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UL Product Mindset Industry Report Food

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This report is a complement to a global study, Navigating the Product Mindset, that features marketplace trends, statistical data, differing stakeholders, varied geographies, diverse industries and a technical panel of UL experts. This report presents the key findings related to the food industry. It is based on 2,430 quantitative interviews with manufacturers and consumers across a range of significant export and import markets — China, Germany, India and the United States.

Navigating the Product Mindset and its additional industry reports seek to better understand market forces; drivers of decisions; findings related to safety, performance, sustainability and innovation; and the motivations behind these views.

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UL Product Mindset Industry Report Food

  1. 1. NAVIGATINGTHE PRODUCTMINDSETFOOD INDUSTRY REPORT
  2. 2. INTRODUCTIONUL has launched a global study, Navigating the Product Mindset, that features PRODUCT STUDY KEYmarketplace trends, statistical data, differing stakeholders, varied geographies,diverse industries and a technical panel of UL experts. This report presentsthe key findings related to the food industry. It is based on 2,430 quantitativeinterviews with manufacturers and consumers across a range of significant Quantitative data: blue indicatesexport and import markets — China, Germany, India and the United States. manufacturers.Navigating the Product Mindset and its additional industry reports seek to betterunderstand market forces; drivers of decisions; findings related to safety, performance,sustainability and innovation; and the motivations behind these views. Quantitative data: green indicates consumers.To read the full study, go to ul.com/productmindset. U.S. CHINA INDIA GERMANY Flags indicate specific geographic results.FOOD 2
  3. 3. Manufacturer findingsFOOD 3
  4. 4. Findings Snapshot• Food manufacturers express confidence in their job performance related to product safety, product innovation, sustainability and reliability. Only 2% of food manufacturers feel that their company is behind the curve regarding product safety.• Rising costs are the biggest supply chain challenge. Consistent product quality is the supply chain consideration with which manufacturers are most satisfied.• Product safety has the largest impact on food manufacturers’ ability to successfully compete in the marketplace today. In the future, manufacturers believe product safety will remain their most important consideration.• Manufacturers believe they are responsible for ensuring product safety, not government agencies, consumer agencies and retailers. They also feel that it is their job to communicate key product safety information to consumers.• Food manufacturers agree consumers are becoming more empowered and commanding greater influence across the supply chain. As further evidence of this, they most value consumer claims about their products.• More than 50% of food manufacturers agree there is a direct relationship between product quality and country of origin.• Today, 59% of manufacturers consider environmentally friendly products profitable or somewhat profitable. Chinese food manufacturers are the most optimistic about environmental products being profitable, while U.S. manufacturers demonstrate the largest concern in this area.FOOD 4
  5. 5. Food manufacturers are confident IN their performance In general, manufacturers consistently rank their company performance higher than that of their industry. Compared to manufacturers in building materials, high-tech and household chemicals, food manufacturers rank themselves highest in terms of being ahead of the curve in product safety. Company Industry 33% Ahead of the 38% Ahead of theINNOVATION PRODUCT curve curve 55% At the curve 53% At the curve 12% Behind the 9% Behind the curve curve Company Industry 63% Ahead of the 55% Ahead of thePRODUCT Safety curve curve 35% At the curve 42% At the curve 2% Behind the 3% Behind the curve curve Company Industrysustainability 43% Ahead of the 37% Ahead of the PRODUCT curve curve 52% At the curve 54% At the curve 5% Behind the 9% Behind the curve curve Company Industrysustainability OPERATIONAL 40% Ahead of the 35% Ahead of the curve curve 49% At the curve 55% At the curve 11% Behind the 10% Behind the curve curve Company Industry 56% Ahead of the 50% Ahead of thereliability PRODUCT curve curve 42% At the curve 47% At the curve 2% Behind the 3% Behind the curve curve FOOD 5
  6. 6. Rising Costs ARE the largest supply chain challenge for food manufacturersThis concern demonstrates the economic volatility of the marketplace and is also the primary supply chainchallenge for building materials and household chemical manufacturers.Biggest Supply Chain Challenges Rising costs/Price fluctuation 13% Timely delivery 9% Quality 9% Availability of materials 7% Competition 4%Biggest Supply Chain Challenges: GEOGRAPHIC DETAILSRising costs are particularly a concern among Chinese and U.S. manufacturers. German manufacturers note timelydelivery as their most significant supply chain issue, while Indian manufacturers are most concerned with laborshortages.Rising costs/Price fluctuation Timely delivery 18% 20% 18% 9% 8% 5% 6% 0%Quality Availability of materials 14% 11% 11% 9% 6% 5% 4% 4%Competition 7% 5% 3% 0%FOOD 6
  7. 7. Manufacturers are most satisfied with quality and on-time deliveryFood manufacturers feel most confident in their ability to manage consistent product quality andon-time delivery. They ranked these as the two best-performing aspects of their supply chain.Manufacturer Supply Chain Satisfaction Consistent product quality 79% On-time product delivery 73% Ability to manage risk in an increasingly complex marketplace 53% Managing costs 48% Reducing redundancy in your company’s supply chain 44%Manufacturer Supply Chain Satisfaction: GEOGRAPHIC DETAILSIt is notable that Chinese manufacturers’ confidence is high across all supply aspects of supply chain satisfaction.Consistent product quality On-time product delivery 91% 89% 79% 74% 77% 65% 69% 64%Ability to manage risk in an increasinglycomplex marketplace Managing costs 62% 55% 51% 55% 51% 41% 47% 39%Reducing redundancy in your company’s supply chain 54% 51% 44% 29%FOOD 7
  8. 8. Product Safety and Reliability are priority considerationsfor Food manufacturersProduct safety and product reliability are the top considerations that impact manufacturers’abilities to effectively compete in the food marketplace. Notably less significant is outsourcingto developing countries to contain manufacturing costs, even though rising costs are a keysupply chain challenge. Product safety 94% Product reliability 91% Operational sustainability 78% Product innovation 76% Speed to market 75% Using environmentally friendly packaging 74% Designing sustainable products 67% Outsourcing to developing countries 42%Product Safety is the Key Factor in Manufacturer SuccessWhen asked to select only one key factor, food manufacturers chose safety as the single mostsignificant consideration related to their business success. This suggests the essential importanceof safety to food manufacturers.Most important consideration impacting manufacturers’ ability to competeUsing environmentally friendly packaging 1% Designing sustainable products 5% Speed to market 7% Operational sustainability 8% 41% Product safety Product innovation 16% 22% Product reliabilityFOOD 8
  9. 9. Manufacturers feel it is their job to communicate product safetyinformation to consumersFood manufacturers identify themselves as the primary stakeholder responsible for providingand communicating safety information to consumers. Relative to other industries, they aresignificantly more likely to feel that the government should also be involved in communicatingproduct safety information to consumers.Who is responsible for communicating key product safety information to consumers? 82% 32% 31% 25% AGREE AGREE AGREE AGREE Manufacturers Government Retailers Independent safety organizations92 % of FOOD manufacturers agree product safety is becoming more important.FOOD 9
  10. 10. For FOOD Manufacturers, PRODUCT SAFETY Leads TomorrowForecasting a few years into the future, product safety remains of key importance and product innovation alsobecomes more significant to food manufacturers. They are the only manufacturers, when compared with buildingmaterials, high-tech and household chemicals manufacturers, that did not consider innovation to be the singlemost importation consideration in their future.Future Consideration Most Important in Impacting Your Company’s Ability to CompetE Using environmentally friendly packaging 3% Outsourcing to developing countries 3% Designing sustainable products 7% 31% Product safety Speed to market 8% Operational sustainability 9% Product reliability 19% 20% Product innovationFuture Consideration Most Important in Impacting Your Company’s Ability to CompetEIt is notable that Indian food manufacturers are less concerned with product safety than are manufacturersin China, Germany and the U.S. Additionally, they appear to consider operational sustainability more significantfor future success than do their counterparts, especially Chinese manufacturers.Product safety Operational sustainability 39% 19% 38% 9% 33% 8% 16% 1%FOOD 10
  11. 11. Manufacturers are responsible for product safetyManufacturers clearly see themselves as responsible for ensuring the safety of food products. While otherstakeholders are seen as contributing to product safety, the onus clearly lies with the manufacturer.Additionally, manufacturers are more likely to hold those manufacturers that assemble the final productversus those that create ingredients as primarily accountable for safety. Manufacturers that assemble final products 65% Government agencies 12% Companies that manufacture components/ingredients 10% Independent safety testing organizations 4% Consumer agencies 4%FOOD 11
  12. 12. Food manufacturers agree consumers are becoming more empoweredConsumers are increasingly gaining influence and effectively getting their voices heard across the global supplychain. Manufacturers clearly see consumers commanding greater power and becoming more informed.Manufacturers strongly agree 84% 83% 80% 75% AGREE AGREE AGREE AGREEConsumers are requesting Consumers are becoming Consumer confidence in Consumers are demanding more safety information more aware and better product safety is increasing more eco-friendly products about products educated about products at the same cost as non- in general eco-friendly productsFood manufacturers Believe Consumer Claims are the Most ValuableManufacturers express a strong degree of confidence in consumers regarding the value of their endorsements.They consider claims made by consumers the single most valuable type of endorsement, which serves as anotherproof point of the growing influence of consumers. Demonstrating confidence in their own performance, foodmanufacturers rank their own endorsements as the next most valuable type of claim.Most valuable party making a claim about your product Consumers 89% Self-claims 83% Retailers 82% Government agencies 82% Independent safety certification companies 81% Independent companies regarding performance verification 77%FOOD 12
  13. 13. Manufacturers agree that country of origin has a strong impacton product qualityManufacturers believe there is a direct relationship between food products and the importanceof country of origin. The perceived quality of unprocessed food products is more directly impactedby the source country.Impacting Product Quality 62% 58% 53% 41% AGREE AGREE AGREE AGREE Country of origin of Country of origin of Country of origin Sourcing and fresh dairy products fresh, unprocessed of processed food processing prepared, food (meat, fruit) ingredients ready-to-use food (sugar, flour) components (fillings, sauces)Food manufacturers will increase sourcing from other countriesover the next five yearsOn average, 40% of food manufacturers will increase sourcing from other countries over thenext five years. Additionally, for the vast majority of manufacturers, these new countries willbe in addition to their current roster rather than replacing existing sources.Agree over the next five years you will source moreingredients from more countries Agree these countries will be in addition to your current sources 46% 94% 44% 86% 37% 81% 33% 75%FOOD 13
  14. 14. An Environmental Orientation Can Be ProfitableThe potential of the environment as a significant business driver is evidenced by the fact that 59% offood manufacturers consider environmentally friendly products to be profitable or somewhat profitable. Profitable 26% Somewhat profitable 33% Not profitable today, but may be over time 35% Not profitable today and you do not 6% expect it to be over the next few yearsAn Environmental Orientation Can Be Profitable: Geographic DetailsNotably, Chinese and Indian food manufacturers are the most positive about environmentally friendlyproducts being profitable, while U.S. manufacturers have the largest concerns in this area.Profitable Somewhat profitable 40% 44% 30% 39% 24% 26% 11% 23%Not profitable today, but may be over time Not profitable and do not expect it to be in the next few years 49% 16% 35% 6% 29% 1% 25% 1%FOOD 14
  15. 15. CONSUMER findingsFOOD 15
  16. 16. Findings Snapshot• Consumers feel that the safety of food products has largely stayed the same over the past two years or improved slightly. The exception is consumers in China, who feel the safety of both fresh and processed food has worsened.• The primary safety concerns for food products relate to contracting a foodborne illness, chemical additives and sanitary conditions.• Product performance and safety are priorities for consumers and are considered the most important types of information when evaluating a fresh food product such as meat or fish. Additionally, 76% of consumers find it difficult to locate product safety information about these products.• More than 50% of consumers across all geographies state they are always or usually aware of the country of origin for food products. More than 50% of consumers also believe the country of origin of food products will become more important over the next five years.• On average, 69% of consumers feel that it is more important to know the origin of a food product’s ingredients versus where the product was assembled.• They also believe that the product quality of food products is better in developed markets than in emerging countries.• Consumers think that food manufacturers can do a better job. They perceive that manufacturers do not take adequate steps to ensure environmentally friendly manufacturing procedures are followed or conduct thorough testing before releasing products into the marketplace.FOOD 16
  17. 17. Consumers view food, both fresh and unprocessed, as slightly improvingin terms of safety over the past few yearsFood shows minimal changes in terms of safety over the past few years, with the notable exception of China.Consumers there note the worsening of both fresh and processed food. Fresh food Processed food Better INDIA INDIA Worse U.S. U.S. GERMANY GERMANY CHINA CHINAPerformance and Safety are priorities for consumersWhen asked about fresh meat and fish as an example of a food product, freshness/performanceand safety are considered the most important types of information that consumers considercritical and valuable when evaluating a product.Most important types of information when evaluating a product Freshness/Performance 42% Product safety 38% Organically grown or raised 7%FOOD 17
  18. 18. Consumer safety concerns: contracting a foodborne illness, chemical additivesand sanitary conditionsContracting a foodborne illness is the greatest safety issue for fresh food, while chemical additives causethe biggest worry regarding processed food. Cleanliness/sanitary conditions and freshness are also relevantconcerns for both food types.Biggest consumer safety concerns about fresh food Other 1% Tampering 8% Genetic modification 11% 33% Contracting foodborne illness Freshness 21% 26% Cleanliness/sanitary conditions prior to purchaseBiggest consumer safety concerns about PROCESSED food Genetic modification 6% Tampering 7% Synthetic pesticides 8% 33% Chemical additives Toxins in food containers 9% Freshness 10%Cleanliness/sanitary conditions 12% 15% Contracting foodborne illness prior to purchaseFOOD 18
  19. 19. It is hard for consumers to find product information for fresh meat and fishIn general, consumers do not think that it is easy to find product information on either safety or performance.Safety information about fresh meat and fish was considered the most difficult safety information for consumers76to find, as compared with products such as cell phones, household cleaners and insulation. % of consumers find safety information about fresh meat and fish difficult to locate.49 % of consumers find performance/ quality information ABOUT FRESH MEAT AND FISH DIFFICULT TO LOCATE.FOOD 19
  20. 20. Awareness of country of originOver 50% of consumers across all geographies state they are always or usually aware of the country in whichfresh and processed food is manufactured. Additionally, more than 50% of consumers also believe the countryof origin of food products will become more important over the next five years.Usually or Always Aware of which Country where a FRESH product iscountry a fresh food product was manufactured will become moremanufactured in important to you in the next five years 76% 62% 73% 59% 63% 57% 62% 49%Usually or Always Aware of which Country where a processed product iscountry a PROCESSED food product manufactured will become morewas manufactured in important to you in the next five years 70% 58% 65% 55% 52% 54% 46% 50%FOOD 20
  21. 21. Importance of Country of Origin and Ingredients to consumersConsumers in all geographies feel that it is more important to know the country of origin for each of the individualingredients that constitute a food product rather than to know where the finished product is assembled.Importance of knowing the country IMPORTANCE OF KNOWING WHERE THE PARTS COMEof origin for each individual FROM VS. WHERE A PRODUCT WAS Assembledpart/ingredient of the product 71% 78% 22% 69% 75% 25% 68% 64% 36% 61% 60% 40% COUNTRY OF ORIGIN FOR A PRODUCT’S PARTS/INGREDIENTS THE COUNTRY WHERE IT WAS ASSEMBLED/PACKAGEDConsumers perceive product quality as better in developed vs. emerging marketsConsumers in both developed and emerging nations feel that developed markets produce higher-quality fresh andprocessed food products. Consumers in India and China rate food products from developed countries higher thanthey do those made in their own. In the U.S. and Germany, consumers perceive the emerging markets as delivering42lower-quality products. % higher from developed to emerging countries regarding processed food.40 % higher from developed to emerging countries REGARDING fresh food.FOOD 21
  22. 22. 75Consumers believe FRESH FOOD manufacturers can do a better job % do not believe fresh food manufacturers have taken adequate steps to ensure environmentally friendly manufacturing procedures are followed.71 % feel THAT fresh food manufacturers are not making better products today than FIVE years ago.70 % do not think fresh food manufacturers conduct thorough product testing before introducing new products to market.FOOD 22
  23. 23. Consumers are even less satisfied with the performance of processed77food manufacturers % Do not believe processed food manufacturers have taken adequate steps to ensure environmentally friendly manufacturing procedures are followed.76 % feel THAT processed food manufacturers are not making better products today than FIVE years ago.72 % do not think processed food manufacturers conduct thorough product testing before introducing new products to market.FOOD 23
  24. 24. NAVIGATINGTHE PRODUCTMINDSETin the NewsNavigating the Product Mindset has been recently featured in Time magazine,The New York Times, Fortune and Forbes, among other notable publications.To read the full study, go to ul.com/productmindset.FOOD 24
  25. 25. methodologyIn Spring 2011, UL employed an independent researchfirm, ORC International, to conduct a globalquantitative survey among 1,235 consumers and 1,195manufacturers across four countries: China, Germany,India and the United States. To meet the objectivesof the survey, manufacturers across the high-tech, food,household chemicals and building materials sectorswere interviewed by phone and consumers were interviewedthrough an online survey. Manufacturers were director-level and above and specialized in management, researchand development, marketing and sales, quality control,product management, or design. Consumers were arepresentative mix of age, gender, education and income.Data tabulations among subgroups have been tested forstatistical significance at the 90% and 95% confidencelevels. A technical panel was used to provide additionalinsights, and Product Mindset considerations were selectedbased on importance and overall significance of the data.FOOD 25
  26. 26. furtherinformationFor more information about this study:Visit: www.ul.com/productmindsetEmail: productmindset@ul.comCall: +1 847.664.2226UL and the UL logo are trademarks of Underwriters Laboratories Inc. © 2012The Food Industry Report cannot be copied, reproduced, distributedor displayed without UL’s express written permission. V.12.FOOD 26

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