Country of origin labelling

The jargon surrounding country of origin confuses consumers.
 
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01 .Introduction

AustralianMade_lead

When it comes to buying groceries, Australians want to support their local farmers, manufacturing jobs in Australia and Australian owned companies by buying Australian made products.

Under the Food Standards Code, it’s mandatory that food labels identify the country in which a product was made or produced. While this seems straightforward, claims are applied to whole foods, rather than their individual ingredients, so country of origin labels can often be confusing. CHOICE wants country of origin labels to be informative, so that consumers can identify where key ingredients like fruit, vegetables and meat have come from.

CHOICE surveyed members to find out what they think about country of origin and their understanding of the different origin claims. We received over 900 responses, of which:

  • 90% said origin labelling should be clearer.
  • It’s very important to 66% of survey participants that they can confidently identify whether a product is manufactured or produced in Australia.
  • Almost half of the survey respondents will always try to buy Australian products when they’re available.
  • 83% of respondents say supporting Australian-owned companies and keeping profits in Australia is important to them.

Unfortunately, there are no current labelling laws to regulate the “Australian owned” claim, although there are guidelines for its use. The ACCC says “Australian owned” relates to majority ownership. To make the claim, a company must be able to prove that at least 51% of ownership is held in Australia – 100% if the claim “100% Australian owned” has been made.

However, “Australian owned” doesn’t necessarily mean the product has been manufactured in Australia. The Australian Made, Australian Grown campaign (AMAG) endorses a logo with “Australian Made and Owned”. This logo cannot be used by companies that are Australian owned if they manufacture their goods overseas.

For more information on food labelling take a look at the articles at CHOICE labelling and advertising.

Decoding origin claims

The survey gave participants the opportunity to explain their understanding of origin labels, in their own words. These responses were then sorted into categories, determine by how correct/incorrect they were in regards to the actual definitions. The definitions of each claim below are sourced from the Labelling Requirements of the Food Standards Code. Australian Grown is defined by the AMAG.

Made in Australia

Definition: The product has been substantially transformed in Australia and at least 50% of the production costs have been incurred in Australia. “Substantial transformation” is defined in the Competition and Consumer Act as a fundamental change in form or nature.

  • Although 56% of members were on the right track with their responses, only 1% was close to the mark. This group's responses expressed an understanding that the product was primarily processed in Australia.
  • Around 8% were incorrect, making statements such as ‘all ingredients/contents are sourced in Australia’, ‘100% Australian’ and ‘all ingredients/contents are sourced from overseas’. A great individual response was, “the product is made or substantially altered in Australia (from Australian and/or imported content).” Another said, “It seems to mean nothing unless it is qualified by further information” – highlighting the need for clear and informative labelling.

Made in Australia from local and imported ingredients

Definition: This claim qualifies the “Made in Australia” claim for manufacturers that don’t meet the “Made in” claim requirements. Whichever comes first, local or imported, is in the greatest proportion. For example, Woolworths Select Light Smooth Peanut Butter is “Made in Australia from imported and local ingredients” – imported ingredients are in the largest proportion here and Woolworths says the peanuts are currently sourced from Argentina.

  • Around 68% of respondents had a good general understanding when defining this claim.
  • The most accurate response was from the 15% who made statements suggesting the ingredient/content origin is uncertain. A perfect individual response said, “The product is created from Australian and Imported ingredients. Hopefully if ‘local’ comes first, the proportion of local ingredients should be greater than imported.”

In our survey:

  • 38% said they would like food labels to disclose the origin of all ingredients in a product.
  • 24% said they would like to at least see the origin of the ingredients in the greatest proportion.
  • 23% said they would like to know the origin of the ingredients that characterise the product, such as the peanuts in peanut butter.

While information this detailed would be ideal, Food Standards Australia and New Zealand (FSANZ) has decided that country of origin labelling only applies to whole foods. Packaged foods often have a high number of ingredients and labelling the origin of all would be costly, resulting in higher prices for consumers.

Product of Australia

Definition: Each significant ingredient must come from Australia, and all or almost all of the processing must happen here too.

This is a premium level claim and is your best bet that the product you’re purchasing was sourced and manufactured in Australia.

  • 41% had a good understanding.
  • 11% made statements that were incorrect.

Of these incorrect responses 21% made statements to suggest the product is ‘grown in Australia’. 16% said the ingredient/content origin is uncertain/could be local or imported/sourced from overseas.

Australian Grown

Definition: Each significant ingredient has been grown in Australia and all or almost all of the production processes have occurred in Australia as well.

Respondents had a good understanding of this claim, one that is commonly seen in the fresh food section of supermarkets. When this claim is used in conjunction with an ingredient, for example, “Australian grown tomatoes” then 100% of the named ingredient was grown in Australia and at least 90% of the whole product was grown here too. This is the case with Kraft Nuts Smooth Peanut Butter, which claims to use “100% Aussie peanuts”.

 
 

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How private labels stack up?

While country of origin is important to consumers, they’re also value conscious and want bang for their buck. Private labels - also known as 'supermarket brands' or 'homebrands' - are gaining a foothold in this area and are becoming serious competitors to their national brand equivalents. Private labels have 100% household penetration according to Nielsen Homescan Research and the average grocery spend on these products continues to rise. A Nielsen Global Online Consumer Survey questioned consumers on their perception of private labels:

  • 46% of Australian consumers said private labels are a good alternative to name brands.
  • 42% said most private label quality is as good as name brands.
  • 38% said private label brands have cheap-looking packaging.
  • 31% said some private label brand products are of higher quality than name brands.
  • 31% said private label brands are as good as name brands.
  • 16% said private label brands are not suitable for products when quality matters.

Woolworths has a number of private label product categories, including Homebrand, Woolworths Select and Macro Wholefoods Market, with about 96% of Woolworths’ fresh food products grown in Australia and approximately 75% of branded packaged grocery products sourced from local manufacturers.

Coles has about 2100 private label product lines across its Smartbuy, Coles and Coles Finest brands and was praised earlier in the year by AMAG as having over 900 products carrying the Australian Made logo. Coles chooses to source products from overseas if Australian suppliers are unable to meet their product specifications or volume requirements.

Aldi is unique in that its grocery range consists predominantly of exclusively branded goods, each with their own individual brand identities. Its Australian stores source 100% of fresh meat, 97% of dairy products and fresh fruit and vegetables from Australian farmers. Aldi too sources from overseas if their conditions can’t be met in Australia.

Is imported food safe?

There are strict processes in place to ensure the safety of food entering Australia. The Australian Quarantine and Inspection Service (AQIS) keeps a watchful eye on imported foods and once these enter Australia they are subject to the Imported Food Inspection Scheme (IFIS). Under the scheme, food must first pass quarantine requirements and then pass food safety requirements. The inspection service is part of a broad regulatory system established in Australia. Food policy decisions are made by the Australia New Zealand Food Regulation Ministerial Council, while FSANZ sets safety standards for all food, detailed in the Food Standards Code.

A recent example of the work involved in ensuring imported is safe is FSANZ’s response in relation to imported food from Japan following the devastating earthquake and tsunami, and resulting nuclear crisis. The Japanese Government placed restrictions on certain foods sourced from areas where there has been radiation contamination. On 23 March, FSANZ responded by requesting that AQIS test fresh or frozen seafood, seaweed, milk and fresh fruit and vegetables coming from four Japanese regions – Fukushima, Gunma, Ikaraki and Tochigi. While FSANZ views the risk of Australian consumers being exposed to radionuclides from imported food from Japan as negligible, this is a precautionary measure. You can find more information about what testing is taking place on the Department of Agriculture, Fisheries and Forestry website - imported food notice 5/11.

What’s the difference between AMAG and Ausbuy?

Both logos endorse local producers and manufacturers; however AUSBUY’s key emphasis is on ownership. CEO Lynne Wilkinson: “Ownership means that we keep the decisions, profits and jobs here and that has a multiplier effect in our economy.”
AMAG’s key emphasis is on products being made here. CEO Ian Harrison: “The AMAG logo is focused on where a product is made or produce is grown, rather than on the ownership of the company. If it is made or grown here, then it means that jobs are created here, it is made in a clean and safe environment, to Australian standards, parts can be easily replaced and it hasn’t travelled around the world.”

AUSBUY

Launched in 1991 by Australian Companies Institute (ACI), businessman Harry Wallace founded the scheme when his 120-year-old printing business suffered as a result of dumping by USA companies wanting to come into the Australian market place during the 1991 recession.

Logo use: Majority (more than 51%) Australian-owned companies that source and produce here can use the AUSBUY logo, although AUSBUY members source 80% to 98% of their produce or components from local businesses. Franchises with no marketing input from foreign parents can join provided they source, produce and supply in Australia. The companies and brands licensed to use its logo, along with other Australian-owned and foreign-owned companies, are listed in the AUSBUY Guide, which is available for $2.95 at most supermarkets.

Governance: It is run by the Australian Companies Institute (ACI), a not-for-profit organisation.

Application process: Representatives of a company must undergo a review, complete an application form and agree to abide by AUSBUY’s strict rules governing the use of its certification marks. Companies pay an annual fee to use the logo.

Compliance/audit process: Ownership of businesses using AUSBUY logo is checked by ACI. There is no formal audit process. “The integrity of our members is such that if a product is majority sourced offshore they do not use our logo. We have a wide network of Friends of AUSBUY across Australia who are our advocates and check products and prices for us,” explains Wilkinson.

For more information about the work conducted by AUSBUY and their policies visit their website at www.ausbuy.com.au.

Research conducted by AUSBUY supports CHOICE’s survey findings in that Australian consumers want to support Australian companies.

Currently the AUSBUY logo (and the AUSBUY Guide) is the only form of identification on a label to identify a product as being produced by an Australian-owned company. AUSBUY’s labelling policy outlines that:
• The ACCC should be harsher when it comes to labelling infringements.
• Foreign-owned companies shouldn’t be allowed to mislead consumers by using Australian iconography on their packaging which infers they are Australian.
• The Government should produce stricter legislation in terms of labelling and identifying Country of Origin. (AUSBUY was a key advocate for Country of Origin on fresh produce nearly a decade ago).

In CHOICE’s submission to the independent food labelling review panel, one of the seven demands for better food labels was for Informative country of origin labels that help consumers to identify where key ingredients (like fruit, vegetables, meat, etc) have come from. From this the panel recommended extending country of origin labelling to all primary foods (eg: meat, poultry, pork). The panel also recommended that country of origin labelling should be regulated in the Competition and Consumer Act 2010 rather than the Food Standards Code, suggesting that the Australian Competition and Consumer Commission (ACCC) should develop a consumer information standard specifically relating to food, with clearer requirements for products with Australian ingredients.

Table: Ownership of the top selling food brands in Australian supermarkets.

 Brand

Australian owned 

Foreign owned 

Formerly Australian owned 

 Cadbury (A)  

 Kraft USA

 
 Coca-Cola  

 USA

 
 Bega

 yes (B)

   
 Smith's  

 Pepsico USA

 P

 Bird's Eye (A)  

 Simplot USA

 
Mainland

Fonterra NZ

Berri (A)

National Foods Kirin Japan

P

Bulla

yes (B)

Golden Circle

Heinz USA

P

John West (A)

Simplot USA

Vegemite (A)

Kraft USA

P

Shapes

Arnott's owned by Campbells USA

P

Milo (A)

Nestle NZ

Weet-Bix

yes (B)

 

Schweppes

Formerly Cadbury Schweppes Japan

Dairy Farmers (A)

National Foods Kirin Japan

P

Coon (A)

National Foods Kirin Japan

P

Lindt

Switzerland

Tim Tams Arnott's owned by Campbells USA

P

Pura (A)

National Foods Kirin Japan

P

(A) Products within these brands may be Australian Made, however they are foreign owned.
(B) AUSBUY member.

AMAG (Australian Made, Australian Grown)

Australian Made, Australia Grown Logo was launched by the Hawke government in 1986 and is a registered trademark approved by the Department of Innovation, Industry, Science and Research, IP Australia and the ACCC.

Logo use: The logo can only be used on products that are actually made or grown in Australia (it cannot be used on services). About 1700 businesses are licensed to use the logo on more than 10,000 products which can be found on its website’s searchable directory at www.australianmade.com.au.

Governance: Australian Made, Australian Made Campaign is a not-for-profit organization but provides annual reports to the government. It also works closely with the Australian Trade Commission (Austrade) to promote locally made products overseas.

Application process: Representatives of a company must complete an application form, sign a statutory declaration that their products comply with the legislation and describe how they do so, and agree to be bound by a Code of Practice. An AMAG representative will often call and visit the business to ensure entries are accurate before the business submits the form. Companies pay an annual fee to use the logo.

Compliance/audit process: Annual random sampling of 1% of licensees for on-site independent auditing. If the auditor or ACCC discover products do not meet the criteria, their licence is cancelled.

AMAG’s emphasis is on products being made locally. “The issue of ownership can be misleading,” says CEO Ian Harrison. “Pacific Brands for example is Australian-owned but sent 1850 jobs offshore last year. The AMAG logo is focused on where a product is made or produce is grown, rather than on the ownership of the company. “If it is made or grown here, that means that jobs are created here, it is made in a clean and safe environment to Australian standards, parts can be easily replaced and it hasn’t travelled around the world.”

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