By Joe Lederman, Managing-principal, FoodLegal – www.foodlegal.com.au

Do food labels help shoppers stay thinner? Yes, according to a recently released study, published in the “Agricultural Economics” journal, authored by Steven T. Yen, a University of Tennessee professor in the Institute of Agriculture’s Department of Agricultural and Resource Economics, in conjunction with researchers at the University of Santiago de Compostela in Spain, the University of Arkansas and the Norwegian Institute for Agricultural Finance Research.

Professor Yen’s study reportedly found that women who read food labels weighed nearly 9 pounds less than women who did not read labels. However, the query I have is about the cause-and-effect findings of this latest American study. In an Australian 2008 Federal court case, there was evidence that the health-conscious, weight-watching female consumer is already more likely to have a pre-existing knowledge about a product that is marketed as a healthy option.

“Reading food labels is important because it allows shoppers to improve diet quality by making more informed decisions in food purchases,” Professor Yen said. He and his co-researchers used data from the annual “National Health Interview Survey” that was conducted by the USA’s Centers for Disease Control and Prevention. The survey collected more than 25,000 observations on health, eating and shopping habits. Professor Yen’s study aimed to examine the relationship between nutritional label use and obesity. His conclusion was that reading labels played a role in reducing obesity, especially among women.

However to state that the findings imply that health education campaigns can employ nutritional labels as one of the instruments for reducing obesity, as Professor Yen’s study did, may not be telling the whole story.

In 2008, the large Australian rice processor Ricegrowers went to the Federal Court of Australia to sue its competitor Real Foods alleging that Real Foods had acted in a misleading or deceptive fashion as seller of Corn Thins, a combined corn-and-rice ricecake product, consisting mostly of rice rather than corn.

Evidence produced to the Federal Court of Australia in the case showed that in the 12 months ending May 2005, the total value of goods in the Australian market for rice and corn cakes sold in supermarkets was about AU$27 million; The Woolworths supermarket group was selling approximately 50% of the corn and rice cakes in the Australian market, with Coles selling about 21%, the balance of sales occurred in independent supermarkets and elsewhere, including school canteens. Ricegrowers’ sales accounted for about 44% of the market and Real Foods about 51%. Further evidence produced by the disputant companies in this court case revealed that in the subsequent 12 months (ending May 2006), the value of goods sold in supermarkets increased to approximately $28 million, but the market shares changed so that Real Foods had about 41% and Ricegrowers 54%. This coincided with an increase in sales of SunRice flavoured rice cakes. Subsequently, for the 12 months ending May 2007, the market grew to about $35 million, but Ricegrowers ’ share increased to 61% and Real Foods declined to 36%. Once again, sales of SunRice’s expanding range of flavoured rice cakes grew markedly. The introduction of its flavoured rice and corn cake products had been a very successful move for Ricegrowers which had helped it to grow its share of the market for rice and corn cake products from approximately 44% in 2005 to about 61% in May 2007. Over that period total units of all rice and corn cakes made by Ricegrowers and Real Foods sold increased significantly, so the size of the market was expanding.

Evidence about ‘the ordinary reasonable consumer’ was important evidence in the proceedings.

What is interesting is the description that the parties agreed to as the demographic makeup of the ordinary reasonable consumer for this product, namely:

” The ordinary reasonable consumer of the parties’ rice and corn cake products was a female aged between 30 and 49 years. Most would have middle or older families (i.e. school age children or teenagers) but some would not have children; some would be in households with either one or two income earners. She would be working either full-time or part-time, be married and educated.

“The ordinary reasonable consumer would be purchasing these products as snack foods for herself and her entire family unit.

 “She would be health conscious and would want to set a good example for her family by her healthy eating. She also would be conscious of her weight and would feel guilty when snacking. She would not want to have foods that were full of fat or sugar. Nor would she want to give her children or teenagers such foods or set a bad example for them”.

Clearly, this was a product aimed at the female health-conscious consumer. The evidence showed that such health conscious consumers are already health-conscious before they read the label. They may already be conscious of their weight before they read the label.

It is just as easy to suggest, as the evidence from the Australian Ricegrowers versus Real Foods case suggests, that the more health-conscious consumer who is inclined to shop with knowledge of her food, already has the predilection and motivation to control her weight before looking at the product.

The existence of the food label may not necessarily be the cause of her weight-loss. Some healthier food products are marketed to be more attractive to the health-conscious or weight-conscious consumer. The label may not necessarily be the cause of any weight-loss. The label is not the only form of marketing for the product.

There are many ways in which marketing messages are conveyed to the health-conscious consumer about the healthiness of the food; and the effect of a food label may not necessarily be as significant as the latest American study may have suggested.  No form of labelling is likely to ensure that consumers will lose weight.

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