Country of Origin Labelling of Fresh Produce: Consumer Preferences and Policy Implications

ABSTRACTThis study examines the effect of country of origin (COO) on New Zealand consumers' purchase probabilities for three categories of fresh produce: tomatoes, apples and pork, for local and overseas sourced produce. Purchase probabilities for all three product categories suggest a clear COO effect. Consumers prefer New Zealand sourced produce to both unlabelled and overseas-labelled produce. When price increases, a COO effect is still apparent; however, less so than at the lower price point. This finding suggests that a competitive advantage exists for fresh produce which is labelled of New Zealand origin; however, the advantage is in volume rather than price increase. Further findings contribute to public policy debate about the provision of COO labelling of food items. Consumers' desire to know the origin of fresh produce is high and support is strong for mandatory COO labelling of fresh produce.Keywords: Purchase probabilities, country of origin, food labelling, competitive advantage1. INTRODUCTIONTo date, the country of origin (COO) literature has focused predominantly on purchasing of highinvolvement durable products; in particular, wellrecognised branded products (Knight et ai, 2007). The effect of COO on consumers' purchase of food products has generated less interest (Juric & Worsley, 1998, Orth & Firbasova, 2003; Chryssochoidis et ai, 2007; Krystallis & Chryssochoidis, 2009). Yet Ploffmann (2000) notes that in food surveys consumers consider COO important, and there are indications that food origin can influence purchase decisions independent of other cues (Skaggs et ai, 1996; Loureiro & Umberger, 2005). Studies that have examined consumers' stated preferences for food origin typically report that food items are favoured from one country in preference to identical or similar items that originate from elsewhere. For example, Menapace's et ai (2011) study, which investigated preference for extra virgin olive oil, found that Canadian consumers' purchase preferences are influenced by country of origin and they are willing to pay a premium for products originating from a favoured geographic region. Camgozand Ertem (2008) also report that respondents' intention to purchase chocolate changed, both favourably and unfavourably, when COO was revealed, depending on whether the item originated from Turkey, Germany, Holland or Switzerland. Similarly, Krystallis and Chryssochoidis (2009) noted that Greek consumers expressed a marginal preference for locally produced ham and cheese to similar products originating from Italy and the Netherlands. Thus COO labelling of food presents both as a potential marketing tool to gain competitive advantage and as providing benefit to consumers by enabling them to make informed purchase decisions (Verbeke & Viaene, 1999). This study aims to address the existing gap in knowledge of the effect of COO on purchase decisions for fresh food. The paper also aims to address a noted limitation in previous COO research; namely, the reliance on attitude and opinion surveys (Gao & Knight, 2007). Specifically, this paper reports findings on the effect of COO on New Zealand consumers' purchase probabilities for three categories of unbranded fresh produce, for which price and product origin are the only cues. First, we provide the rationale for our focus on country of origin labelling of fresh food. We then present the methodology and results of our study, and then discuss the policy implications and avenues for further research that arise from our findings.2. BACKGROUNDThe lack of interest in the relationship between country image and food purchase decisions is likely to be the result of earlier beliefs that food items are a low involvement purchase (Pecher & Tregear, 2000). Flowever, while purchase decisions relating to food items could be considered low involvement on the basis of monetary outlay, increasing food related health concerns and food safety issues among consumers have made food purchase decisions high involvement (Skaggs et ai, 1996; Loureiro & Umberger, 2005). …