How the market for animal welfare-friendly food products works

Building on earlier findings from Welfare Quality on the current and potential market for animal welfare-friendly products, our recent findings indicate the value that animal welfare has as a marketing term, used by retailers to protect and differentiate their brand and the products they offer. Three inter-related retailing dynamics are key to understanding the development of products that carry farm animal welfare claims:

Brand Management Innovation with supply chains Limitations to supply and demand

Brand Management
Competition between retailers for consumers’ loyalties and trust has expanded beyond product quality and price to encompass wider issues of ‘corporate social responsibility’ that cover all aspects of their commercial practices. In effect, closer scrutiny of the integrity and quality of their commercial relations and supply chains by government, NGO’s and media is embraced as a commercial opportunity, a possibility to differentiate their own brand and product favourably from the competition.
In this context farm animal welfare is becoming an increasingly important issue for retailers’ brand management and thereby demands some control over the ‘quality’ of the supply chains, especially for ‘own label’ ranges. In practice, this varies widely between the study countries. In the UK, Netherlands, Sweden and Norway most of the products taken up by the major retailers conform to some form of quality assurance (QA) scheme, indeed membership is a pre-requisite to market access. In Sweden and Norway this is mainly driven by the farmer cooperatives which dominate both production and processing and own the most visible brand names. In the UK and Netherlands the process is mainly retailer-led with the cooperation of the industry as a whole. In Italy and France we found far fewer QA schemes in the supply chain with the exception of a few retailers that focus on ‘quality’ products and ranges.

Innovation in supply chains
The development of QA schemes has provided a key instrument for defining safety and quality (including farm animal welfare) throughout a supply chain. Such schemes have been used varyingly by retailers across the board, not only to fulfil their ‘due diligence’ responsibilities but also to enable more active involvement in defining minimum standards for all products and setting specifications for ‘higher’ quality ranges and products, particularly own-label ones. Some European retailers and manufacturers/farmer cooperatives have established bespoke, quality driven supply chains that enable the marketing of ranges and products with unique selling points.Retailer-led initiatives are commoner in the UK and the Netherlands whereas manufacturers/farmer cooperatives have a much stronger presence in the French, Italian and Swedish market place. In Norway and, to some extent, Sweden, manufacturers have been reluctant to differentiate products along any quality lines let alone farm animal welfare.

Limitations to supply and demand
It is clear that the market recognises limitations to both supply and demand for products with improved animal welfare. The growth in the supply of welfare-friendly food products is restricted by uneven legislation and enforcement on farm animal welfare across Europe as well as by generally low investment within product sectors to improve housing, training etc. Demand for ‘welfare friendly’ products is not uniform across all types, there is a tendency to sell only the higher valued meat cuts as ‘welfare friendly’ products. This dichotomy presents its own commercial challenges.

This note summarises a 2007 report: “The current and potential market for welfare-friendly food: retailing and supply chain practices. A cross-comparative study over six European countries”.
Please contact Emma Roe e.j.roe@soton.ac.uk or Marc Higgin Higginm@cf.ac.uk for further information or a copy of the report.