpact in the odds for a unitary change in the explanatory variableholding other variables constant. On the one hand, if the exponen-tiated coefficient is greater than unity, it explains that the odds areincreasing, and on the other hand, the negative value indicates thatthe odds decrease. Deviation of the exponentiated coefficient valuefrom 1 indicates the magnitude of impact on the odds for a unitchange in independent variable.

Respondent’s profile

The demographic profile of overall sample is shown in Table 1.The sample comprises of 69% male and 31% female respondents,as emphasis was laid on surveying the purchase decision makers ofthe households. The age composition of the sample shows a betterdistribution of all categories of respondents with an average age of37 years. The educational profile of the sample shows that about42% of respondents are graduates and above; 35% are havingeducation up to secondary and higher secondary levels. About53% of respondents were found to be vegetarians. The majority ofthe respondents have more than five family members with anaverage family size of six members. The number of earningmembers is one or two in a family with an average monthlyincome of INR 9103, with a dominance in the INR 5000–10 000monthly household income group. As per the recent economicsurvey, the average per capita income of Uttar Pradesh is INR13 262, which indicates that sample respondents are quite repre-sentative for the state.

Results and discussion

Indian packaged food market

A large population base and steady economic growth are importantcontributors to India’s increasing consumption and diversificationtowards high-value commodities like fruits, vegetables, milk,meat and eggs (Kumar, 1998; Bhalla et al., 1999; Chand, 2003). Acontinuous rise in middle-income households is having a signifi-cant impact on food demand in India because these groups tend tospend a relatively larger share of their income on food consump-tion and also on upgrading and diversifying their diets, eating out

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more often, and eating more processed and convenience foods(Landes et al., 2004). Despite being a leading producer of mostagricultural commodities, India accounts for just 1.5% of globalprocessed food trade (Euromonitor, 2009). The country processesabout 15% of its milk output, 2% of its fruit and vegetable output,and 1% of its meat output respectively. Liberal policies of thegovernment in terms of delicencing to establish food processingfirms, eliminating the restriction on their size and automaticapproval of foreign direct investments in food processing andmarketing up to 51% equity have provided a conducive environ-ment for the growth of the food processing sector. This has pro-moted the entry of a number of multinational firms throughacquisitions and joint ventures to establish their presence in thecountry.

The strong retail volume growth for packaged food, accompa-nied by significant increase in sales value for most of the packagedfood products, is a reflection of growing consumer confidence in abooming economy and a growing desire for convenience shopping(Euromonitor, 2009). According to the recent estimates of theEuromonitor International, India ranked second after Indonesia asthe fastest growing packaged food market in Asia Pacific in 2007.During 1998–1999 to 2008–2009, India has witnessed a growthrate of 8.3% in packaged food retail value (Table 2). Annual percapita expenditure on packaged food has increased from INR290.5 in 1998 to INR 592.7 in 2008 and is expected to rise to theextent of INR 1099.6 by 2013.

Table 3 indicates the market composition of packaged food inIndia along with annual growth in each product segment during2001–2002 to 2008–2009. The analysis of market composition ofpackaged food products provides interesting insights for formu-lating effective strategies to target the potential food segments. Outof 16 product categories, nine product groups have witnesseddouble-digit growth during 2001–2002 to 2008–2009 in packagedfood sales. The fastest growing food group comes out to be ready-to-eat products (38.2%), followed by noodles (17.6%). In terms ofmarket composition, dairy products constitute the major share,that is, 36.0%, followed by bakery products (19.3%). The Coop-erative sector has played a significant role in developing dairyprocessing in the country. Among the top 10 packaged food manu-facturers, six producers were from the dairy sector in 2007, mostof which witnessed strong double-digit value sales growth.

Consumer response on food labelling

The survey results of the study indicate that majority of consumers(96%) in the sample read food labels. Among them, 45.3% ‘often’read the labels, followed by 22.3% reading them ‘regularly’, 20%reading them ‘sometimes’ and the remaining rarely go throughlabels while purchasing packaged food products (Table 4). Whenasked about their opinion on whether the food label helps indeciding whether or not to buy a certain packaged food product,the most common response was ‘often’ (45%), followed by ‘some-times’ (27.8%), ‘always’ (15.3%) and, finally, ‘never and seldom’(6%). This clearly indicates that food label is becoming an impor-tant source of product information for consumers. Several empiri-cal findings on the role of food labelling in purchase decisionsacross the world indicate that food label information significantlyaffects the purchase decision of the consumers (Nayga et al.,1998; Variyam et al., 1998; Baltas, 2001; Cowburn and Stockley,2005; Peters-Texeira and Badrie, 2005; Rimal, 2005; Hu et al.,2006; McEachern and Warnaby, 2008). Dimara and Skuras (2005)argue that labelling is a powerful quality signal and a direct aid toconsumers in making purchase decisions because labels canconvey important information on search, experience and credenceattributes of the products.

Consumer response on food labellinginformation

Consumers’ responses on 12 attributes of food labelling have beenrecorded in a five-point Likert scale through structured interviews.Consumers were asked to express their views if labels should carryinformation on various attributes in terms of ‘not essential’ to

Table 1 Demographic characteristics of respondents

Characteristics

Respondents reporting

n %

GenderMale 436 69.1Female 195 30.9

Age group (years)<25 158 25.025–35 172 27.336–45 152 24.1>45 149 23.6Average age 37

EducationIlliterate 38 6.1Below junior high school 93 14.8High school/intermediate 227 36.3Graduate 179 28.6Postgraduate/professional 89 14.2

Family typeVegetarian 354 56.6Non-vegetarian 271 43.4

Only male members 88 37.3All members 148 62.7

Family size (members)<5 331 52.65–6 99 15.77–10 154 24.4>10 46 7.3Average family size 6.3

Number of working members1 277 44.62 206 33.23–5 131 21.1>5 7 1.1

Monthly household income (INR)<5000 123 19.55000–10 000 239 37.910 001–15 000 125 19.815 001–20 000 70 11.120 001–25 000 39 6.2>25 000 35 5.5Average income 9 103

Per capita income (Uttar Pradesh) INRa 13 262

aAs reported in Economic Survey, 2007–2008, Government of India.




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‘extremely essential’. Analysis of mean scores indicates that infor-mation on product price (4.79), manufacturing date along with thebest before and expiry dates (4.74), name and address of theproduct manufacturer (4.24) and warning/instruction on healthrisk with details of nutritional contents (3.92) have been reportedto be ‘extremely essential’ by majority of the consumers. Further-more, information on artificial ingredients (3.75), precautions for

children (3.35), use/preparation methods (3.34), amount of nutri-tion (3.22) and serving size (3.01) have been reported by theconsumers to be ‘very important’ (Table 5).

Comparisons of 12 aspects of food labelling attributes with thedemographic profile of samples have been done by computingchi-square statistic to assess if there is any significant difference inthe responses (Table 6). Out of 12 labelling attributes, males and

Table 2 Market size of packaged food in India

YearRetail value(INR in million)

Per capita(INR)

Year-to-yeargrowth (%)

1998 286 205 290.51999 304 687 303.8 6.52000 325 065 318.5 6.72001 349 008 336.2 7.42002 373 937 354.3 7.12003 399 789 372.7 6.92004 428 993 393.7 7.32005 463 132 418.5 8.02006 517 567 460.6 11.82007 595 956 522.5 15.12008a 687 036 593.7 15.32009b 814 264 690.7 18.52010b 936 587 782.1 15.02011b 1 067 849 880.7 14.02012b 1 211 156 986.8 13.42013b 1 365 779 1099.6 12.8

Compound annual growth rate (%)

1998–2008 8.3 6.71998–2013 10.7 9.1

aProvisional.bForecasted.Source: Euromonitor International: Packaged Food, 2009.

Table 3 Market composition of packaged food in India

ProductsCAGR2001–2007 (%)

Market composition (%)

2001 2002 2003 2004 2005 2006 2007

Dairy products 9.9 33.0 32.7 32.4 32.2 32.1 33.6 36.0Bakery products 6.1 22.9 22.6 22.3 22.0 21.5 20.5 19.3Oils and fats 6.1 18.1 17.7 17.5 17.2 16.9 16.1 15.2Confectionery 8.1 7.1 7.2 7.1 7.0 7.0 7.0 6.8Processed food 13.3 5.3 5.6 5.9 6.3 6.8 6.9 6.8Sweet and savoury snacks 12.3 3.1 3.3 3.5 3.7 3.8 3.8 3.9Sauces, dressings and condiments 9.9 3.6 3.7 3.8 3.9 4.0 3.9 3.8Ice cream 15.2 1.5 1.6 1.7 1.8 1.9 2.1 2.2Noodles 17.6 1.3 1.4 1.5 1.7 1.9 2.0 2.1Baby food 6.2 2.4 2.4 2.3 2.2 2.3 2.2 2.1Meal replacement products 9.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1Spreads 5.3 0.5 0.5 0.5 0.5 0.5 0.5 0.4Ready-to-eat meals 38.2 0.0 0.0 0.1 0.1 0.1 0.2 0.2Soup 12.4 0.1 0.1 0.1 0.1 0.1 0.1 0.1Pasta 13.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0Overall 8.8 100.0 100.0 100.0 100.0 100.0 100.0 100.0

CAGR, compound annual growth rate.Source: Euromonitor International: Packaged Food, 2009.




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females significantly differ on nine attributes. Males differstrongly in most of the attributes, except three attributes, that is,information on artificial ingredients, indication of vegetarian andnon-vegetarian and serving size of the foods. Consumers of all theage groups responded similarly on most of the food labellingattributes, except product price, manufacturing details, servingsize and ethical information. Analysis of mean scores indicatesthat younger consumers are significantly concerned about themanufacturing details on the food labels; middle-aged consumersare more concerned about product price information; and latemiddle or old-aged consumers are more concerned about ethicalinformation and information related to serving size.

Similarly, the education level of the consumers also influencesthe importance of information contents on food label. Price infor-mation on the food label is more important for consumers with alow level of education, while consumers with education betweenhigh school and graduate strongly prefer the label information onartificial ingredients used, preparation methods and precautionsfor children. Consumers with a graduate education and above

prefer food label attributes such as information on health risk,serving size and indication of vegetarian or non-vegetarian. Basedon the income category, consumers’ responses differ on five label-ling attributes, where information on product price is compara-tively more important for lower income groups, while consumersfrom higher income groups have stronger views on otherattributes. The analysis of difference in responses by location onvarious packaging attributes shows that consumers from biggercities require more technical information related to product QN,while consumers of smaller cities favour basic product informa-tion such as manufacturing details, SMs, and indication of veg-etarian and non-vegetarian.

Literature on consumer research indicates that labels intend toinform consumers about safety (Caswell, 1998), quality (Caswelland Mojduszka, 1996; Auriol and Schilizzi, 2002), nutrition(Nayga, 1999; Variyam and Cawley, 2005), ethical aspects (DePelsmacker et al., 2005), environmental issues (Jaffry et al., 2004;Stø and Strandbakken, 2005) and other qualities related to theproduct (including its production, distribution, sale and storage).Consumers are also becoming increasingly interested in knowingabout the products’ origins, and method of production, to ensurethat what they consume is real, healthy, authentic, traceable andwholesome (Coakley, 1998; Gilg and Battershill, 1998; Marsden,1998; Ilbery and Kneafsey, 1999). Literature provides empiricalevidence on variability in food label information requirementacross individuals, which may be associated with demographiccharacteristics such as gender, age, education and income(Mueller, 1991; Cole and Balasubramian, 1993; Guthrie et al.,1995; Burton and Andrews, 1996; Mangleburg et al., 1997;Nayga, 1997, 1999, 2000; Nayga et al., 1998; Variyam et al.,1998; Baltas, 2001; Lin et al., 2004).

Consumer response on food labellingattributes

Based on factor analysis, four sets of components/factors emergedwith an eigenvalue greater than 1, which explains the 66.271% ofvariance (Table 7). The total variance explained by factor 1 is18.390%, primarily comprising of serving size and use/preparation method attributes of food labelling as indicated byfactor loading values. Factor 2 explains 18.071% variation andloads high on factors related to product quality and nutritionalinformation on the food labels. Similarly, factor 3 explains varia-tion of 17.110% and correlates high on factors related to theprocess of PS of the product on food labels. The last component offactor analysis shows a variation of 12.703% and loads high on thebasic information on the product labels related to manufacturingand price details. This analysis clearly categorizes the food label-ling attributes based on consumers’ perspective, which can be usedby food processors and packagers for making appropriate deci-sions on labelling issues. These four extracted factors can broadlybe categorized as (i) SM; (ii) QN; (iii) PS; and (iv) PI.

Logistic regression tested the hypothesis as to how the explana-tory variables influence the use of food labels for purchase deci-sions among the consumers. The model is a reasonably good fitas shown in Table 8. Approximately 68% of the observations arecorrectly predicted, and 7 of the 10 variables in the model arestatistically significant. The chi-square test of the measure ofoverall significance of the model with 10 degrees of freedom is

Table 4 Consumer response on influence of food labelling in purchasedecisions

Responses

Do you read foodlabel at the timeof purchase?

Does food labeldetermine whatfood to buy?

n % n %

Never 23 3.7 37 6.0Seldom 54 8.7 37 6.0Sometimes 124 19.9 171 27.8Often 282 45.3 277 45.0Always 139 22.3 94 15.3

Total 622 100.0 616 100.0

Table 5 Consumer response on informative labelling

Contents n Meana Mode SD

Product price 618 4.79 5 0.515Manufacturing date, the best

before and expiry date618 4.74 5 0.551

Name and address of the productsmanufacturer

619 4.24 5 0.976

Warning/instruction about healthrisk with details of nutritionalcontents

617 3.92 5 1.131

Quantitative information abouteach artificial ingredient used

611 3.75 4 1.078

Precautions for children 624 3.35 4 1.050Use/preparation methods 623 3.34 4 1.052Amount of nutrition 626 3.22 4 1.212Vegetarian and non-vegetarian 617 3.09 2 1.305Serving sizes 616 3.01 4 1.403Storage instruction 624 2.61 2 1.025Ethical information (production

method)625 2.51 3 1.118

aNot essential = 1, extremely essential = 5.SD, standard deviation.




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significant at 1% level. The log-likelihood ratio, which measuresthe goodness of fit, is 746.596. This ratio is relatively low, imply-ing that the model fit is perfect. Similarly, a relatively low r-squaresuggests a low explanatory power.

The socio-demographic profiles of those who use the foodlabels in buying decisions along with indication of major infor-mation required on food labels are shown in Table 8. Among

the socio-demographic indicators, the estimated coefficients forgender, education, income and location of residence are statisti-cally significant, indicating that these factors are likely to influ-ence the use of food labels in purchase decisions. The resultssuggest that educated consumers are more than twice as likely touse food labels in purchase decisions as non-educated consumers.Similarly, the purchase decisions of male consumers, who arethe major shoppers, are also more likely to be influenced by theinformation on the food labels. Consumers who have a monthlyfamily income of INR 10 000 and above are more likely to usefood labels while shopping than those with less monthly income.Results also suggest that consumers belonging to bigger cities aremore likely to use the information on food labels while shoppingthan consumers from smaller cities.

Beside QN, PS processes and basic information of the productare found to be significant indicators of information on the foodlabels. Results indicate that consumers who perceived basic infor-mation on PI to be important are 1.629 times more likely to usefood labels for purchase decisions. Similarly, consumers who wantto know the details of PS of the food products are more likely touse food labels. The information on QN of a food product isperceived to be another important factor influencing the use offood labels in purchase decisions.

Food labelling regulations in India

Labels on food packages are designed to promote and protectconsumers’ interests by providing information on various productattributes and nutrition contents of the product so that consumerscan make informed dietary choices (Wang et al., 1995; Lin et al.,2004). A key principle for effective labelling policy lies withconsumer trust and confidence in information contents andenforcement mechanism (Segerson, 1999; Crespi and Marette,2003). Sudershan et al. (2008) studied that food inspectors in Indiaare of the opinion that food labels should contain all details relatedto ingredients used, date of manufacturing, weight of product,manufacturer’s address, permitted or non-permitted colours,maximum retail price, batch number and appropriate symbolsto indicate whether the food is vegetarian or non-vegetarian.

Table 6 Chi-square statistics for relationship between labelling attributes and demographic characteristics

Attributes Gender Age Education Income Location

Product price 11.755** 37.458** 23.680* 40.145* 30.462Manufacturing date, the best before and expiry date 2.550 35.576** 30.926* 28.638 49.270*Name and address of the products manufacturer 3.778 24.162 9.678 28.684 62.088*Warning/instruction about health risk with details of nutritional contents 10.000** 32.709 23.916* 24.890 68.933*Quantitative information about each artificial ingredient used 18.583* 22.171 10.428 55.121* 104.135*Precautions for children 7.917 16.541 16.632** 30.769 107.566*Use/preparation methods 11.472** 22.351 18.597** 31.201** 83.693Amount of nutrition 26.969* 28.119 8.089 57.103* 125.174*Vegetarian and non-vegetarian 25.421* 18.618 17.035** 32.459** 99.847*Serving sizes 14.617* 38.326** 25.140* 20.224 107.566*Storage instruction 20.315* 14.884 10.700 24.568 116.495*Ethical information (production method) 51.719* 40.691** 9.959 23.555 87.294*df 4 24 8 20 20

Significant at *1% level; **5% level.df, degrees of freedom.(Correction added on 9 September 2009, after first online publication: The chi-square statistic for Serving sizes/location was corrected from 107.566to 107.566*.)

Table 7 Factor analysis to identify food labelling attributes

Variables

Components

SM QN PS PI

Serving sizes 0.831 -0.322 0.047 0.048Precautions for children 0.827 0.091 0.113 0.056Use/preparation methods 0.625 -0.174 0.463 0.189Warning/instruction about

health risk with details ofnutritional contents

-0.096 0.777 0.065 0.085

Vegetarian and non-vegetarian -0.105 0.729 0.071 0.006Quantitative information on

artificial ingredients0.453 0.641 -0.280 0.130

Amount of nutrition -0.347 0.618 0.403 0.148Ethical information (production

method)0.159 -0.003 0.851 0.038

Storage instruction 0.063 0.201 0.845 0.043Manufacturing date, the best

before and expiry date0.181 0.041 -0.160 0.816

Product price -0.100 0.227 0.075 0.660

Name and address of theproduct’s manufacturer

0.149 -0.075 0.324 0.576

Total variance explained (%) 18.390 18.071 17.110 12.703Cumulative variance explained

(%)18.390 36.461 53.571 66.274

SM, serving method; QN, quality and nutrition; PS, production andstorage; PI, product identification.Extraction method: principal component analysis. Rotation method:varimax with Kaiser normalization.Bold values indicate variable loadings onto each extracted factor.




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However, food regulations in general focus on the basic informa-tion of the product on the food labels and put less emphasis onhealth and nutritional information to be given on the food labels.This emphasizes the need for a systematic change in governmentalapproach through the establishment of a professionally competentand autonomous food regulatory agency to ensure supply of goodquality and safe food to the consumers.

In August 2006, the reform process acquired pace with thepassing of a comprehensive union legislation by the parliament, thatis, the FSSA, after merging eight separate acts/orders comprising ofthe Prevention of Food Adulteration Act, 1954; the Food ProductsOrder, 1955; the Meat Products Order, 1973; the Vegetable Prod-ucts (Control) Order, 1947; the Edible Oil Packaging (Regulation)Order, 1998; the Solvent Extracted Oil, Deoiled Meal, and EdibleFlour (Control) Order, 1967; the Milk and Milk Product Order,1992; and any other order issued under the Essential CommoditiesAct, 1955 relating to food. The FSSA, 2006 proposes the establish-ment of a new autonomous statutory authority, called the FoodSafety and Standards Authority, for laying down science-basedstandards for articles of food and regulating the manufacture,storage, distribution, sale and import of food, in order to ensureavailability of safe and wholesome food for human consumption.TheAct also aims to establish a single reference point for all mattersrelating to food safety and standards across the country, by movingfrom multi-level, multi-departmental control to a single line ofcommand. Chapter IV, paragraph 23 of the FSSA clearly states thatno person shall manufacture, distribute, sell or expose for sale, ordispatch or deliver to any agent or broker for the purpose of sale anypackaged food product which is not marked and labelled in themanner as may be specified by regulation. It is expected that theActshall mandate and define the health and nutritional claims for the

purpose of labelling by considering the recent amendments onpackaging and labelling of food under part VII of the Prevention ofFood Adulteration Rules, 1955.

There is a pressing need not only to have integrated and com-prehensive food laws, but also to prepare effective operationalguidelines to make these laws more relevant for consumers interms of providing safe food along with essential information onhealth and nutrition. An effective framework to ensure food safetyshould comprise of three pillars of consumer policy – provisionsof food safety and standards, consumer awareness and empower-ment on food safety issues with proper information flow on foodlabels through mandatory government regulations and effectiveinstitutional mechanism for enforcement and redressal (Fig. 1).This framework clearly indicates that the regulatory mechanismshould create an accountable system to provide safe food to con-sumers by ensuring accurate information flow on the food labels.The operational system should be supported with sufficient infra-structure and legal back-up to ensure scientific validation of claimsmade on food labels, on the one hand, and strengthening of con-sumer education, on the other hand, so that consumers can makeinformed food choices. With the implementation of the Act, thisstudy provides timely inputs to the policy makers and food pro-cessing industry about consumers’ perspectives on food safetyprovisions and how food labelling policy can be embedded inoverall food policy framework.

Conclusion and policy implicationsFood labels play an important role in influencing the buying deci-sion by building consumers’ confidence in the safety and qualityof the food, and by increasing consumer awareness on diet and

Table 8 Estimated results of the logistic regression

Variables

Dependent variables

Often or always food label determines what food to buy = 1, otherwise = 0

Explanatory variables b SE Sig Exp (b)

Constant -5.386* 1.051 0.000 0.005SMa 0.132 0.104 0.205 1.141QNa 0.0231** 0.119 0.051 1.023PSa 0.328* 0.101 0.001 1.388PIa 0.488** 0.198 0.014 1.629GND (male = 1, female = 0) 0.527* 0.198 0.008 1.694AGE (years) 0.011 0.007 0.103 1.011EDU (literate = 1, otherwise = 0) 0.822** 0.395 0.038 2.275OCCUP (salaried = 1, otherwise = 0) 0.215 0.220 0.328 1.240INCOM (INR 10 000 and above = 1, otherwise = 0) 0.491* 0.191 0.010 1.634LOCb (big cities = 1, otherwise = 0) 0.398** 0.183 0.030 1.489Log-likelihood 746.596Cox and Snell R 2 0.126Nagelkerke R 2 0.170Chi-square (df = 10) 82.803*Corrected prediction (%) 68.3

aIndicates extracted variables from factor analysis (Table 5).bBigger cities – Agra, Allahabad and Lucknow = 1; smaller cities – Gorakhpur, Jhansi and Moradabad = 2.Statistically significant at the *0.01 level; **0.05 level.SE, standard error; SM, serving method; QN, quality and nutrition; PS, production and storage; PI, product identification; GND, gender; AGE, age ofthe respondent; EDU, education; OCCUP, occupation; INCOM, income; LOC, location; Sig, level of significance; Exp (b), odds ratio.




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health. Strong economic growth and increased purchasing powerhave brought with them a new set of consumers at urban locations,demanding processed and packaged food products at convenientmarketplaces. With the emergence of global economy and influxof information technology, consumers have been increasinglygetting interested in knowing the ways their food is produced,processed and marketed and the impact of food intake on theirhealth. Food labelling is considered an important instrument for allthe stakeholders in the packaged food sector. Food processors useit as an effective tool to communicate with consumers in promot-ing the sales of their products, while food regulators consider foodlabel as an effective medium to educate consumers on food safetyand health issues, on the one hand, and enforce food qualitystandards, on the other hand. Similarly, consumers also considerthe food label as an important source of information on variousproduct attributes to enable them to make informed choices.

This study analyses the consumers’ perspectives on variousfood labelling attributes in India. Analysis of mean scores of urbanconsumers indicates that every food label should contain informa-tion on product price, manufacturing date along with the bestbefore and expiry dates, name and address of the product manu-facturer and information on nutritional contents for better man-agement of health risk. Socio-demographic parameters of theconsumers such as gender, age, education, income and residentiallocation play a significant role in determining what kind of infor-mation should be provided on food labels. The analysis clearlyindicates that educated male consumers of young age, belongingto higher income groups and living in comparatively larger citiesrequire more technical information on a food label as comparedwith others.

Consumers’ responses on 12 food labelling attributes have beenreduced to four components – SM, QN, PS and PI – by factoranalysis adopting the principal component analysis technique.Findings of the logistic regression indicate that gender, education,income and location of residence are important socio-demographic factors affecting the use of food labels for purchasedecisions of the consumers. Findings also indicate that a food labelshould contain information related to QN, PS processes and basic

information of the product. The propositions derived in this paperhold important implications for government labelling regulatorsand provide inputs to food processors, retailers and food packag-ers. Recently, the Government of India has enacted a comprehen-sive legislation on food safety and standards, that is, the FSSA,covering all the major issues of food safety and quality includingfood labelling. As operational guidelines for implementing thislegislation are under way, this study provides timely policy inputson food labelling based on the consumers’ perspectives.

AcknowledgementsThis paper is a part of an externally funded research project‘Demand Assessment of Horticultural Commodities in UttarPradesh’ sponsored by the Uttar Pradesh Council of AgriculturalResearch (UPCAR), Government of Uttar Pradesh, Lucknow. Theauthors would like to thank the editor and anonymous reviewersfor their invaluable inputs and comments for improving the qualityof manuscript.

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