Consumers' use of nutritional labels: A review of research studies and issues

Andreas Drichoutis, Agricultural University of Athens
Panagiotis Lazaridis, Agricultural University of Athens
Rodolfo M. Nayga, Jr., Texas A & M University - College Station

Abstract

Introduction

Diet-related health problems have increased dramatically over the last few years. Consequently, nutritional labeling has emerged as an important aspect of consumers’ food purchase decisions. Nutritional content in food products is considered to be a credence attribute. However, if trustworthy nutritional labels are available, nutritional labels could function as a search characteristic. The regulatory environment in some countries (e.g. USA, Australia etc.) has long recognized the potential of standardized on-pack nutrition information and has mandated the presence of nutritional labels on all processed food products. Others, like the EU, are contemplating similar mandatory nutritional labeling regulations. The nutritional labeling literature has grown significantly in recent years. Our paper reviews this increasingly important literature and addresses some specific issues regarding the determinants of label use, the debate on mandatory labeling, the label formats preferred by consumers, and the effect of nutrition label use on purchase and dietary behavior.

Determinants of nutritional label use

There has been no consistency in the results of studies conducted regarding the determinants of label use. For example, there has been no consensus on the effect of age, income, or working status on nutritional label use. However, education and gender (i.e., being female) have been found to positively affect label use. In addition, people with more available time for grocery shopping have been found to be more likely to be classified as label users. It also appears that consumers who are more concerned about nutrition and health are more likely to use nutritional labels. Consequently, consumers on a special diet, organic buyers, and those aware of the diet-disease relation are more likely to search for on-pack nutrition information than others.

Type of household also has an effect on label use. Specifically, smaller households and households with young children are more likely to engage in nutrition information search behaviors. In addition, households in non-city or rural areas are more likely to use nutritional labels. Grocery shoppers but not meal planners are also more likely to engage in nutrition information search.

Our review of the literature also suggests that consumers who attach importance to price usually are less likely to use labels but those who attach importance to nutrition are, as expected, more likely to search for nutritional information. Finally many studies have found that nutrition knowledge has a significant impact on nutritional label use.

Mandatory vs. voluntary labeling

From a firm’s point of view, provision of nutritional information on food packages is desirable if it can generate more revenues. In the context of effective private quality signalling, government regulation would be unnecessary if higher quality products had nutritional information on their packages and those with lower quality did not. However, if sellers cannot signal quality effectively, the market may disappear completely or only the lowest quality products may be sold. Mandatory labeling is called to fill the void of information provision mainly by correcting asymmetric information or by correcting externality problems. However, prescriptions such as “more information is always better” may not be an optimal policy for nutrition labeling. One cannot therefore unambiguously state that the benefits of new nutrition labeling rules will be greater than the costs, although there is some reason to believe that benefits may be greater than the costs.

The U.S.’ Nutritional Labeling and Educational Act (NLEA) that went into effect in 1994 can serve as a good reference point for mandatory labeling. Some authors have found no significant change in the average nutritional quality of food products offered for sale by manufacturers and retailers after the implementation of the NLEA, thus suggesting that the benefits from information provision might be more limited than previously thought. Other studies did not also detect any change in behavior of consumers with regard to nutritional information search both before and after the implementation of the NLEA. More recently, due to rising obesity rates, there has been debate on whether to require nutritional labeling in the Food Away From Home (FAFH) sector. However, some studies have found that provision of nutrition information has no effect on overall energy and fat intake from restaurants.

Label formats: which is preferred?

Nutritional labels come in different formats. The format that consistently produces the most positive dietary benefits is the percentage declaration of the various nutrient amounts based on the daily values for each nutrient. Consumers tend to perform poorly with manipulation of quantitative nutrient information. Furthermore, the use of bold text, colored nutrition panels, and whole numbers instead of decimals and calories instead of joules (in a typical EU nutritional label, energy has to be expressed both in terms of calories and joules where 1 kcal=4,18 kjoules) are preferred by the majority of consumers.

Does nutritional label use affect purchasing behavior?

In general, it has been found that nutritional label use affects purchasing behavior mainly because consumers want to avoid the negative nutrients in food products. The effects can be even greater if labeling is combined with an information campaign to educate consumers. It appears that nutritional information affects purchasing behavior because it influences valuations and perceptions of the product. In that context, several surveys have studied the effect that claims create on personal evaluations. Health claims in the front of the package have been found to create favourable judgements about a product. For example, when a product features a health or nutrient content claim, consumers tend to view the product as healthier and are then more likely to purchase it, independent of their information search behavior. Other studies, however, have found that health claims have a weak effect on disease risk perceptions. Most importantly, one has to keep in mind that in the food choice process, there will always be a taste-nutrition trade off. Consumers may prefer the immediate gratification offered by a tasteful product rather than the long run benefits of a nutritious product. Dietary indulgence is often cited as consumer’s self-control problem.

Can use of nutritional information lead to dietary changes?

Some researchers have argued that provision of health related information does not always lead to healthier consumption. Most empirical research, however, suggests that provision and use of information can significantly change dietary patterns. Several studies have found that nutritional label use contributes to a better dietary intake or to reduced consumption of ‘unhealthy’ foods. Nutritional label use is also associated with diets high in vitamin C, low in cholesterol, and lower percentage of calories from fat. Other studies have found nutritional label use to increase dietary quality of consumers, with higher improvements detected when health claim information was used. Finally, some studies have also found that consumers who use the Nutrition Facts panel that was mandated by the NLEA have higher fiber, iron, and protein intakes than non-label users.

Conclusion

This study synthesizes the results of empirical research related to nutritional label use that spans almost two decades. The summary of results presented in this study provides valuable information for directions for future research and development of theoretical and empirical studies. Among others, we find that provision of information has a positive effect on the consumption of beneficial nutrient components and a negative effect on the consumption of harmful components such as fat and cholesterol.

No large-scale, longitudinal research has yet been conducted on the determinants of nutritional label use and the effect of nutritional label use on purchase and consumption behavior. Longitudinal analysis would assess the temporal stability of the conclusions derived from the extant literature. Finally, research on nutritional label use can be characterized as applied research and an area of future research that needs some attention is the development and empirical testing of theoretical models related to nutritional label use.