Palsgaard study finds consumers are willing to pay more for sustainable ingredients
A key industry study has found that the majority of consumers are willing to pay more for food and drink ranges, including within confectionery, that contain sustainably produced ingredients, reports Neill Barston
The analysis from Danish emulsifier specialist Palsgaard, which surveyed over 600 people in four countries, found that the coronavirus crisis has increased the importance shoppers place on price, yet significantly, this did not affect their focus on environmental issues.
In terms of spending patterns for confectionery, the study found that 20% of people expected to spend more on chocolate during the pandemic, but this was balanced against the same number who anticipated indulging less, with 60% expecting no change in their habits.
As Palsgaard noted in its study of Mexican, Singapore, US and British-based consumers this summer, that there were some interesting variations by age. For example, some of the respondents within the younger Generation Z and millennial age groups were significantly more likely than average to anticipate spending more on food areas such as ready meals.
Furthermore, three quarters (75%) of respondents believed food companies have a lot of responsibility for protecting the environment, with 23% believing they have a little duty to engage on the issue. More than nine in ten (92%) said it was important that the ingredients in the products they buy are produced sustainably, with 49% saying it was very important.
Notably, 82% said they would be willing to pay more for a food product containing sustainably produced ingredients. Nearly half (46%) would pay over 5% more and 17% would pay over 10% more. Environmental issues were found to be of particular concern to younger consumers. For 18-24 year olds, climate change was the ethical issue food companies should take most seriously.
Sustainability is a key concern for Palsgaard, which in 2018 became the first emulsifier producer to achieve CO2-neutral production at all its sites, which Confectionery Production covered with a site visit last year (see the video with CEO Jakob Thøisen here, who explains the major importance of improving the company’s environmental performance).
Another significant issue for consumers is that of traceability, with 79% of those in the study saying food companies should be able to trace all the ingredients in their products back to their original source.
In response to this, Palsgaard stated that it is fully compliant with food safety legislation and standards and guarantee full traceability within its product value chain. As the business noted, one ingredient that has received particularly high levels of interest, and controversy, is palm oil.
Most (58%) survey respondents were aware that ethical concerns have been raised about its use in food products. Of these, 39% believed food companies should use no palm oil at all, 54% thought it is acceptable to use palm oil certified as sustainable and 7% did not care at all if companies use palm oil. Palsgaard confirmed that in instances which it uses such oil, it is careful to work with only RSPO-certified materials, with its complete product range being MB or SG certified. In addition, it has also insisted that each batch can be individually trace back to the source mill. In 2019, sales of its RSPO SG certified products increased by 13%.
Speaking in the wake of the company’s latest studies, Thøisen said: “We always believed that carbon neutrality was the right path to take from an ethical point of view. As this research shows, it also makes sound business sense. Consumers, especially younger ones, are increasingly focused on reducing their carbon footprints and will reward food manufacturers who share that commitment.”
The research also provides new insights into the effects of coronavirus on food purchasing decisions. Over half (55%) of consumers said the price of products had become a more important factor since the pandemic, while 42% said it had made no change and only 3% said it had become less important.
However, this does not appear to have detracted from the focus on sustainability. In fact, 41% of respondents said environmental concerns had become more important since the pandemic, with 55% saying there had been no change and only 4% saying they had become less important.
Thøisen added: “It would be understandable if the economic hardship caused by COVID-19 had pushed sustainability down the agenda. However, we found that the opposite was true. This is perhaps because great change causes people to reflect and focus on the things that matter most. Whatever the reason, the food industry cannot afford to underestimate the importance of environmental issues to consumers.”
Palsgaard also asked consumers how they thought their purchasing behaviours would change post-pandemic. Four in ten (40%) expected their households to buy groceries online more often, compared to 12% who said they would do so less often. Almost half (47%) said they expected to eat out less often.
The same number (47%) said they expected to spend more on products for home cooking and baking. Millennial consumers (those aged 25-34) were the most likely to expect to increase their spending on home cooking and baking products (57%). Fifty-four per cent of consumers in Generation Z (those aged 18-24) said the same.