Effects of menu labelling on consumption behaviour : evidence from Mahikeng Local Municipality

Abstract

Menu labelling is believed to be valuable to both the consumer and producer of ready-to-eat food products as food choices become more closely in line with preferences, and uncertainty regarding the nature of product attributes is minimized. One of the benefits of menu labelling is the removal of information asymmetry, which enhances the widespread fight against obesity and coronary heart diseases linked to increased consumption of fast foods. Over the years, these problems have been associated with first world countries. However, globalisation has seen developing countries such as South Africa not being spared from this phenomenon. While fast food consumption is mainly popular in urban areas, the South African case is exacerbated by street food vendors who operate unregulated. In the first world countries, policies aimed at protecting consumers have been promulgated to regulate restaurants and control the prevalence of obesity and related chronic diseases. Despite the reported alarming rates of obesity in South Africa, there is no regulation that requires posting of nutrient information on menus, menu boards and brochures by local restaurants. In a country where there is no menu labelling law, the implications are that consumers are more exposed to unhealthy foods and this is likely to be a persistent challenge, which has become an economic burden to the state. The objectives of the study were therefore, to (i) Determine the effects of menu labelling on the consumption of ready to- eat foods; and (ii) Investigate consumers ' willingness to pay for nutrient information on ready-to-eat foods, using evidence from Mahikeng Local Municipality. Conducting a study of this nature provided an opportunity to ascertain whether South Africa needs to replicate policy procedures that have been introduced in some developed countries to promote healthy eating habits. Using cross-sectional data gathered from 371 households identified through a systematic multistage sampling procedure, the first objective was addressed by estimating an Endogenous Treatment Poisson model (ETPOISSON). The analysis of consumers ' willingness to pay for nutrient information was conducted in two related phases. The dichotomous decision of whether or not consumers are willing to pay for nutrient information was analysed using a Prob it model, while the level of willingness was analysed through the use of an Ordered Lo git model. The results of the ETPOISSON model indicated that the use of nutrient information (menu labels) has a significant negative effect on fast foods consumption. These findings were further justified by the ATE and ATET results, which reflected that providing consumers with nutrient information can significantly reduce the frequency of consuming ready -to-eat or fast foods by at least one meal within a period of seven days. About 31 % of the respondents were not willing to pay for nutrient information, 19% were less willing, 26% were moderately willing, while 24% were more willing to pay. The results of the Prob it and Ordered Logit model highlighted that the level of willingness to pay was more related to household budgetary constraints, pointing to the need for diligence on the part of government should it consider introducing menu labelling legislation, which may require consumers to pay a price premium in their quest to access ready-to-eat meals. Drawing from the empirical findings, the study recommends the development of awareness raising programmes to sensitize the community about nutrition information and healthy eating, introduction of mandatory menu labelling legislation to regulate trade and consumption of fast foods as well as the introduction of a sustainable mechanism to account for the costs associated with menu labelling.