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4. OBJECTIVE (ii) TO INVESTIGATE INDUSTRY PRACTICE BEHIND 'SCOTTISH' LABELLING AND BRANDING INITIATIVES

Survey of Scottish food and drink businesses

4.1 All market research carried out by ADAS is conducted in line with the Market Research Society code of conduct. ADAS also takes very seriously its obligations under the Data Protection Act. Any email contact or telephone contact gives the recipient an opportunity to request that no further contact be made.

4.2 A telephone survey was conducted by ADAS during February 2009. Respondents were recruited to the study at random from lists of food and drink businesses based in Scotland. These lists were obtained from a variety of databases, including:

• The Scotland Food and Drink Buyers Guide.
• Scottish Organic Producers Association "The Larder".
• Wendy Barrie's "Scottish Food Guide".
• The FARMA lists of farm shops and suppliers to famers' markets.

Sample discussion

4.3 It is emphasised that the sample was not designed to be representative of the 2,500 food and drink businesses that were estimated to operate in Scotland but to achieve a good spread by enterprise type and region. To ensure that a broad cross-section was interviewed, the eleven categories designated by Scotland Food and Drink were used to group businesses as follows:

• Alcoholic Beverages
• Bakery and Cereals
• Confectionery
• Dairy
• Fish and Seafood
• Food Ingredients
• Fruit and Vegetables
• Meat, Game and Poultry
• Non-alcoholic beverages
• Prepared Food
• Preserves and Sauces

4.4 A target was set of ten interviews in each sector to give a total sample of 110 respondents, with good geographic spread. No other restrictive criteria applied. It was considered that this number would yield sufficiently robust information on which to base overall conclusions without being overly burdensome on the food and drink industry. This sample size does not permit analyses at category level and findings should not be interpreted as necessarily representative of the wider Scottish food and drink sector.

4.5 At the draft reporting stage, concerns were expressed that the larger meat and dairy organisations were under-represented in the survey. In response and given the time available, two additional interviews were conducted to boost the number of larger meat businesses and one additional interview was conducted to boost the number of large enterprises in the dairy sector.

Questionnaire

4.6 The questionnaire was designed by the Project Team, in full consultation with the Scottish Government Research Group, to address the following points:

• Business size (full time equivalent employees).
• Range of products manufactured/distributed/sold.
• Type and whereabouts of customers.
• Source of products, is it all Scottish. Could it be, given demand.
• Current practice within supply chain in terms of labelling.
• Whether products carry country of origin of labelling.
• Other information that is included regarding traceability.
• Whether current practice differs for different products.
• Perceived importance to customers of having information on where products are produced and processed.
• • Has there been any demand.
  • Which sectors is it most important for.
  • Perceived need for a change in labelling to include country of origin.
  • How it is ensured that suppliers' claims are correct/ taken on trust.
  • Whether or not any detail of country of origin or local production is included on any marketing materials.
  • Whether or not local authorities (or anyone else) have ever requested proof of traceability - how could this be done.
  • Whether or not sufficient Scottish products could be sourced if there was more demand from customers.

4.7 A telephone pilot study of four businesses was conducted to pre-test the questionnaire prior to gaining final approval (Appendix 1) and commencing the main-stage fieldwork. Telephone interviews were conducted by ADAS consultants during the period 28 January to 18 February 2009.

Sample description

4.8 A total of 113 completed interviews was achieved in total. There were at least ten respondents from each sub-sector with twelve respondents in the meat sub-sector and eleven respondents in the dairy sub-sector.

4.9 Sub-sectors were not mutually exclusive. For example, three respondents in the bakery and cereals sub-sector were also active in the confectionery sub-sector and five respondents in the prepared foods sub-sector were also active in the meat, game and poultry sub-sector, and so on. For the purposes of the interview, respondents were asked to focus mostly on a single sub-sector.

4.10 When asked to describe their main product, respondents reported a range of activity, as follows:

• Alcoholic beverages (10 respondents).
• • Ales and beers (3).
  • Malt and blended whisky (3).
  • Wine, liqueurs and alco-pops (4).
• Bakery and cereals (10 respondents).
• • Oatcakes, biscuits, shortbread (5).
  • Bread and rolls (3).
  • Specialist vegetarian or allergen free baking (2).
• Confectionery (10 respondents).
• • Tablet (4).
  • Chocolates (3).
  • Boiled sweets etc. (3).
• Dairy (11 respondents).
• • Cheese (6).
  • Ice cream (2).
  • Milk, cream and other dairy products (3).
• Fish and seafood (10 respondents).
• • Shellfish specialists (3).
  • Salmon specialists (3).
  • Other (4).
• Food ingredients (10 respondents).
• • Cereals and flours (4).
  • Rapeseed oil (1).
  • Miscellaneous (dripping, seaweed, seasonings etc.) (5).
• Fruit and vegetables (10 respondents).
• • Soft fruit (3).
  • Potatoes (2).
  • Field vegetables (2).
  • Salad and other vegetables (3).
• Meat, game and poultry (12 respondents).
• • Fresh meat and meat products (10).
  • Game and venison (2).
• Non-alcoholic beverages (10 respondents).
• • Water (5).
  • Juices and soft drinks (3).
  • Coffee and tea (2).
• Prepared foods (10 respondents).
• • Ready meals (4).
  • Cooked, smoked or dried meats (4).
  • Prepared or smoked fish products (2).
• Preserves and sauces (10 respondents).
• • Jams and marmalade (2).
  • Chutney and pickle (4).
  • Honey (2).
  • Other condiments (2).

Respondents' enterprise size

11. Respondents were asked to state how many employees worked for their business in the particular sub-sector of interest. Table1, below, summarises respondents' enterprises according to their reported number of employees (expressed as full time equivalent).

4.12 Table 2 also shows that of the total sample of 113 respondents:

• There were 41 respondents that reported 1-4 employees.
• 23 reported 5-9 employees.
• 26 reported 10-49 employees.
• 20 reported 50-249 employees.
• 3 reported 250+ employees.

Table 2: Number employed ( FTE) in respondents' main sub-sector

Q5: Please can you tell me approximately how many people work in this area of the business in total? By

Q4: Which do you regard as your main sub-sector?

Base: all respondents

4.13 Further research that targets the larger enterprises (250+ FTE) - in particular, in the bakery and cereals, dairy and meat sectors is recommended. This could, for example, take the form of face-to-face on-site meetings to allow the findings of this project to be presented to representatives from the target company's sales, marketing and production departments for discussion.

Respondents' customer profile

4.14 Respondents were asked to identify their main customers. Some two-thirds of participants cited retailers, including multiple retailers, local retailers, farm shops and internet outlets. There was slightly over one-third that identified wholesalers and just below one-third that reported supplying the foodservice sector, for example hotels and restaurants. Some four out of ten respondents stated that they supplied direct to consumers and less than one in ten reported supplying into the further processing/manufacturing sectors. Approximately two-thirds of respondents reported that they supplied two or more customers and around one-third supplied a single customer sector only.

Respondents' market description

4.15 Participants in the survey were asked to estimate the proportion of sales of their main product that were generated from specified geographic locations, selecting one choice from the list.

4.16 As illustrated in Table 3, below, there were:

• 10 respondents that supplied into their regional/local market only.
• 15 respondents that supplied the wider Scottish market.
• 43 respondents that supplied Scotland and the wider UK.
• 39 participants that were exporting to overseas markets as well as supplying the domestic market.
• 6 respondents were unable to provide an answer.

Table 3: Proportion of respondents' sales generated by location

Q20: What proportions of the sales of your main product are generated from each of regional/local, Scotland, the rest of the UK and outside the UK?

Base: all respondents

Membership of assurance schemes

4.17 Six out of ten respondents reported that they complied with one or more assurance schemes or standards. There were 29 mentions of the BRC Food Certification scheme and 13 mentions each of QMS and the Little Red Tractor. SALSA was cited by 12 respondents. A total of 26 respondents reported some form of organic certification. There were nine mentions of EFSIS (which is a commercial scheme including compliance with the BRC scheme) and 3 mentions of STS, who operate the certification scheme for suppliers to the NHS. There were 23 mentions of "other" and these included, among other schemes, retailer-specific assurance programmes. A little over half of all respondents were members of a trade association or marketing group.

Origin labelling

4.18 The majority, (100 of all 113 respondents) indicated that their main products carried some form of origin labelling. Of these:

• 29 labelled product origin according to a particular region or local area.
• 39 cited Scotland.
• 16 used some combination of regional/local and Scotland.
• 6 respondents labelled origin as UK.
• 3 respondents used some combination of regional/Scotland/ UK.
• There were 7 mentions of 'other'.

4.19 Respondents were asked to describe, in their own language, the terms that were used to denote origin. Interviewers provided prompts only when respondents' sought help, by suggesting 'made in Scotland', 'product of Scotland', 'Scottish', a 'regional name', and so on.

4.20 Responses highlighted some sector-specific terms and some cross-sector language:

• Sector-specific:
• • Scotch whisky.
  • Scotch beef.
  • Aberdeen Angus.
  • Craft-brewed in (region).
  • Hand-baked/home-made/hand-crafted in (Scotland/region).
  • Produced from Scottish fish.
  • Processed and packed in Scotland.
  • Farmed in Scotland.
• Cross-sector:
• • Product of Scotland.
  • Made in Scotland.
  • Scottish.
  • Country of origin, Scotland.
  • Regional references - Highlands and Islands e.g. Highlands, Orkney, Isle of Islay, Arran, Skye, Colonsay and Western Isles.
  • Regional references - other e.g. Edinburgh, Castle Douglas, Aberdeenshire and Borders.

4.21 In addition, there were some respondents, typically supplying at local level that described marketing under their own name and address. Eight out of ten respondents that labelled by origin indicated that this applied to 100% of their main product output.

Reference to Scotland in the presentation of products

4.22 When asked whether or not they made reference to Scotland in the presentation of their products, for example using the Saltire or a tartan image, 48 respondents replied to the positive and 65 to the negative.

4.23 Among those respondents that made reference to Scotland, this drew largely on Scottish and Celtic imagery and associations:

• Saltire / St Andrew's Cross / Scottish Flag (12 mentions).
• Tartan (12 mentions).
• Landscape ( 11 mentions).
• • Including specific mentions of Glamis Castle, Orkney, West Coast, Fishing Boats, Hills and Lochs and Edinburgh Castle.
• Thistle logo (8 mentions).
• Celtic imagery (3 mentions).
• Gaelic writing (2 mentions).
• Stag's head (2 mentions).
• Single mentions of a deerstalker hat and Ayrshire cow.

Perceived benefits

4.24 Respondents (n=70) that were labelling product origin as Scotland and/or presenting their products as Scottish were asked to describe the benefits these associations with Scotland brought to their products. The key benefits tended to be associated with added value and product differentiation:

• Product attracts a higher sale price/adds value.
• Sales volumes increased.
• Advantage over UK or English products.
• Helps to identify the product for target consumer groups.
• • Scottish consumers (local purchasing).
  • Tourists/visitors to Scotland.
  • Overseas consumers (including expatriates).

4.25 The attributes that were associated by these respondents with Scotland were primarily:

• Natural, fresh and pure associations with the landscape in Scotland.
• • "Although local custom is our main business, our continental customers love the overall image of clean, mountains, pure waters and an overall image of quality." (Fish and Seafood).
• A reputation for quality products.
• The intrinsic strength of the 'Scotland' brand that was itself seen as very strong.

4.26 Some sector-specific advantages were identified, as described below:

• Alcoholic beverages: the strength of the Scotch whisky brand was widely acknowledged. The product's romantic associations with the Highlands and the competitive advantage represented by the exclusive Scotch label were cited in particular.
• • "The Whisky industry has done a good job on the image of Scotch whisky - but where the whisky's distilled is exceptionally important to whisky drinkers and that is what people look for on a bottle."
• Bakery: Scotland's reputation as a food producer and the country's food heritage were cited in general.
• Confectionery: respondents highlighted the importance of local branding in response to demand from visitors. In addition, mention was made of export markets where expatriates wished to have a "taste of home". The imagery of the Scottish countryside was described for its role in branding.
• Dairy: respondents described the positive attributes associated with Scotland, "clean air, fresh water and wide-open spaces". Also mentioned were aspects of sustainability through local supply.
• • "Reducing road miles, traceability from farm to housewife."
• Fish and seafood: the imagery of Scotland's mountain scenery, pure water and fresh air were all identified as underpinning the country's established reputation for quality produce. Nevertheless, there were also concerns with regard to some use of Scottish labelling.
• • "There appears to be a very grey area - to me the wording 'product of Scotland' means grown, reared, sourced and processed entirely in Scotland. Whereas 'Scottish', is being used by everyone jumping on the band wagon and using the Scottish selling point to their advantage, even if the product/produce has been brought into Scotland and not originated from Scotland - this is why I do not use the word Scottish on my label."
• Fruit and vegetables: Scottish raspberries, swedes, mushrooms and garlic were all cited in particular for their associations with quality.
• Meat: Scotland's reputation for nature and open, wild countryside were mentioned. The Scotch Beef brand was highlighted in particular.
• • "Scotch Beef has a well-deserved special reputation for the quality and flavour of the product."
• Non-alcoholic beverages: the strength of Scottish imagery was emphasised for the benefits it conveyed in communicating messages of quality and nature.
• • "Very brand-able and subtle, many icons and internationally recognised."
• Prepared foods: Scotland and Scottishness were highlighted for the role they played in denoting quality and value to consumers with potential for premium pricing.
• • "Higher price paid for Scottish products - perceptions of healthier and better quality."
• Preserves: while there was much emphasis on the value of Scottish imagery in distinguishing products from competitors, mention was also made of the growing awareness of food miles and local sourcing initiatives - this was perceived as double-edged when target markets were far removed from the product's origin. Respondents in this sector also highlighted the tourism and hospitality markets where local/Scottish branding was utilised to good effect.

Barriers to origin labelling

4.27 Respondents (n=43) that were not labelling their products by origin and were not making use of Scottish imagery in the presentation of their products were asked to describe what their reasons were for choosing not to feature Scotland. The majority of respondents tended to highlight a positive rationale to brand or position their product according to specific drivers:

• Preference for local branding;
• • "Being local more important than being Scottish." (Confectionery).
  • "Tremendous benefits from local branding, supply hotels and guest houses that promote the fact that they use local products." (Dairy).
  • "Local brand more important (to the identity of the brand) than Scotland but moving towards Scotland as marketing area broadens." (Dairy).
• Preference for specific quality marks or organic branding.

4.28 For some respondents, the question of Scottish branding was not perceived to be of direct relevance given their particular markets:

• Supplying products for further processing.
• Not relevant - particularly for products with non-Scottish ingredients.
• • " Although the item is very Scottish, it's put together in Scotland with little or no Scottish ingredients." (Confectionery).
  • "We do buy-in - it's UK but not always Scotland so prefer to label as UK with name of smokery." (Fish and Seafood).

4.29 A minority of respondents identified a risk of potentially negative associations:

• Branding as Scottish a disadvantage in some geographical markets.
• Overuse of Scottish imagery, particularly tartan, has devalued the brand.
• • "Use of the term Scottish has been overdone and any previous benefits have been watered down." (Dairy).

4.30 There were several reported instances where respondents were keen to brand their products as Scottish but were unable to do so due to their particular circumstances. For example, a respondent in the meat sub-sector described stock that were born, reared, cut and packed in Scotland but as they were slaughtered in Northumberland they were marketed under the farm brand rather than under the Scotch Beef label. Similarly, a respondent from the food ingredients sub-sector reported that although they sourced goods from a local abattoir, not all animals were sourced by the abattoir from within Scotland.

Perceived importance of origin labelling

4.31 Respondents were asked to indicate how important they considered it was that their customers had details of the origin of their products (n=110 respondents) and also where processed (n=76), if this was relevant to that business. In both cases, seven out of ten respondents described it as highly or quite important and two out ten respondents stated that it was not important or not at all important - the remainder were not sure.

Use of origin labelling in marketing materials

4.32 Seven out of ten respondents indicated that they included detail of origin labelling in marketing information or displays. Respondents were fairly evenly divided among those that included detail of country only, region only, local area only, or some mix of country/region/local area.

Authenticating origin labelling

4.33 When asked if they had been asked to provide evidence to support their claim of origin labelling, four out of ten respondents answered 'yes' and six out of ten said 'no'. Respondents were then asked how evidence of origin labelling could be provided, if requested.

4.34 Among those respondents that had been asked to provide evidence, responses tended to fall into one of two categories. Traceability could either be proven through inspection of invoices, delivery notes and ingredient specification (i.e. paper trail based) or by showing inspectors the source of manufacture of the product.

• 'Showing people' was particularly mentioned in 13 cases, including:
• • Source of spring and mineral waters.
  • Can take people out to the fishing areas.
  • Can view the livestock (for dairy and meat sectors).
  • Can view product being made (for confectionery and beverage sectors).
• 'Paper trail based' proof was offered as evidence in 32 cases including:
• • Tagging and labelling of individuals and batches to allow tracing back to specific fields or animals.
  • Production records/audit trail detailing the progress of raw materials through the manufacturing process.
  • Supplier invoices with ingredients specifications.
  • Export certificates.

4.35 Among respondents that had not been asked to provide evidence:

• 'Showing people' was mentioned in 24 cases:
• • Source of spring and mineral waters.
  • Can take people out to the fishing areas.
  • Can view the livestock (for dairy and meat sectors).
  • Could visit the farms of their suppliers.
  • Can view product being made (for confectionery, bakery and beverage sectors).
• 'Paper trail based' proof was offered as evidence in 20 cases including:
• • Tagging and labelling of batches to allow tracing back to specific fields or animals.
  • Production records detailing the progress of raw materials through the manufacturing process.
  • Supplier invoices with ingredients specifications.
• In 8 cases respondents claimed that they could prove origin but did not state how they would do it.

4.36 With regard to obtaining information from their suppliers on origin labelling, excluding those that provided their own source of raw materials, respondents were equally divided between those that reported that steps were taken to ensure suppliers' claims of origin labelling and those that took such claims on trust. Where it was reported that steps were taken, these included:

• Suppliers subject to site visits or are known personally (10 respondents).
• Suppliers subject to an auditing or verification process (15).
• Rely on paperwork - specification and certification (15).
• Source from reputable suppliers (8).

Sourcing of Scottish ingredients

4.37 Just over one third of respondents estimated that 100% of the ingredients of their main product could be regarded as being of Scottish origin. The remainder were fairly evenly divided between those that estimated up to 50% of ingredients could be regarded as Scottish and those that estimated somewhere over 50% but less than 100%.

4.38 When those respondents that reported using anything less than 100% Scottish ingredients were asked whether or not they could source all products and ingredients from within Scotland, at almost nine out of ten, the overwhelming majority did not believe that this could be achieved. Various barriers to sourcing from within Scotland were identified:

• Product/ingredient not grown in Scotland, cannot be sourced in Scotland:
• • Specific mentions of sugar, bananas, mangoes, fruit essences, glucose syrup, coffee, hops, ginger, oranges, dried fruits, chocolate, maize starch and mozzarella.
• Product not available in sufficient quantities:
• • Specific mentions of organic barley.
• Seasonality:
• • Specific mentions of tomatoes, butter and fish.
  • Also mentioned were impacts of poor (growing) seasons on availability of quality supplies, e.g. barley.
• Quality (particularly important for cereals).
• Cost.

Satisfaction with current practice in terms of origin labelling

4.39 Respondents were almost unanimous (107 of 113 respondents) in describing current practice within their own supply chain as entirely satisfactory or satisfactory. Just three respondents felt that it was not very satisfactory or not at all satisfactory with three respondents that replied they were not sure.

4.40 There was less unanimity when respondents were asked to describe their level of satisfaction with origin labelling within their respective sectors. Six out of ten respondents replied entirely satisfactory or satisfactory. Two out of ten respondents reported that they were not very satisfied or not at all satisfied.

4.41 The survey went on to ask where, if at all, respondents would like to see improvements with regard to current practice in terms of origin labelling. Responses tended to focus on aspects of traceability and concerns about the potential to mislead consumers. Suggestions included:

• The source of products should be made clear:
• • Use of terms such as 'packed in', 'processed in' can mislead consumer. Labelling imported product should not make it Scottish.
  • Dairy sector respondents reported unclear or misleading origin labelling on fresh milk imported into Scotland.
  • Some respondents from the meat sector expressed concerns that animals that were finished for a short period in Scotland were then sold as Scottish.
  • Imported ingredients can be used to make Scottish products, without declaring origin.
  • In some cases a small proportion of the product is of Scottish origin but it can be labelled as Scottish.
• Scottish imagery can mislead consumer.
• Tighten up on supermarket origin labelling.
• Need to avoid confusing the consumer with too many terms.
• More effort needed regarding food labelling within food service sector to follow traceability and food origin through to menu.

Government guidance and control

4.42 When asked if they thought that there should be more Government guidance on the use of terms such as 'Scottish', 'Made in Scotland', 'Product of Scotland' etc., half of all respondents answered yes. Unsurprisingly those who answered 'Yes' were more likely to be sourcing all or most of their ingredients from other Scottish suppliers than those who answered 'No' to this question.

4.43 The reasons underpinning these responses tended to focus on aspects of enforcement:

• The terms used at the moment are used too widely and are open to interpretation. Clear, simple definitions of the guidelines are needed.
• The criteria for allowing products to use Scottish labelling are not strict enough e.g. the low proportion of Scottish ingredients in some products.
• Scottish products and producers need to be protected; in some cases the Scottish brand is being abused.
• Consumers must not be misled.
• Action should be taken against those abusing the regulations.

4.44 Just under half of respondents indicated that they did not believe that there was a need for more Government guidance or control. Their reasons tended to reflect a degree of satisfaction with existing arrangements and a concern about increased levels of administration and government interference:

• Things are fine as they are, more guidance/control not necessary.
• Already too much bureaucracy.
• Too much government interference already.
• Worried that tougher rules may jeopardise existing branding as Scottish.
• Worried that more government control will add to costs.
• Lack of faith in (Scottish) Government.
• Should be left to individuals to decide.

Labelling across sectors

4.45 A total of 29 respondents were active in more than one sub-sector. Of whom, ten indicated that they labelled differently for other products/sectors. In some cases this reflected different target markets, for example a confectionery manufacturer that described an adult line marketed under Scottish branding and a national children's brand that was not. Similarly, other respondents cited the use of different branding and imagery that reflected different geographical markets. Distinctions were also drawn between products that were marketed to the catering as opposed to the consumer markets.

Claims other than origin

4.46 When asked whether they labelled or branded for other claims, such as healthier, higher quality, better welfare or more sustainable, one quarter of respondents replied to the positive but, at almost three quarters, the majority replied to the negative. Where additional claims were made:

• Higher quality:
• • Terms such as finest, luxury and premium.
  • Reference to quality breeds of livestock.
  • Hand-baked etc. to imply home-made quality.
• Health benefits:
• • For fruit and vegetable sector, reference to 'one of your five a day'.
  • For fish and seafood sector reference to Omega-3.
  • Reference to health for oat products and allergen free foods.
• Local and sustainable:
• • Local sourcing.
  • Traceability.
• Natural:
• • Traditionally/naturally reared.
  • Free from artificial ingredients.
• Animal welfare:
• • Freedom Foods in relation to fish and pig farms.
• Organic:
• • Ten respondents used the term 'Organic' in their labelling to encompass many of the attributes in the natural, sustainable and animal welfare categories.

Additional comments

4.47 Prior to closing the interview, respondents were asked if there were additional comments, on the topics under investigation that they wished to make. Responses were wide-ranging, some sector-specific and some more general:

• Enforcement:
• • Tighten-up on the use of terms - e.g. concern that 'fresh' fish could be misinterpreted as 'wild'.
  • Tighten-up on the criteria for Scottish products - e.g. concern at low proportion of Scottish ingredients in some instances.
  • Regulations subject to interpretation by local authorities impacts on consistency.
  • Simple rules and guidelines sought.
  • Producers should be able to decide how to label their produce.
  • Clearer guidelines sought re: PGI.
  • • " PGI has been granted to try to protect these products but the guidelines are not clear; this is a good example of something that has not been executed through to the product on the shelf…" (Prepared Foods).
• Quality:
• • Quality more important than origin.
  • Quality is not dependant on country of origin but scale of production.
  • Risk of diluting the Scotland brand through overuse.
  • Must ensure that Scotland retains reputation for quality e.g. through regulation on breeds (traditional beef not dairy or continental breeds) and production system.
• Traceability:
• • Throughout the entire production chain - not just the final finishing or processing period.
  • • "I buy my Lemon Sole from the Aberdeen fish market; the merchant could have 4 different boxes - one from Aberdeen, one from Ullapool and the other two boxes from different destinations. As he sells some from each box, he may then put them all into the same box, he would then sell them to a merchant who would sell to the supplier who would sell the product to me - I do wonder whether there is true traceability?" (Fish and Seafood).
• The desire for a common sense approach was a theme that ran through many responses:
• • "I think that there are lots of things already being done in the Industry to promote 'Scottish products,' I just hope as they develop they keep in mind that not all products are the same and that it is not always possible to use local products, whether it is season or climate dictating to us." (Preserves).

Further research

4.48 On completion of the main interview, all participants were asked whether or not they would be prepared to take part in follow-up research and eight out of ten respondents gave their permission.

Multiple Retailers

4.49 Several multiple retailers have made public their plans to market more food and drink products locally in Scotland. For example in 2008 Tesco introduced 150 new lines sourced from 21 new Scottish suppliers. These included Summer Eating fish range from Farne Salmon & trout. Tesco also introduced 'Local Choice' milk sourced from small dairy farms (The Grocer Sept 08).

4.50 Sainsbury's now stock 17 lines including Taste the Difference beef with some sourced from Mey Selections based in the Scottish Highlands region. Sainsbury's is also supporting a new Supplier Development Programme offering Scottish firms advice on how to tap into major supply chains.

4.51 The Co-operative Group stated that they have always stocked Scottish products, but in an attempt to answer to consumer demand, have increased the range of Scottish products over the past year. The focus has been on meat, fish, dairy and bread, for example all fresh beef is Scottish, both standard and premium own label salmon is sourced from Scotland, also own-label milk sold? in Scotland is Scottish. The Co-op has invested over £3 million to grow Ava strawberries on their farm in Perthshire.

4.52 Morrison's have made over £1 billion worth of investment in Scotland with 51 new and extended stores and employ over 12,000 staff across Scotland. Morrison's use 100 Scottish suppliers and stock over 500 Scottish products. All fresh salmon and all fresh beef and lamb is Scottish. Morrison's also offer wide range of locally sourced cheeses (e.g. Strathdon Blue) and stock extensive range of whiskies, with over 30 single malts. All fresh produce is sourced direct from the farm, and process & pack over 80% of fresh fruit and vegetables in Scottish stores.

4.53 Summary of Multiple Retailer responses

• The move to Scottish labelling could become more comprehensive but inclination by each retailer varies as to the size/nature of their business. Several of the retailers indicated they would be happy to extend Scottish labelling of food and drink products in Scottish stores but there would need to be a strong commercial reason for doing so, i.e. sales increase. For some retailers, Scotland and the Scottish market is probably not large enough to warrant a lot of the additional cost/expense required setting up dedicated supply chains.
• Some retailers believe consumers are confused by the plethora of food logos/assurance labels and the relative qualities they confer.
• Traceability through the retail chain is considered to be robust because of the initiatives led by the British Retail Consortium, set in place because of the need to demonstrate Due Diligence, initially introduced by the Food Safety Act 1990.

Food Service Companies

4.54 To investigate practices within the foodservice supply chain telephone consultations have been undertaken with various organisations. The consultations were based on a consultation guide that enabled the interviewer to cover the following points:

• Details of business including geographic spread and type of customers.
• Current practice with regards to country of origin labelling and use of reference to Scotland logos / images.
• Benefits of country of origin labelling.
• Future need for changes.

4.55 Company A

• • Type of business - National Food service
  • Type of customer: Corporate services, Defence, Education, Healthcare, Leisure and Hospitality
  • Main products supplied: Catering, hospitality and prepared foods - all foods.
• In terms of the Scottish contract, company A source as much as possible from Scotland. They have suppliers based in Edinburgh for meat, fruit and vegetables and bakery, a sandwich supplier in Kilmarnock and source dairy from all over Scotland. If the contract specified they wanted Scottish then they would attempt to source it.
• Origin labelling does tend to be applied to fresh products such as fruit and vegetables, meat and dairy. These are the type of products people think of more often. It is not necessarily applied to premium products. Traceability is key, the place name on the label is important.
• In terms of making reference to Scotland, they can only really influence this on the menus. They do not currently highlight this but they are looking to review it.
• They do not use the term 'Scotch' as it is a protected name and will not pay the premium to use it. Do use the term 'Scottish'.
• Stating origin labelling is very important to their clients, less sure how important it is to the end user/consumer.
• The main reason clients want product origin labelling is that they tend to want to be seen to be supporting the local economy and farmers. Also increasingly to make sure what they source has minimal impact on the environment, and there is the concept that if they choose local they will be reducing the carbon impact. The other reason is provenance, as it has the perception that it is a better quality product. People do have a different perception of a product if they can see a name or a flag.
• Clients could communicate origin labelling through their restaurants, but it is not communicated that well. It may be worded in the menu or more often it is through word of mouth, i.e. the chef might say 'the carrots today are sourced from…'.
• Can not take it on trust with the suppliers that claims of origin are correct - would not want to make an incorrect claim. Suppliers are audited and full traceability is tested during the audit. They are working to get the 'Red Tractor' logo onto menus as a way of demonstrating traceability.
• Consider that current practice within the supply chain is satisfactory but everything can be improved. For example to see more information, rather than just a name, so people know a product has been produced to welfare standards e.g. Freedom Foods.
• Do not think that more detailed origin labelling would help with traceability as have a very rigorous process already. It is needed more for end customer confidence.
• For future origin labelling, a logo would be good but there is the issue that could become logo fatigued and it would clutter up menus. Guidance would be beneficial on what can and cannot be stated. People may assume a product sourced five miles down the road is good but there is a whole bigger picture to look at, a need to look at sustainability as a whole.

4.56 Company B

• • Type of customer: National Food service - hotels and restaurants, caterers and public sector.
  • Main products supplied: Large frozen range including meat, chips to desserts and bakery, and an ambient and fresh equivalent range.
• Sales are generated from within the UK, not possible to split it into proportion of sales in Scotland. Main sales areas focus around centres of population e.g. South East England.
• Estimate that 10% or less of suppliers are based in Scotland.
• Supply own branded products, these cover the fresh, ambient and frozen foods. Try to cover gaps in market with own brands; if there are strong brands present will not use own brands for certain food products.
• A very limited number of products carry origin labelling, as main customers are caterers who struggle to communicate origin to their customers, so do not tend to focus on origin. One of their suppliers is Youngs Seafood who supply a lot of Scottish fish and also sell haggis.
• Origin labelling does tend to be used for more premium products, although using origin labelling tends to narrow the supply base down.
• Origin is not labelled as a particular region in Scotland, tends to be broader and just states 'Scottish'. It is hard to communicate origin.
• If any reference is made to origin it always tends to be in the name, e.g. Scottish salmon, but do sometimes use the Saltire. Foodservice does not lend itself to elaborate packaging design as the packaging does not sell the products.
• Origin labelling is important to customers as far as well presented on the price list, and marking it on the boxes does help the chef.
• The main reason why customers want product origin labelling is for marketing purposes. Traceability is a requirement in all cases.
• As all customers are caterers they would communicate origin to their customers through their menus.
• In terms of ensuring claims of origin are correct, for own branded products they work closely with the Trading Standards Officer to ensure labels are legal. For other branded products would check on any claims made.
• Some customers have asked to provide traceability but that is expected as it is part of the system.
• Current practice within supply chain is considered to be satisfactory in terms of origin labelling as this is exception rather than the rule.
• As regards seeing improvements, company B stated they carry out procedures to the letter. If there are more requirements it would not be a problem but it would be for those suppliers who do not already meet regulations, so they would struggle. It would make more of a level playing field.
• More detailed origin labelling would probably help with traceability in some cases.
• With regards to what needs to happen, the promotion of a logo is always good. People do associate the Red Tractor logo with 'British', so something similar to that would be good.

4.57 Company C

• • Type of business - Privately owned family business, servicing both the catering and retail market place, wholesale distribution within Scotland.
  • Type of customer: Business & Industry, Contract Caterers, Fast Food & Cafes, Health & Education, Leisure & Travel, Pubs, Clubs & Bars, Restaurants & Hotels
  • Main products supplied: Full range of all food commodities
• 100% of sales are generated from within Scotland, mainly the West Highlands and the Islands.
• About 10% of suppliers are based in Scotland (in terms of manufacturing sites as apposed to sales sites). The rest are UK or global.
• Supply own branded products, have a butchery cutting plant so have both fresh and frozen meat, also do a number of manufactured products under their own name which are mainly frozen products.
• Origin labelling depends on the product; meat does carry origin labelling as requires traceability, but many items do not. Have over 10,000 products. If it is advantageous for the manufacturer they will flag up the origin so it does tend to be used more on the premium products, for example wild venison.
• Origin can be labelled as a particular region, for instance supply 'Scottish pork' which covers the whole country, and also 'Argyll pork' and 'Argyll venison' which is locally sourced.
• Reference is made to Scotland in the presentation of the products through a number of ways:
• • tartan
  • highland cow
  • photography of area e.g. Oban Bay, Calmac ferry, Argyll or West Highlands
  • maps
• Origin of labelling is quite important to customers, because of the area where company is based. The origin of the main food in dishes is important and therefore is listed.
• Main customers are retailers and caterers; the main reasons they want product origin labelling is that it enables them to market the product to their customers. The area is a high tourist attraction and it helps when defining products to them.
• Retailer customers communicate product origin on the label/packaging and by using the point of sale material supplied. Catering customers may list product origin on the menus.
• With regards to the larger manufacturers company C mainly take it on trust that claims of origin are correct as have not got the facilities to audit them, but do use reputable suppliers. For smaller suppliers they check traceability as they collect direct from the local suppliers.
• Company C regard the current practice within the supply chain as satisfactory most of the time but have had some poor experiences with parts of the meat supply industry.
• With regard improvements there are difficulties as restricted to space on the label and do not want to overload the label with too much information. Need to keep it very simple, either have something small to put on the label or through accreditation.
• More detailed country of origin and origin labelling would not help with traceability for company C as believe have a system in place which provides them with the proof required.
• If the product is Scottish and you are able to verify it is, then it is important to be able to demonstrate that clearly on the product.

4.58 Company D

• Type of business - National Food service
• Type of customer: Corporate services, Defence, Education, Healthcare, Leisure and Hospitality
• Main products supplied: Catering, hospitality and prepared foods - all foods.
• One of the World's largest foodservice providers operating in 60 countries.
• Committed to UK sourcing and have appointed a regional sourcing manager.
• Provenance is increasingly important to their customers and the perception of how this impacts on seasonality, freshness, sustainability, authenticity, as well as the issues of local, regional, British.
• Country of origin labelling is not very important to their customers as are more focused on the individual story of the product and its provenance rather than a cover all brand or label just because it is produced and processed in Scotland.
• Thought there is danger of over stating provenance, for example Scottish Haggis - everyone knows it's Scottish!
• The nature of foodservice is that it up to individual sites to decide upon menu promotions and is more likely to be communicated through the name such as Scottish Beef or a specific Scottish Cheese.
• In itself greater use of Scotch or other form of general label would not increase the use of Scottish products within the supply chain. What is needed is specific support for specific Scottish suppliers that have a good product the foodservice sector wants to buy and make sure they are maximising that opportunity.

4.59 Company E

• • Type of business - Local Catering Supplier
  • Type of customer: Corporate services, Leisure and Hospitality
  • Main products supplied: Catering, hospitality and prepared foods - all foods.
• Mainly service hospitality events in Scotland.
• Try to source ingredients in Scotland wherever possible but problems with availability and price.
• Some clients specify Scottish products - occasionally difficult to be certain of origin especially for fruit and vegetables due to lack of traceability.

Public Sector Food Procurement

4.60 ADAS recently under a project for Scottish Government on labelling of pork and pig meat. As part of this study Public Sector food buyers from Local Authorities and from Hospitals were consulted. The information gathered is also relevant to this study and is summarised as follows.

4.61 Public Sector Food Procurement is subject to EU procurement rules and is therefore limited as to specify within the contract a specific country of origin. It is possible in certain circumstances to specify for example Scotch Beef as it is a PGI. The relationship Public Sector Food Buyers have with the food ingredients procured is primarily with the first tier supplier who will typically be a distributor. Scotch labelling is not commonly used as it would only be specified if it was a PGI product and the PGI products tend to be premium products that are not commonly used within the cost sector.

4.62 The interviews highlighted that where there were local, regional or Scottish products used this had been achieved by a close working relationship between the procurer and supplier rather than through specifications. Typically the Public Sector do not promote provenance though menus due to the nature of their customer e.g. School Children, Hospital Patients. In instances where there are examples of promotion, for example a Local Authority promoting its use of local suppliers for school meals, then this type of promotion is often done via local press releases. Where there is promotion then it tends to be in relation to local or regional produce rather than the Country of Origin.

4.63 In conclusion current industry practice on the use of Scottish labelling and branding by Public Sector Foodservice is even less than Private Sector Foodservice partly due to procurement rules and also the cost pressures on Public Sector catering.

4.64 Summary of Food Service Companies responses

• A consistent view across the foodservice providers interviewed is that caterers do not typically promote origin on their menus. Because of this caterers do not typically demand country of origin labelling. If such labelling is used then it tends to be with regards to fresh products such as fruit, vegetables and meat and not necessarily specialist products that may already have their own very specific provenance, such as a brand of cheese. If any reference is made to Scotland then it tends to be within the name of the product, such as Scottish Salmon. The nature of Foodservice is that it does not lend itself to elaborate packaging design although it was stated that marking country of origin labelling on the boxes will help the chef if the item on the menu requires that item.
• The Scottish-based foodservice business focused on the West Highlands and Islands and in their case they will specify region on certain products such as Argyll Pork or Argyll Venison. They also make reference in the packaging of the product through the use of Tartan or "Highland". This requirement for specific labelling is driven by the location of its customers (i.e. Scotland) as opposed to the other foodservice providers interviewed whose supply chain is servicing a broad range of customer across the UK.
• The foodservice businesses interviewed were adamant that the traceability systems in place are adequate and changing labelling would not make a significant improvement to this aspect of their operation. Foodservice providers generally audit their suppliers and test the traceability of their products so claims are not taken totally on trust as the reputational risk to their businesses is very high, although this was less evident with smaller scale operators
• The larger foodservice providers all mentioned the Red Tractor scheme as a standard that they included on some products and looking to include on others.
• A commonly held view across the foodservice consultees is that customers are looking for Provenance rather than Country of Origin Labelling i.e. a story behind the food of the specific producer. One of the dangers identified of going down the route of over-labelling or branding as Scottish is that customers could become fatigued and it could also dilute strong brands associated with provenance.
• Another issue highlighted is that local, regional or specific country of origin branding can confuse the customer as to the sustainability of the product and there is a natural assumption that local is automatically more sustainable, which may not be the case

Consumer Focus Scotland report (November 2008)

4.65 Consumer Focus Scotland commissioned research to investigate the use of Scottish labelling on fresh and frozen meat - beef, lamb, pork and chicken - in the retail sector in Scotland. The research demonstrated that retailers make extensive use of Scottish origin labelling on fresh meat products and that in general robust systems were in place to allow proper traceability of Scottish origin labelled meat.

4.66 There was considerable variation in the type of labelling used. Every major retailer has developed their own labelling designs covering meat packaging, shelf labels, posters and banners. The most popular designations of Scotland are Scotch or Scottish and/or the use of a Saltire Flag. Other labelling designs used included:

Produce of Scotland

Narrative about a Scottish farmer

PGI logos for Scotch Beef and Lamb

Specially Selected Pork with a Saltire

Taste of Scotland

Proudly serving Scotland

Enjoy the Taste of Scotland

Reared in its native Scotland

4.67 The research suggested that the labelling used could lead to consumers being confused about the use of Scotch and Scottish on beef and lamb. These do not necessarily have the same meaning since Scotch requires certain standards of production as well as the animal having been born, reared and slaughtered in Scotland. For beef, Scottish means born, reared and slaughtered in Scotland but the requirements are less stringent for lamb which is not covered by domestic labelling regulations. Where Scottish is used alone, there is often no indication of whether the beef or lamb has been produced to independently audited assurance standards.

4.68 As part of this study a YouGov poll of 980 Scottish consumers was commissioned in February 2008 to explore the consumer understanding of the terms Scotch and Scottish to describe beef:

• "Which one do you think is better quality?"
• • Only 10% answered Scotch, with 38% giving Scottish; 36% thought they were the same and 17% didn't know the difference. [ rounded figures - do not total 100%]
• Which would you buy to support local farmers?
• 
  
  
  • 7% answered Scotch, 39% Scottish, 7% both/neither and 9% didn't know.
• "Which if either would you associate with legal standards of animal welfare and meat processing by Scottish farmers?"
• 
  
  
  • 11% answered Scotch, 35% Scottish, 11% neither and 43% didn't know.

4.69 The report also indicated variations between different Scottish stores of the same retailer regarding quantity of meat product labelled as of Scottish origin. Between three and six stores of the following retailers were visited in October 2007 and/or January 2008. The researchers 'best estimates' of the proportion of meat labelled as Scottish varied considerably between stores as shown in Table 4.

Table 4: Percentage of meat sold using Scottish origin or Scotch labelling

(Source Consumer Focus Scotland 2008)

Support to Food and Drink businesses to produce healthier and/or more sustainable products

4.70 The Scottish Government Food Processing, Marketing and Co-operation Grant Scheme ( FPMC) was re-launched in 2008. The FPMC application form requires applicants to detail how their products will be healthier and more sustainable. The stated aims of FPMC are to make Scotland:

• Healthier - provide affordable, safe, healthy and fresh seasonal food.
• Wealthier and fairer - sustainable economic growth.
• Safer and stronger - more benefit to local communities.
• Greener - more sustainable food with less environmental impact.

For more details visit: http://www.scotland.gov.uk/Topics/Rural/SRDP/ProcessingandMarketing

4.71 Scottish Enterprise, through Scotland Food and Drink, assist food and drink companies to develop healthy foods (through the Health Enhancing Foods Project) and encourage sustainable development. For more details visit

http://www.scotlandfoodanddrink.org/20694

http://www.scotlandfoodanddrink.org/49536

4.72 Another scheme that can provide support to SMEs is 'KIT-OUT the Park'. 'KIT-OUT (Knowledge, Innovation & Technology Out of University into Tourism) the Park' is a project that has been set up by Glasgow Caledonian University with funding from Scottish Government. It aims to encourage the uptake of the latest technological developments by small and medium sized businesses. The key objective is to help small companies to improve their business performance, develop new products and services and increase their competitive edge, through the adoption and integration of the latest technologies in 5 key sectors, including food technology. Successful applicants can be provided with up to 5 days free consultancy and other support to take new products to market. For further information visit http://www.kit-out.org/index.html

4.73 There are also several sources of general business support to SMEs in Scotland, including Interface ( http://www.interface-online.org.uk/) which provides information for businesses wanting to engage with academia for knowledge and expertise.

4.74 In 2007 Scotland Food and Drink sponsored Connect to prepare a report identifying various sources of funding (Scotland Food and Drink 2007b). This identifies various sources of funding, but does not necessarily specifically target healthier or sustainable products.

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