The demand for improved packaging, branding, and labeling of rice is expected to rise in Asia. Because of rapid income growth in Asia, consumers are increasingly willing to pay for higher quality and healthier products. Second, regulators are becoming more stringent in their food safety policies regarding product packaging and labeling attributes. Third, extrinsic attributes are also being used for product differentiation to cater to the demand of consumers in urban food markets.
Consumers cannot directly observe some product quality attributes. For instance, in the case of experience goods, consumers learn about the quality of the product when they consume it, but for another class of goods, known as credence goods, consumers cannot independently verify the presence of the attribute. In both cases, consumers may rely on attributes that are observable prior to consumption to judge product quality and, ultimately, make purchase decisions.
In the case of rice, quality attributes can be classified as intrinsic and extrinsic. Intrinsic attributes include color, cleanliness, grain shape and size, softness, and aroma (fragrance); extrinsic quality attributes include packaging, branding, labeling, and information. Packaging can be seen as a first step in the shifting focus from intrinsic to extrinsic quality attributes in the modernization of the food retail sector as it facilitates communication of extrinsic quality attributes, which can inform consumers about food product quality, nutrition, and safety.
Therefore, an essential role of governments, policymakers, and markets is to ensure accurate information provision by implementing extrinsic quality cues that can assist both production and consumption decisions and reshape the entire rice value chain.
Thailand, one of the major rice-producing countries in South and Southeast Asia, has already adopted a strategy that emphasizes the role of extrinsic quality cues to foster the development of a modern retail sector.
Throughout Asia, where most of the world’s rice is produced and consumed, the rice value chain is undergoing a structural transformation— at different stages and in various segments—which appears to improve food safety, nutrition, and equity, by increasing the quality and diversity of rice, among other factors.
Notably, the mill and retail segments are undergoing a marketing transformation characterized by:
- the emergence of packaging and branding that supports the vertical coordination relationship between mills and wholesalers/exporters and between supermarket chains and large rice mills;
- a shift in selling rice from loose to packaged form; and
- a bimodal selling strategy of supermarkets to appeal to different income classes by offering a diversity of product types.
These transformations in the rice sector highlight the increasing role that extrinsic attributes such as packaging, branding, and labeling play as quality signals concerning product origin, quality, and safety, which consumers can use in product choice. Therefore, it is crucial to understand consumer preferences for these attributes. There is a growing body of literature on rice consumer preferences in Asia and Africa for:
- intrinsic attributes such as fragrance, texture, cleanliness, and other grain quality attributes and
- extrinsic attributes such as production standard certification, geographic indication (GI) labels, branding and provision of information on nutrition, technology, and cultural heritage
Despite the overwhelming evidence of the growing role of extrinsic quality attributes in rice consumers’ purchase decision making, there is currently little-to-no empirical evidence on the drivers of the shift of consumer demand from loose to packaged rice.
This is important because food packaging is not only the essential first step towards the provision and governance of food safety; it also offers substantially more opportunities for the communication and promotion of extrinsic attributes that can help consumers actively contribute to food system transformation.
The demand for improved packaging, branding, and labeling of rice is expected to rise in Asia. Because of rapid income growth in Asia, consumers are increasingly willing to pay for higher quality and healthier products. Second, regulators are becoming more stringent in their food safety policies regarding product packaging and labeling attributes. Third, extrinsic attributes are also being used for product differentiation to cater to the demand of consumers in urban food markets.
Finally and importantly, these critical extrinsic quality attributes can facilitate the communication of other attributes such as quality, traceability, and production practices (e.g., organic, fair trade, and sustainably produced), which could be important drivers for food safety, sustainable value chain upgrading, and reducing climate footprints of rice production.
Nevertheless, packaging and labeling add marketing costs to the product at the retail level. Consumers face a tradeoff between higher prices and extrinsic quality attributes.
Therefore, affordability and inclusiveness questions are crucial, including questions about whether access to the benefits of packaged rice is inclusive or only accessible and affordable for specific segments of the population.
Therefore, it is imperative to examine whether Asian rice consumers are willing to pay more for extrinsic attributes related to packaging and labeling, and what the main determinants are that influence consumers to switch from loose to packaged rice.
We argue that packaging and labeling can be exploited as an entry point in the rice value chain to address food safety, nutrition, and equity issues. The rationale is that extrinsic quality cues are easier to implement, govern, and control if they are embodied in the product through packaging. Packaging also makes quality cues easier to certify and facilitates consumer trust.
In this study, we focus on the demand for packaged rice and define it as any rice that is sold in a sealed package. We focus on packaged rice as a “product category” consisting of a bundle of extrinsic attributes that are:
- embodied in the package, such as packaging materials, color and size, and added to the package, such as branding, certification, labels,
- production standards, nutrition content, country of origin, traceability information, Geographic Indications (GI), etc.
Our survey reveals that half of the consumers in South and Southeast Asia purchase packaged rice. This trend is likely to be evolving in the future because of massive structural transformations, such as the influence of westernization in diet and lifestyle, and due to rising income and urbanization.
Moreover, policymakers and markets increasingly pay attention to climate mitigation, nutrition, food safety, and equity, causes that consumers can contribute to if the relevant extrinsic quality cues are communicated to them.
Since all consumers do not evaluate packaged products as their purchasing capacities are different, market segmentation is necessary for designing policies. Our study suggests that consumers who purchase packaged rice are significantly different from consumers who purchase loose rice.
Our survey uncovered the market segments that remain untapped to mainstream packaged rice in the broader population: consumers from poor households and less-educated consumers from smaller households without internet access that more frequently purchase non-fragrant rice and consume smaller quantities.
These results provide crucial insights into rice value chain upgrading for policymakers and value chain actors. The more consumers shift demand from loose to packaged rice, the more value chain stakeholders can add value to rice products through branding and quality cues; the more they can differentiate rice products and capture surplus in various market segments. It remains to be analyzed whether this surplus is also shared equitably with farmers. Policymakers should carefully monitor and govern this trend in order to ensure that value chain upgrading by the private sector is inclusive and equitable.
Our study has a couple of potential limitations. First, the general findings may not reflect all consumers’ demand for packaged rice in a studied country because the sample sizes in some countries are perhaps not large enough nor randomly selected such that findings can be generalized to the entire population. Second, relying on consumers’ self-reported behavior may be subject to recall biases. Finally, our study cannot disaggregate demand for any combination of extrinsic qualities such as demand for packaging and labeling versus packaging, labeling, and branding.
Therefore, future studies on demand for packaged rice should collect larger, representative samples, conduct disaggregated demand analysis for packaging and other extrinsic quality attributes, and explore methods borrowed from experimental and behavioral economics.
Read the full study:
Bairagi S, Gustafson C, Custodio MC, Ynion J, Demont M (2021) What drives consumer demand for packaged rice? Evidence from South and Southeast Asia, Food Control Volume 129
