Market Strategies and Consumer Behaviour: Future Initiatives For Knowledge and Innovation

Market strategies and consumer behaviour
Future initiatives for knowledge and innovation
National Council for Agricultural Research P .O. Box 20401 2500 EK The Hague The Netherlands tel.: 0031 70 378 56 53 internet: http://www.agro.nl/nrlo/ ISBN: 90 - 5059 - 078 - 0 Parts of the text may be used provided that the source is quoted. NRLO Report no. 98/3E, The Hague, 1998
Foreword
The future of the agrosector is one of the key themes in the studies undertaken by the National Council for Agricultural Research (NRLO). The agrosector is facing major change, above all in terms of the social role and position of agriculture. It is recognised not only that agribusiness is an important sector in the Netherlands, but that the downside of its economic success is reflected in large-scale problems in such areas as the countryside, environment and animal health. Agribusiness appears to have shielded itself for too long from social developments. In the market, the agrosector is confronted with problems and opportunities arising out of the reversal of chains: customers, consumers who are deciding what products are wanted. And finally there is the question of how the already highly international agribusiness could develop in the event of the extension of free markets and the dismantling of protectionist policies. The most important question for the NRLO was what this turbulence in agribusiness and elsewhere could mean in terms of the position and the content of agricultural research. This question is central to NRLOs researches and a great many background studies have been carried out in this context. The principal findings of these studies have now been integrated in five reports on the main themes: agriculture in society: a new perspective, globalisation and agribusiness, market strategies and consumer behaviour, agriculture and environment and towards healthy animal production. This report summarises the main conclusions of the background studies on the theme Market Strategies and Consumer Behaviour. Important aspects to emerge are that developed markets are becoming saturated, government intervention is decreasing and emerging economies elsewhere in the world are developing very rapidly. The sector will consequently have to search actively for new opportunities for its products. At the same time, the behaviour of consumers in developed markets is becoming increasingly volatile and concerned with the instant satisfaction of their wants (agility or mass individualisation). This makes severe demands on the flexibility of agricultural production chains. These chains are also expected to produce the goods, including the necessary transportation of them, without placing an undue burden on the environment, land use and the quality of life. In this report, the NRLO points out that there are four areas requiring additional attention. In part this is a question of extra emphasis in the context of initiatives that have already been set in train. In two areas (Chains & Logistics and New Markets), however, far-reaching changes are essential.
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Dr B.G. Linsen (the member of the Executive Board of the NRLO with responsibility in this area) and Dr J.M.P Papenhuijzen (project manager) played a major role in the formulation . of this report. I should like to express my sincere thanks to them, and to the many others who have directly or indirectly contributed to the report. Professor A. Rrsch, Chairman NRLO.
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Contents
Foreword Policy Summary 1. Introduction 2. Searching for new markets 2.1. The EU 2.2. Emerging markets 2.3. Distribution channels 2.4. Priority innovation, technology and science themes 3. Consumer wishes and chain reversal 3.1. Areas of attention 3.2. Consumer types 3.3. Flexible agricultural chains 3.4. Priority innovation, technology and science themes 4. Sustainable means of primary food production, processing and distribution 4.1. The environmentally-aware consumer and producer 4.2. Transport, Distribution and Logistics 4.3. Priority innovation, technology and science themes 5. Nutrition and health 5.1. Priority innovation, technology and science themes 6. Translating market wishes into technological development 6.1. Priority innovation, technology and science themes References List of abbreviations i 1 7 10 10 11 13 15 17 17 18 21 24 25 25 27 29 30 32 33 35 36 38
Policy Summary
The 21st century calls for a revolution in the way we think and act in terms of markets, consumers, technology, and production structures.
Future challenges
Past Low cost bulk in existing markets Future Providing added value in existing markets, high-quality standard basic products and processes; ongoing exploration of new markets Delivering individual customized work at the right time and place. Developing consumer and society driven dedicated process technology Developing flexible organisational forms of production, transport and distribution systems
Taking account of diverse groups of consumers Cost price driven technology development Vertical agro-chains
The growing importance of sustainability aspects - environment, production methods, land use and quality of life - is a factor in each of these challenges. In order to rise to these future challenges, we need not only knowledge development but also the training and education of people. And this is not just a question of research, but equally of technology development and innovation. The Market Strategies and Consumer Behaviour study concentrated on foodstuffs. To a significant extent, however, the conclusions also apply to the growing of ornamental crops. Renewable raw materials for technical applications has been the subject of NRLO studies in previous years and has not been covered again in the present study. The challenges for the future are examined in detail in this report. Opportunities in the market A portfolio analysis of the position of Dutch agribusiness in the various markets in the world reveals that Dutch agribusiness has a strong position in the saturated or slowgrowing markets of the EU and Central Europe. The Dutch position in markets that are growing rapidly, such as the emerging markets in areas like Latin America, the Pacific Rim, China and India, is a limited one. This means that our share in world trade will diminish unless we are able to acquire a larger market share in these new markets.
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In the case of the saturated markets in the EU, the sector will have to look for market segments with higher added value. There are interesting possibilities in health care products, environment-friendly and animal-friendly products, and the growth in the foodaway-from-home market. Dutch agribusiness lacks the basic knowledge about market structures, consumer behaviour, cultural patterns and institutions that is needed to evaluate the opportunities in the emerging markets. Specifically, the small and medium-sized business sector, which is interested in getting into these kinds of markets, is largely reliant on knowledge about these markets in the public domain that is not yet available in a sufficiently systematic form. Individual customisation An important trend in our Western society is agility or mass individualisation. Consumer behaviour is much more volatile, much less predictable and increasingly concerned with instant gratification. The expectation is that in due course this trend towards individualisation will become a more important factor in the emerging markets too, particularly in the urban areas. As well as setting quality standards for products, this attitude also demands delivery at the right time and in the right place. At any moment, wherever the consumer may be, it has to be possible to satisfy his or her requirements; it is a question of the consumer as a moving target and how we can increase our chances of scoring a hit. In modern thinking about categories of consumers, every consumer has something of this instant consumer in his or her make-up, alongside other possible descriptions, such as rational, social and responsible. Whats more, this can vary according to the product category. One moment, moreover, this instant consumer will be demanding products on the basis of flavour, convenience or cheapness, and in the next breath will be voicing concerns about the environment, animal welfare or his or her own health. The likelihood is that in the long term health, the environment and animal welfare will be significant factors in the concept of quality, as safety already is. Changes in consumption patterns are an important factor in this development. While the retail trade is evolving from supermarket to household service provider in response to mass individualisation, consumers are increasingly also obtaining their food through other outlets: company canteens, take-away meals, snack bars, old peoples homes etc. Young couples in Europe are rapidly moving towards the situation that already exists in the United States, where 50% of the food consumed is prepared outside the home. This places different demands on products in terms of keeping qualities (shelf life), convenience and presentation.
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Consumer-driven technology development These trends in the market and among consumers generate a demand for a more differentiated and more rapidly changing product range and also call for a different approach to technology development (dedicated production systems). In the future there will have to be product development that takes the dynamic of the market and the divergent wishes of the consumers as its starting point and uses the technologies of the future: biotechnology, separations technology, sensor technology and modern information technology (IT). To achieve this, product development will have to be tackled in a more structured way, and knowledge deriving from different areas of research will have to be integrated more effectively. The development of sensor technology in the agrosector, for instance, requires the integration of materials technology, biotechnology and process technology. New scientific developments also provide interfaces through which the sector may respond to wishes relating to health: both the information about genetic aspects and the new insights into bioactive components - substances that, in low concentrations, affect human health - offer interesting prospects of made-to-measure food! In the future, made-to-measure food will also mean food produced in a way that the public finds socially acceptable. Such aspects as the environment, animal welfare etc. will play a major role. This will have to be specifically taken into account in the development of technology. From chains to flexible networks As well as imposing requirements in terms of technology development, trends such as mass individualisation call for a responsive answer to a sharply fluctuating market demand. This places considerable demands on the organisation of agricultural production chains. The full vertical integration of links in a chain can mean a loss of flexibility. It would appear to be more efficient to opt for a continuation of the development of the chain concept, leading to responsive networks that combine the advantage of co-ordination with the flexibility of more loosely linked organisations. These independent organisations work closely together in the flow of goods along the chain in order to achieve the desired customer value at the lowest possible cost. Agricultural production chains, and transport and distribution systems should be redesigned on the basis of an integral concept, both in order to increase the economic efficiency of the chains and to limit the environmental impact, land use and the clogging up of transport arteries. The looser links require adaptations of the quality control systems. This is an important area of attention for both the private and public sectors (risk management). There is growing concern about the impact that the transport of agricultural products has on the environment, land use and quality of life. By far the lions share of this transport is by road, making the sector responsible for a massive 40% of all road freight in the
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Netherlands. These trucks, moreover, are only partially laden. This calls for a more integrated approach to chain development, including the transport movements this involves: between the links, bringing in raw materials, and distributing the end products. What other modes of transport could be considered, how can product flows be combined, can transport be reduced or even avoided? In order to tackle this problem, knowledge of agricultural products and the way in which they are produced will have to be combined with an understanding of new transport concepts.
Priority innovation themes

The NRLO believes it is extremely important for the Netherlands to have a knowledge infrastructure that is capable of helping to successfully tackle the challenges outlined above in the years ahead. This relates not just to the development of new knowledge but, as importantly, to the considered combination of existing knowledge, knowledge transfer, and the achievement of developments in the market. In the years to come, farms and knowledge institutions will have to devote specific attention to the development of knowledge, technology and skills in the following four areas: a. knowledge of and information about new markets and relatively unknown consumers; b. knowledge of the content, function, effects and interactions of food components and food concepts in relation to changing patterns of consumption. The various aspects of food, such as flavour and convenience, and peoples health and well-being, all demand attention. So too do the underlying motives for consumer behaviour in order to underpin such concepts as consumer science and consumer concern; c. the development of technology relating to food and non-food that is more attuned to the dynamic of the market and societys wishes, including the opportunities presented by biotechnology for made-to-measure raw materials; d. the skill to get integral chains and flexible networks to function effectively within the parameters of the environment, land use and the quality of life. This calls for, among other things, new logistic concepts. Some of these themes have already been the subject of study in recent years. Consumer Behaviour and Bioactive Components are themes in the NWO (Netherlands Organisation for Scientific Research) Nutrition Incentive Scheme. Genetic aspects are being examined in the NWO priority programme Nutrition and Chronic Disease: the Role of Genetically Determined Sensitivity. Also of great importance in this context are the recent revitalisation of agricultural technology research through, among other things, the development of the ATO-DLO (Agrotechnological Research Institute) and TNO-Voeding (the Nutrition Division of the Netherlands Organisation for Applied Scientific Research), the
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foundation of the VLAG graduate school and the establishment of the Wageningen Centre for Food Sciences. This has laid down an excellent basis for giving substance to the approach to the priority themes (referred to under b. and c. above) in food and agricultural technology research. The challenge facing us in the years ahead is a threefold one:
to give the co-operation between the research institutions concerned operational form in programmes that contribute to the generation of new knowledge and to the development of new technologies;
to intensify still further public-private partnership aimed at innovation in the market; to significantly expand the international position of Dutch food and agrotechnological research.
A particular point of attention here should be the development and application of sensor technology in the agrosector. To this end, intensive co-operation between agrotechnological institutions and centres of expertise in the field of sensor and micro-system technology is crucial.
Adaptations to the knowledge infrastructure

In two of the fields referred to above (see a. and d.), there will have to be another radical revamping of the knowledge infrastructure in the foreseeable future. This relates in the first place to the development of skills in the area of integral chains and flexible networks within the constraints imposed by the environment, land use etc., and in the second place to a significant improvement in the system for knowledge development and the gathering and processing of information about unfamiliar markets and consumers (including those in distant parts of the world). As far as the development of skills relating to chains and networks is concerned, it is necessary to move organisations developed in recent yearssuch as the Agri Chain Competence Foundation (AKK), the Centre for Transport Technology and otherstowards a centre for integral chain and network science. This will have to specifically include such aspects as transport, distribution and logistics within the parameters of the environment, land use and quality of life. Plans for a Chains and Logistics Competence Centre are currently being worked out in close association between the government, the private sector and knowledge institutions. This will be funded by government and business (public/ private). The NRLO is also contributing to it. This is being done in part with a view to the stimulation of the vitalisation of the planning and economic structure of the Netherlands envisaged in the framework of ICES (Interdepartmental Committee on Economic Structure). A commission given by the AKK and NRLO to the ATO-DLO and TNO-INRO (the Infrastructure, Transport and Regional Development Division of the Netherlands
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Organisation for Applied Scientific Research) for the exploration of alternative transport concepts also falls into this framework. In terms of the development of knowledge and information relating to new markets and consumers (particularly those in distant parts of the world), the aim must be to strengthen the Dutch knowledge infrastructure and to make the information about these markets that is available in various places, including internationally, more accessible to the private sector. In part on the initiative of the NRLO, a group of key players is presently working on the desirable strengthening of the knowledge infrastructure. In addition to the government (in the shape of the Ministry of Agriculture, Nature Management and Fisheries (LNV)), the private sector and research organisations, with the LEI-DLO (Agricultural Economics Research Institute) taking the lead, are working on the development of a targeted plan of attack. The objective is to arrive at a prototype Data Warehouse for agribusiness. One of the aspects involved in formulating the plan is the sharing of the responsibility for financing: overall the government should fund the basic knowledge and the development of the search system, the private sector should be responsible for funding specific search assignments. A revitalised knowledge infrastructure along the lines set out above must be deemed to be capable of carrying out satisfactorily the priority science, technology and innovation programmes described in the body of this report.
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This report deals with an exploratory study, not a piece of research. To a significant extent it is about our future and in that sense it can for the time being be neither confirmed nor denied. It is concerned not with accuracy but with provocation, not with answers but with questions. It is about provoking opinions and stimulating debate, about inciting the formulation of ideas about consumers, agricultural chains and research agendas in the decades ahead. We put forward building blocks and suggest prospects. Our proposition is arguable, the end is open it is over to you! NRLO report 96/25 FLAK 2010 6).
1. Introduction
One of the themes of NRLO studies is Sales, processing and primary production systems for agricultural products in the 21st century or, more briefly, The Future of the Agrosector. In the light of the increasingly market-driven nature of the agrosector, an important subsidiary theme is Markets and Consumers in 2010, in which various questions need to be addressed. They include:
What are the important markets of the future and how will these markets develop? How will consumer behaviour develop in these markets and what does this mean in terms of the demand for agricultural products? What standards does this changing market demand set for the production chains and what does this mean in terms of knowledge and competence questions? What knowledge is available, and what will have to be developed and consequently will have to be given priority over the next few years? In which situations are other aspects of knowledge involved, such as knowledge transfer and education?
These questions were defined more precisely and supplemented during the kick-off conference in December 1995. Following on from this, background studies were carried out on the following subjects: 1. What is known about Consumer behaviour and strategies for influencing it? (Professor Meulenberg) 2. Which different markets are important in terms of 2010 and do these markets impose different requirements for the products supplied? (Professor Steenkamp) 3. What are the implications for agribusiness of shifts from use in the home to use outside the home? (Professor Zachariasse/Dr van Gaasbeek) These three studies were discussed at a workshop in June 1996. The essays and the report have been published in NRLO report 96/4 Markets and Consumers in 20101). Another subject that received a considerable degree of attention during the kickoff/working conference was: 4. What do market changes mean for the chain organisation? How can links in a chain respond to sometimes unpredictable consumer demand: how can we achieve short, flexible chains? This questions led to a joint project with AKK entitled Flexible Agricultural Chains (known by its Dutch acronym FLAK) 2010, which was reported in various forums in June 1996 and
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during the Agri Chain Competence conference Chains on the move in December 1996. The results can be found in NRLO report 96/25 FLAK 20106). During the workshop held in June 1996 (see above), two subjects were put forward for further study: 5. Focused differentiation as a subsidiary strategy in the EU and as the main strategy in emerging markets, and in respect of emerging markets: what do we know (and what do we not know) about interesting niches, consumer behaviour, cultural patterns? 6. How can consumer wishes be translated into requirements imposed on products and production processes, and what are the implications for science and technology? As far as 5 is concerned, there are key questions relating to the collection of information, the development of missing knowledge, the organisation of access to the knowledge about markets and consumers in emerging markets, and the role of the various (public and private) parties in the production of knowledge and information. An NRLO study, Knowledge systems for new markets2), has meanwhile been completed by the LEI-DLO. The private sector, the Rabobank and the government (LNV-I&H) are involved in taking the report further. As far as 6 is concerned, at the request of the NRLO, Professor Jongen has written an essay entitled Consumer-driven product development: the route from desirability to technological feasibility and effectiveness25). This essay was discussed during a workshop at the beginning of December 199729). In the context of the subsidiary theme Markets and Consumers, consideration was also given to the following subjects: 7. The Environmentally-Aware Consumer. This subject was tackled in a collaborative venture of the NRLO, the RMNO (Council for Environmental and Nature Research) and the RGO (Health Research Council). The results are summarised in NRLO report 96/612). 8. The inherent dynamic of science and technology. This background study investigated the potential importance of new scientific and technological developments to the agrosector. The executive organisation (ATO-DLO) was asked specifically to look for inspiration in what is happening in other sectors. The final report28) was discussed in a workshop in December 199729). 9. Bioactive components in food (NRLO report 97/1623). 10. The interaction between agricultural chains and various forms of transport and distribution. ATO-DLO and TNO-INRO have meanwhile been asked to undertake a study into this subject. Completion is scheduled for February 1998.
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This final report summarises the results of the various subsidiary studies and groups them into a number of main themes. Considerable use has also been made of information that is available elsewhere. The drafts have been assessed in a wide-ranging round of consultations with the government, the private sector and research organisations.
2. Searching for new markets

A portfolio analysis of the position of Dutch agribusiness1) in the various markets in the world reveals that Dutch agribusiness has a strong position in the EU and in the emerging markets of Central Europe. However, these markets are growing very slowly; the EU, in particular, shows all the signs of a saturated market. The Dutch position in markets that are growing rapidly, such as the emerging markets in areas like Latin America, the Pacific Rim, China and India, is a limited one. This means that our share in world trade in food and ornamental crops will diminish unless we are able to acquire a larger market share in these new markets.
However, closer inspection reveals that the portfolio is highly unbalanced. In most major emerging markets, the market share of the Netherlands is disturbingly low, while future growth will be generated mostly in these regions. Professor Steenkamp in his essay Markets and Marketing Strategies for Dutch Agribusiness in 20101).
2.1.
The EU
The Netherlands has traditionally been very successful as an efficient producer of a narrow range of good quality agricultural products in large quantities (bulk). The most important market is the EU. Given the volumes, a significant proportion will also have to be sold as bulk in the near future. However, the Netherlands will have to reckon with a gradual decline in bulk sales, particularly since other suppliers of low cost bulk (for example Spain and Central Europe) will be making their presence in the market felt much more emphatically. This will have to be offset by a focused differentiation strategy in which new products are marketed in promising market segments. Science and technology have an important task in helping to identify these segments and providing the knowledge for the necessary product development. The trend towards environment-friendly and animal-friendly products, for example, holds out some interesting possibilities. The Netherlands could decide to invest in this so as not to fall behind in future. The expectation is that in 2010 - at least in Northern Europe - environment-friendly and animal-friendly will have become preconditions for product and process quality, in the same way as product safety is now.
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2.2.
Emerging markets
The focused differentiation strategy probably offers the best prospects for the emerging markets. This has to do with, among other things, the distance, the character of the markets and the position of the other suppliers in these markets. The basic knowledge of market structure, consumer behaviour, cultural patterns and institutions needed in order to achieve a successful focused differentiation strategy is often lacking. There is, however, some insight into the potential for products in relation to disposable income. More emerging markets are already seeing disposable incomes in the region of $5,000 to $15,000 (GNP per capita) and if this is not the case now, it certainly will be by 2010 - which means that products like frozen food, instant soup, tinned food, dairy products, confectionery and ice-cream come within the consumers reach as, possibly, do functional foods like Yakult. This makes these markets attractive to Dutch agribusiness.
The absence of a clear knowledge infrastructure means that companies approach new markets in very different ways and with varying degrees of success. Small companies have difficulties finding their way around the knowledge infrastructure. Many of them simply abandon any idea of exporting to new markets. Others take a gamble. NRLO report 97/38 Knowledge Systems for New Markets2).
It is evident that a few larger enterprises that have already decided to break into these new markets are building up the necessary know-how for themselves. The SME sector, however, which would also like to consider getting into these markets, is largely reliant on the knowledge in the public domain, which is still not available (or at least not sufficiently systematically) for these markets. In which direction will these markets develop? This can vary very significantly from one market to another. In some cases, for example, people are unused to dairy products and have been consuming soya products for centuries. Tastes are also very different: people in the Far East are accustomed to sweet things, whereas in the Near East fermentation has been used as a method of preservation since time immemorial, which means that sour-tasting products are preferred. The way products are perceived can also differ widely. The importance of this should not be underestimated. In order to get a better idea of the prospects in new markets, basic market research into opportunities in the EU and the emerging markets is essential. How are products used and perceived? What product modifications will be needed? What sort of market culture will confront a company that wants to break into new markets? Are we talking about the export of products from the Netherlands, or should production locally be considered and is knowledge actually the export product? In this case knowledge is supplied with the product as embedded technology. In both situations (export and local production),
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collaboration with local partners is usually desirable. This can develop in different ways in different regions/countries. Knowledge of these aspects is needed in order to be able to respond to the actual (purchasing) behaviour of the consumers. It is obvious that innovation in these new markets involves more than science and technology alone. At the NRLOs request, LEI-DLO undertook an inventory of the necessary knowledge infrastructure with regard to new (distant) markets2). It revealed the great importance of information that cannot be expressed very easily in figures, such as market culture, relevant networks, potential partners and political systems. It also demonstrated that it is extremely important that the information that does exist is integrated and made accessible to the private sector, particularly to small and medium-sized businesses. Agricultural research can play an important part in this, provided that it makes a specific effort to increase the attention it devotes to distant markets and brings it into proportion with the attention currently being paid to Western markets and consumers. The government is also called upon for basic market knowledge about new (distant) markets. This is already happening through the agricultural councils and agricultural attachs. In the future this task will have to be extended and broadened in close consultation with the private sector interests involved, banks and the research world. Fast, reliable, systematic information about markets anywhere in the world is an essential precondition for the private sector to be able to respond promptly to opportunities in the market.
The government has a larger role to play in basic marketing research than in applied research. The latter type of research may well be paid for by the companies in question. Professor Steenkamp in his essay Markets and Marketing Strategies for Dutch Agribusiness in 20101).
Lastly it is extremely important that the courses given for students of marketing, for example, at the LUW (Wageningen Agricultural University), and other vocational courses too, should allow sufficient time to provide knowledge and understanding of, in particular, the emerging markets in the world. Responding to market wishes can be done most effectively by managers who, from the outset of their training, have acquired a feel for what the various markets want. As an extension of this, companies, banks and research organisations are increasingly opening local branches, often with local managers, in order to establish a presence in these markets themselves and learn about the local problems at first hand.
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2.3.
Distribution channels
In recent years the changes in the retail trade have been the subject of attention in many areas. The consistent application of the mass individualisation idea has major implications: from supermarket to provider of household services. The individualised, demanding and critical consumer wants products and services made to measure. However, consumers are increasingly obtaining their food through other outlets, such as those outside the home. They include works canteens, school meals services, take-away meals, snack bars, hospitals and old peoples homes, etc. In the United States these outlets already account for 50% of all food; young couples in Europe are rapidly moving in the same direction. Smaller households, working partners and well-off older people are bringing about a further increase in consumption outside the home. This places different demands on products in terms of keeping qualities (shelf life), convenience and presentation. The brand in the traditional sense loses significance. How can a product nonetheless set itself apart in outlets outside the home? The retail trade is responding to these trends by staying open later and offering fresh meal components, so that the line between the retail outlet and outlets outside the home is becoming blurred. The retail trade sees developments moving towards a 24-hour economy, resulting among other things in much longer opening hours. This subject raises questions on which the societal debate is far from over.
Does the consumer play fair? At home he eats brown bread (like a good boy), but at work the consumer is increasingly likely to reach for the white. Heukels (Van Hecke) responding as a co-assessor during the Markets and Consumers 20101) workshop.
At the NRLOs request, LEI-DLO has drawn up an outline of the possible future developments in consumption outside the home in the most important markets for Dutch agribusiness. Taking three scenarios: (i) the emphasis on convenience, (ii) the traditional family setting and (iii) the loss of traditional eating patterns, they put forward a number of possible strategies with which agribusiness could respond to these developments, and sketch the possible role of the government, for example in relation to Integral Chain Management and areas of attention for science and technology. Trends are often strongly culture-driven in individual countries. In Spain and Italy, for instance, people eat out a great deal, but in restaurants. In Germany, too, restaurants and pubs play an important role. Fast food caught on much later there. However, fast food has a much stronger position in the United Kingdom. In Eastern Europe, consumption outside the home is one of the sectors to have suffered most under the economic restructuring. This indicates that eating out is not only culture-related, it is also tied very strongly to the economic situation.
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Japan, with its company-oriented culture and long working hours, has had a relatively long history of consumption outside the home. In the other countries of the Far East, ready-to-eat food is available in retail outlets and from the innumerable small street stalls. A great deal is known about consumption outside the home in the Western world. Far less is known about this phenomenon in other countries. Consumption outside the home could grow still further, depending on developments in consumer behaviour. The meal together at home could become a family event at weekends and on special occasions. Where between the extremes will the truth prove to lie? Economic trends are an important factor here. Agricultural chains will have to be flexible enough to respond to developments of this kind in order to be able to seize potential chances. What are the special demands made on products for consumption outside the home? We are thinking here in terms of products that are sold in a works canteen. They have to look fresh and taste good, and the choice should change frequently. Then there are the readyprepared meals that are kept in the refrigerator and simply have to be heated up in the microwave. An increasing number of older people are having their meals brought to them at home in this form, while anyone can buy the components of a meal in the shops. A major problem is the increasing blandness of the food; preserving flavour and texture is an important area for technology research. Bacteriology is not the greatest problem. In terms of food for consumption outside the home, therefore, knowledge is needed in a number of areas, including:
packaging technology: product protection, conditioning of the product, attractive presentation and convenience; fresh and yet with a longer shelf life! product and process development: consumers sometimes eat in the same place every day, prevention of boredom, new products, variation and distinction between products; processing information from the canteen sales back through the chain (upstream).
Far-reaching developments are also taking place in retail outlets3), 4)). In the Western world we are seeing a response to such trends as mass individualisation, instant consumerism and a growing need for convenience. The sector is moving towards the rapid supply of products and services, everywhere and at any time, and towards the provision of household services. Supermarkets are also seeing opportunities in Central Europe and the Far East. This stirs up a great many uncertainties and questions. Will the smaller shops disappear there too? How will the local authorities react? Can developments of this kind be halted, etc.?
I can see three possible scenarios: muddling through, cautious reaching out and global destiny. I know which one I would choose. Professor Steenkamp speaking on opportunities for the agrosector during the Markets and Consumers 20101) workshop.
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The possibilities of electronic shopping on the Internet4). Will this really catch on? Is there a future for electronic commerce? The expectation is that home shopping on the Internet will not replace the supermarket, but will cherry-pick a (limited?) market share. Virtual shops are already operational on the Internet, although at the moment many of them serve primarily as a source of information for the consumer. It is thought that electronic shopping could achieve a share of about 10% in total food sales in the Western world by the year 2005. The arguments put forward to support this are the convenience of home shopping and the fact that young people are growing up with computers. Moreover, the investments required can be written off against the reduced costs of running the supermarket. Many people are predicting that there will not be a breakthrough until the ultimate mass medium, television, has a return channel as well as a supply outlet. An infrastructural development like this cannot be achieved overnight. For many standard products, home shopping can be a good alternative to going out to a shop.
2.4.
Priority innovation, technology and science themes
Identifying and suggesting opportunities for new products and developing the basic knowledge needed for product development, for example biotechnology (product/process). Action: Wageningen Centre for Food Sciences, the VLAG graduate school, ATO-DLO and TNO-Voeding.
Basic market research relating to the EU and emerging markets, including educational aspects. Developing prototype Data Warehouse for agribusiness. Action: LEI-DLO, the private sector, government (LNV), NRLO (data warehouse) and LUW Marketing and Market Research Faculty (educational aspects).
Research into conservation and packaging technologies relating to fresh, chilled and frozen foods; focusing on shelf life, convenience and environmental aspects. Giving consideration to specific requirements relating to use outside the home. Action: VLAG graduate school, ATO-DLO and TNO-Voeding.
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Monitoring developments in distribution channels. Action: LEI-DLO in association with private agencies?
Amending the legislation. Action: government (LNV).
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3. Consumer wishes and chain reversal

As we have noted in the previous chapters, the Netherlands has built up a strong position primarily in those markets that are currently growing very slowly, if at all (market saturation). In the past, it was possible to serve the European market with a narrow range of agricultural products. Now that the European market is becoming saturated, it is essential to look for niche markets. This means developing a focused differentiation strategy, and means that products have to be supplied to meet the needs of a specific market segment. This is compounded by the diminution of government intervention, which means that the market will be a more dominant factor in determining the return on agricultural commodities. It will consequently be necessary to look for products that can fetch a better price in the market (higher added value). Developments like market saturation and declining government intervention, in conjunction with such societal developments as internationalisation and greater knowledge and awareness on the part of consumers, is forcing a switch from a supply-driven to a demanddriven market. When purchasing power also rises in emerging markets, this implies that new, and to us often unfamiliar, markets will also increasingly be demand-driven. The sector is therefore already working on a number of fronts to make the switch to a more differentiated package of products with greater added value. This calls for a different market approach and a change in the culture and organisation of the agri-chains. The process takes time and, sometimes, an additional stimulus, such as the current AKK programme.
3.1.
Areas of attention
When markets are demand-driven, good market research into interesting niches is obviously crucial. So, too, are competition analyses and the development of methods like Direct Marketing. Then there are many different types of consumer, and the same consumer can behave differently on different occasions or in different circumstances. This does not make a demand-driven market any simpler. Consumer research is becoming increasingly complex. Another problem area is the translation of consumer wishes into characteristics of foodstuffs including the packaging, both for the development of new products and the modification of existing products (modelling, designer foods, Quality Function Deployment), see also
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chapter 6. In the case of non-food, the industrial customer is usually the one who provides the specifications. A third major problem area that arises out of chain reversal and the need for Efficient Consumer Response (ECR) is the adaptation of the culture, strategy, organisation, operation and management of the agri-chains. Various forms are possible. Trends like mass individualisation call for a responsive answer to a sharply fluctuating market demand. The full vertical integration of links in a chain can mean a loss of flexibility and an increase in bureaucracy, and can make it more difficult to achieve the optimal scale for the links in a chain. It would appear to be more efficient to opt for networks that combine the advantage of co-ordination with the flexibility of more loosely linked organisations. A network like this is made up of independent businesses that have a longterm relationship with one another. They work closely together in the flow of goods along the chain in order to achieve the desired customer value at the lowest possible cost. Modern IT can help to achieve this. The looser links mean that the quality control systems will have to be adapted to the new situation. This is an important area of attention for the private sector, but certainly also for the government. The concept of the Virtual Enterprise also offers fruitful points of reference5). Management science research bodies have an important task here: establishing which organisational forms offer the best guarantee under which conditions for controlling agri-chains from the market. In the following sections, we examine a number of aspects of the consumer and chain problem. The problem area surrounding the adaptation of products and processes to consumer wishes is discussed in chapter 6.
3.2.
Consumer types
In the debate about mass individualisation, people refer to the 15 million markets (in other words, consumers) in the Netherlands. What do we know about their spending patterns? How do they react to innovations? The report FLAK 20106) defines four human types: the rational, the co-operative, the competitive and the responsible, and outlines what this means in terms of consumer behaviour and the best possible organisation of agri-chains. Although these types are often based very strongly on people in the Western world, there is every reason to assume that these different classifications will be equally appropriate in emerging markets in due course.
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This means that the unpredictable, volatile competitive consumer represents only one category. To what extent will the consumer of the future also embody elements of the other types? What conceivable variants are there? The rational consumer is predictable. For him, efficiency, speed and reliability are the most important factors. The co-operative consumer is a social creature who feels close links to his environment and his family. His world is local and small-scale. He prefers traditional methods and regional products. The competitive consumer is the category referred to in the debate about mass individualisation. He is unpredictable and volatile. The individual comes first and there is little feeling of solidarity. The responsible consumer has a strong feeling of responsibility for the world in all its aspects. Sustainability is important and he favours a fair distribution of prosperity. In reality, many consumers will have some traits of all the different categories. However, this mix is anything but consistent or constant. It may change over time, and may even vary from one moment to the next.
The rational person is a commuter from the suburbs of a large city who sleepily goes to work by tram every morning. A world of high-rise flats, long trains, wide motorways and large office blocks glides past him. In one of these office blocks, in an office down a long corridor on an upper floor, a desk with an in-tray and an outtray awaits him. The co-operative person lives in a small town or on a new housing estate. He has a part-time job and shares in the task of bringing up the children. He works at home, where he has an office and provides services to a circle of regular customers. He is active in local organisations and a regular at the local pub. He usually gets around by bike. The competitive person lives in an apartment in the city centre. He works in a commercial environment and throws himself fully into the strategic battle for customers. After work he will go for a drink in a wine bar, and in the evening he will go to the theatre or a concert. He goes skiing in the winter and takes his summer holidays on a Caribbean island. The responsible consumer takes diverse interests into account in his pattern of consumption. He is aware of the consequences of what he does in terms of health and the environment, the third world, animal welfare and similar concerns. He is modest and not susceptible to fashion trends. Where products are concerned, he appreciates being given comprehensive information about the production method. NRLO report 96/25 FLAK 20106).
Professor Meulenberg has come up with a different breakdown into empirical categories. See his essay in NRLO report no. 96/4 Markets and Consumers:
the environmentally-friendly consumer, such as the EKO consumer; the nature and animal-loving consumer; the health-conscious consumer, steering by health criteria; the convenience-minded consumer, who prizes effectiveness above all;
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the hedonistic consumer, who goes for taste, luxury and refinement; the price-conscious consumer, who uses price as the criterion for buying; the variety-seeking consumer, who is always looking for something different.
The pure profiles are given here. In practice, there are usually combined formsthe environmentally-friendly, nature and animal-loving, health conscious consumer, or the combination of hedonistic, convenience-minded and variety-seeking traits. These combinations often come very close to the four theoretically constructed consumer images in the FLAK report. Meulenberg also notes that, in different roles and different circumstances, the same person consumes in different ways. This consumption pattern differs on weekdays and at weekends, between work and home, and between home and outside the home. Greater mobility, double incomes, new sales outlets, longer opening hours and a larger selection of ready-to-eat products will magnify this effect.
Tell me what you eat and I will tell you who you are! Professor Meulenberg during the Markets and Consumers 20101) workshop.
The study constantly kept in mind the question as to the extent to which the consumer of the future will behave according to these types and in what mix. Taste will remain very important, but:
what role does health play in judging new foods? in which areas does the consumer need greater convenience? how important is sensory perception and do situational factors play a role here? for which foods and ornamental crops is variation important? how should we handle communication relating to new technology (consumer acceptance)? how do we pay sufficient attention to consumers perception of risk in terms of food (consumer concerns)? what will be the effect of the societal undercurrent demanding that such aspects as the environment and animal welfare are considered in the production process? what are the implications of teleshopping in terms of production and distribution and is the consumer ready for this?
The mix of consumer needs is anything but stable. This mix can already differ significantly within Europe, where we have Northwestern Europe with its motto eat to live and Central and Southern Europe, where the motto is live to eat7). Consumer taste can also change dramatically over timeand it is by no means always possible to tell which direction it will
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go in. Product life cycles are getting shorter and the range is getting wider. Innovation is important. This is why it is crucial for the agricultural production chains to build in maximum flexibility. See below. If, for instance, teleshopping takes off, it will be not so much the product and the production process that will have to adapt as the structure of the distribution channels. The growth in prosperity and differences in levels of prosperity are also very significant factors in the development of consumer needs. Because in the Western world, alongside the consumers who can afford anything they want, there is a considerable group of consumers who have to manage on a limited budget. Price is then the crucial factor. The same applies to consumers in emerging markets; while their disposable income is rising, they are still nowhere near the level of prosperity in the Western world. Increasingly, attention will also have to be paid to an aspect of the consumer population that is diametrically opposed to the breakdown into categories described in this section. We are referring here to the changes in the ethnic and cultural make-up of the population, for example in the Netherlands. Successive generations of ethnic minorities adapt their customs, in part, to traditional Dutch customs. At the same time, however, the customs of the native Dutch population are changing as they come into contact with other cultures, both at home in the Netherlands and while on holiday abroad. These changes are expressed in the great diversity of foreign restaurants and the increasing sales of foreign foods.
3.3.
Flexible agricultural chains
The behaviour of the consumer in the Western world seems to be becoming much more volatile, much less predictable and increasingly concerned with instant gratification. In the emerging markets it is still important to respond to local cultural differences, resulting in different usage and perception. The expectation is that in due course this trend towards individualisation will become a more important factor in the emerging markets too. As well as setting quality standards for products, this attitude also demands delivery at the right time (just in time) and in the right place. At any moment, wherever the consumer may be, it has to be possible to satisfy his or her requirements. If we fail, the moment is past, the chance has been lost, the consumer is somewhere else doing something else; it is a question of the consumer as a moving target and how we can increase our chances of scoring a hit.
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Even the affluent consumer does not scruple to get his bulk purchases from a discount store while going to specialist retailers for fun items. Moreover, a growing proportion of food is reaching consumers through outlets other than retailers as a result of the increase in consumption outside the home. Responding to the individualistic instant consumer makes major demands on the flexibility of the production chains. The preparations for and follow-up to the Ministry of Economic Affairs conference on Mass Individualisation in 1995 provided a significant stimulus to the thinking on this subject. What does the chain reversal that is envisaged mean to the links in the chain, particularly those links that are further removed from the market, such as primary production? It will be different for semi-manufactures like flour, sugar and fat as opposed to recognisable primary products like fruit, vegetables and flowers. The FLAK 2010 study, carried out in association with AKK, indicates what the implications could be for the chain and for the knowledge needed6). In terms of flexibility it could mean:
operational flexibility: the ability to adapt products and production volumes within existing organisational frameworks; structural flexibility: the ability to adapt the organisational structure, for example networks instead of (rigid) chains; strategic flexibility: the ability to change strategies, for example from a low cost strategy to one of differentiation.
In these terms, one would be justified in asking whether Dutch agribusiness has sufficient strategic flexibility to make the switch from a supply-driven to a demand-driven market and whether it will be able to build up a sufficiently flexible structure. The private sector is working hard with AKK to develop the necessary knowledge and skills. With reference to four human types, FLAK 2010 shows that in the future it will on the one hand be necessary to develop areas of technology expertise, such as:
bio-process technology to improve properties that are important in terms of processing or distribution (for example keeping qualities); bio-product technology in relation to food and health, for example functional foods; biotechnology in commodities production with the aim of simpler, more natural refining or processing (for example soya); technological aspects related to convenience food and use outside the home; preservation and packaging technology (see also section 2.3.); flexible organisational forms and chain agreements (contracts);
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while on the other attention will have to be paid to aspects of chain organisation:
logistic control concepts, for example ECR; conversion moments as late as possible in the production process; price-setting mechanisms; information flows both upstream and downstream.
A consequence of these developments in a chain organisation could, for example, be that filling lines are controlled by the cash register in the shop. This illustrates the importance of such issues as chain agreements, control concepts, price-setting mechanisms and information flows. FLAK 2010 also advocates:
Paying more attention to behavioural sciences; the importance of peoples behaviour to the organisation of the chain should not be underestimated. Flexibilisation through globalisation and internationalisation: obtaining the commodity/primary product from a number of countries and supplying a number of markets. Other countries will be equally unable to respond immediately to demands for other agricultural products. Being able to react just that little bit faster or more flexibly than the competitor is often what counts.
Directing the research agenda on the basis of what is happening in practice.
The government always remains responsible for ensuring that there is sufficient basic knowledge in the knowledge areas listed. The private sector should take the lead in applying this knowledge to all sorts of practical problems. There can also be an interaction: pilot projects can produce strategic knowledge that will be important in solving future practical problems. As far as converting agricultural chains into demand-driven networks is concerned, AKK, with public/private funding, has played an important stimulating role in the period up to 1998. The further development of chains and flexible networks is one of the priorities for the future of the agrosector. It would therefore be a very good thing if those involved in AKK (the private sector, knowledge institutes and the government) were to make efforts to take the agri chain competence infrastructure that has got off the ground since 1994 on to a further phase of development.
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The activities of the coming ten years should result in a Chains and Logistics Knowledge Centre. The overall image of the Knowledge Centre is: a close-knit and multifaceted network of knowledge producers and stakeholders in the field of chains and logistics. The situation in ten years time should differ from the current situation in a number of respects, including: - knowledge about chains is linked to knowledge in the field of transport, distribution and logistics; - agri chains and other chains constantly and systematically learn from one another; - systematic attention is devoted to both pilot/practical projects (small-scale innovation) and strategic research programmes; - the development of public and private knowledge takes place in interaction; - in addition to research programmes there are also appropriate educational programmes for various target groups; - the network is highly international; - the necessary provisions have been made to guarantee the vital/sustainable development of the subject area in question after 2008. Key points from Chains on the Move30).
3.4.
Competition analyses and the development of market research methods. Action: LEI-DLO, LUW Marketing and Market Research Faculty, and the government (LNV).
Developing methods for translating consumer wishes into product characteristics. Action: VLAG, LUW Marketing and Market Research Faculty, ATO-DLO, TNO-Voeding, private sector.
Research into developments in consumer classifications and possible mixed forms. Action: LEI-DLO and LUW Marketing and Market Research Faculty.
Research relating to chain dynamics and possible organisational forms for agricultural chains. Action: LUW Business Studies Faculty: new chair in chain science!?
Research into various forms of flexibility in agricultural chains/network contexts in relation to mass individualisation. Action: private sector, LEI-DLO, LUW, AKK, NRLO, consultants including TVA.
Developing systems that rapidly pass on market information to previous links in the chain, for example primary production. Action: LEI-DLO, ATO-DLO, ATC and LUW.
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4. Sustainable means of primary food production, processing and distribution

The governments environmental policy is aimed at achieving sustainable balance between (agricultural) production, consumption and the environment8). Its food policy is concerned with providing consumers with a wide choice of foodstuffs from which they can derive a healthy diet. The sustainable production and consumption of food should be the focus of attention throughout the length of the chainfrom farm to plate9). The activities of various players (producers, consumers, the retail trade, authorities etc.) and many different aspects (such as infrastructure, technology and legislation) all play a role. It is important to achieve a satisfactory balance, and as far as possible the integration of such disparate factors as operating profits, health and the environment. It is about operating in a multi-dimensional space. Insight into this problem is crucial in achieving a sustainable society.
4.1.
The environmentally-aware consumer and producer10),

11), 12)
The NRLO, RGO and RMNO have carried out a programming study geared to the environmentally-aware consumer, based on the following considerations:
Consumers could provide a stimulus to the development of sustainable production systems if they were to show a preference for food produced in environmentally-friendly ways and refrain from buying products that had a harmful environmental impact.
As far as the policy is concerned, it is important to know what determines consumers selection behaviour, to what extent such aspects as health and the environment play a part, and how this behaviour can be influenced or how to respond to it.
This study reveals that consumers are relatively environmentally-aware in a number of areas where they are given something to get hold of, such as waste separation and energy saving. However, consumers find it hard to conceive of what environmentally-friendly food might involve. If consumers make a connection between food and the environment, packaging is generally the first thing they think of. Evidently we need a handle/instrument to enable consumers to get a grasp of the environmental aspect of food. This is why a major part of the study was devoted to the subject of classification according to
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environmental impact. LCA (Life Cycle Analysis) or Integral Chain Analysis is an important factor in this13).
It appears, however, that in terms of environmentally-friendly behaviour we still do not know enough about what we want to achieve and what information the consumer needs. There is (as yet) no consensus. Are we not in fact talking about a change in lifestyle, of which environmentally-aware behaviour is a part? This would be in line with some of the ideas we are seeing in the retail sector and among manufacturers of A brands, namely that sustainability will in due course simply be part of the concept of quality. Joint position of the NRLO, RGO and RMNO with respect to The Environmentally-Aware Consumer12).
In the programming study in question, it was concluded that there are all sorts of strings attached to the promotion of more environmentally-friendly food using a classification instrument. It also emerged from the study that there is a lack of synchronicity in reliable and valid knowledge of the environment as opposed to knowledge about health aspects. Moreover, the environmental and health aspects of a product are not of the same order as far as the consumer is concerned: when someone buys a healthy product, he derives direct benefit from it; when he buys environmentally-friendly products it is society that benefits. On the basis of the programming study, the NRLO, RMNO and RGO came to the conclusion that further research is needed in respect of consumer behaviour where environmental aspects are concerned. The public and private sectors each have their own responsibilities here. It is encouraging to note that the problem of consumer behaviour in respect of the environment was included as a subsidiary aspect in the 1997 Science Budget and is one of the three themes in the NWO Nutrition Incentive Scheme14). This will make it possible to provide a better foundation for such concepts as consumer science and consumer concern. It will also provide an insight into the role of standards and values in nutritional behaviour. In his essay (NRLO report no. 96/4) Professor Steenkamp said that if Dutch businesses respond creatively to the trends that can be expected in consumer behaviour, there are good chances of winning a share in the growth markets of the future. The Netherlands should not be allowed to fall behind in environment-friendly and animal-friendly production. This means investing now in a market share in the future. And there is the added fact that by 2010 environment-friendly and animal-friendly will have become part of the quality that the consumer may expect to find in the shops.
The Netherlands should be a leader rather than a follower in environment-friendly and animal friendly production. The benefits of these new developments accrue to companies/countries which are the first to cater to them (first-mover advantage). Since the trends in the Western world are clearly in this direction, being the first can be a blessing in disguise for the future competitive position of the Dutch agrosector. Professor Steenkamp in his essay Markets and Marketing Strategies for Dutch Agribusiness in 20101).
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The greatest impact on the environment occurs in primary production, for example the manure problem in the livestock sector and crop protection in the plant sector (Chain Analysis Food Production Basic Document15)). A separate NRLO study deals with this problem. The processing and distribution of agricultural products also have an impact on the environment because they consume energy and water, create waste flows and require transport. The private sector has been conscious of the energy aspect for some time now (heat recuperation systems, for example), but the availability of sufficient process water of the necessary quality will conflict with the need for fresh water (soft drinks sector, breweries) within the foreseeable future. It will be necessary to aim to use (ground) water as efficiently as possiblewater recycling is one of the options. Water recycling will become an increasingly important subject for the private sector, consumers and research circles16).
4.2.
Transport, Distribution and Logistics
The transport of agricultural products makes major demands on the environment, land use and the quality of life. By far the majority of transport movements are by road, making the sector responsible for an astounding 40% of all domestic road haulage, as against a 10% contribution to the Dutch national product. Whats more, on average these trucks are only 45% full. The AKK report Agro Food Supply Chain Management17) says transport is a necessary evil that costs a great deal of money. This is why unnecessary transport has to be eliminated. It is crucial to minimise and optimise physical transport through the better utilisation of truck capacity and the selection of packaging. A complicating factor is that agricultural products have to be transported under controlled conditions. One of the many questions this raises is that of the possibilities offered by the refrigerated container. Research is needed into ways of improving the efficiency and utilisation of means of transport (particularly road haulage) on the one hand, and into the possibilities of shifting the transport to other modes, such as rail, inland waterway or underground freight tunnels, on the other. How can product flows be combined to achieve optimum load levels and the minimum of transport movements? How, for example, can underground freight transport be upgraded to meet the standards set for the transport and distribution of agricultural products? What does the combining of product flows mean in terms of the development and re-organisation of handling points and the standardisation of packaging? We also need to ask ourselves whether we can conceive of chain processes in which the transport of goods can be reduced by sending information instead of goods. We should, perhaps, be thinking in terms of tele-auctions and remote quality control. And: to what
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extent can better information help to prevent nonessential transport? Cutting down on transport movements has a beneficial effect on the environment and on cost. It also means that products reach the consumer sooner. It is possible to look for systems that involve shorter distances between the place of production and the place of consumption, for instance processing and refining closer to the consumer, linking import and export chains to improve capacity utilisation, and tailoring means of transport to the infrastructural problems of city centres. The extra investments in small-scale processing technology would have to be weighed against the advantages of a shorter distance to the market.
The development of a system of coherent solutions, leading in the medium and long term to demand-driven supply chains for the main agro food products, in a way that strengthens the competitiveness of the Dutch agro food sector as a whole and contributes to the resolution of the five bottlenecks: access, pressure on land use, the vitality of urban areas, employment and the environment. Agro Food Supply Chain Management17).
The AKK report Linked by chain knowledge18) stresses that the agrosector must seek ways of co-operating with the Transport, Distribution and Logistics sector and with what are referred to as the mainports of Schiphol and Rotterdam. These mainports are important in ensuring that a complete range is available all year round: they are the entry points for products that are not grown in the Netherlands: Rotterdam for bulk products and Schiphol for perishables like flowers and fruit. The mainports also have an important export function. Transport and Distribution play an important role between the various links in the chain19). They provide the connections. Viewing these functions as an integral part of the chain can bring about synergy and further improve the chain as a whole. An even better result can be achieved by involving the mainports too. Transport movements in their entirety can be calculated using the SMILE model (Strategic Model for Integral Logistics and Evaluation) developed by TNO-INRO20). There is consultation with AKK and the knowledge institutes concerned (TNO-INRO and ATO-DLO) about the various opportunities for co-operation and the formulation of a plan of action, in order to develop the necessary knowledge and test out the proposed innovations in practice.
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4.3.
Research into consumer behaviour with the environment as a subsidiary aspect, underpinning such concepts as consumer science and concern. The significance of standards and values. Action: NWO Nutrition Incentive Scheme.
Research into energy consumption and water requirements for processing and distribution. Action: research institutes and the private sector.
Developing the skills to get integral chains and flexible networks to function effectively within the parameters of the environment, land use and the quality of life, including the necessary transport, distribution and logistics. Developing a plan for a Centre for Integral Chain and Network Science. Action: private sector, knowledge institutes, public sector, AKK, NRLO, consultants.
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5. Nutrition and health

Nutrition and health is a subject of major importance to maintaining and developing good public health. Healthy eating is also an important aspect in the market, alongside such aspects as sensory quality and convenience. The importance of health can only increase, given the ageing of the population, the change in consumption patterns, the limited time available for food preparation, the consumption of snacks etc. In this context, as long ago as 1991 the Human Nutrition Task Force listed the priority research themes as21): 1. nutrition and ageing; 2. nutrition and chronic diseases; 3. nutrition and physiological functions; 4. social science research into nutrition; 5. new foods. These are still important themes today, and they will remain so for many years to come. New subjects that have emerged since then are the relationship between genetic predisposition and the possible role of bioactive components in food. These are components in food that play a role in preventing or initiating serious diseases, such as cancer and cardiovascular disease. Substances with a specific effect of this kind are described as bioactive. Genetic predisposition is the focus of attention in the NWO priority programme Nutrition and Chronic Disease: the Role of Genetically Determined Sensitivity22).
We have gradually learned a great deal about the role of fat, protein and carbohydrates in the diet. Components that occur in trace quantities, such as bioactive substances and non-digestible oligosaccharides, must now be given extra priority in research. Discussion during the workshop Bioactive components in food23).
The bioactive components in food are one of the themes being tackled as part of the NWO Nutrition Incentive Scheme14). The subject of bioactivity was also raised by the NRLO and RGO in a recent workshop Bioactive components in food23). This subject is important to a better understanding of the health aspects of existing foods and the development of novel foods. It appears that fruit and vegetables have a strong negative correlation with certain types of cancer. It is therefore important to find out which types of fruit and vegetables have an effect and what the active components are. This is a far from easy matter, since account has to be taken of:
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interactions between different components, and between components and such things as smoking and exercise; this requires testing in a natural environment; various mechanisms by which components may affect the onset, stimulation and growth of cancers; the difference between markers and actual active bio-availability; the fact that a higher dose may result in a different distribution of the bioactive substance throughout the body.
In terms of cardiovascular disease, we appear primarily to be talking about an anti-oxidant effect (in respect of unsaturated fats) and activity relating to platelet aggregation. The effects of fruit, vegetables and tea were investigated. Possible areas for R&D that were suggested are:
which substances are primarily involved; new epidemiological studies; a focus on interactions, and hence testing with real foods (natural environment); induced tumours may give rise to erroneous conclusions; consider working with extracts as a middle way between individual substances and complex foodstuffs; animal experiments and in vitro studies are suitable as screening; confirmation must however come from human trials and epidemiological studies in conjunction with biological testing.
The conclusions of the workshop were:
a knowledge of the product, composition, preparation method etc., is required; consumers want this; how do you set a fast enough pace even though you still dont know everything; there is limited time available for research; epidemiological studies will have to be refined; which component is doing it? in terms of priorities: push ahead with metabolism, however also make a start on intervention studies, for example with extracts; the antioxidant effect is just one: there are others!
In terms of consumers buying behaviour, the degree of involvement still appears to be limited at the moment the choice is made. People only think the environment is important, for instance, when the product is also healthy. Discussion during the workshop Bioactive components in food23).
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The contribution that intestinal flora can make to the prevention of serious diseases also merits the attention of nutritional research. These flora can be affected such that pathogenic flora are suppressed in favour of the growth of healthy intestinal flora. The possible options include the addition of healthy flora (for example bifidobacteria), but the addition of a substrate (for example oligosaccharides) on which healthy flora can grow is better. Developments like this are of great importance to a better understanding of the health aspects of foods and the substantiation of possible health claims. The LUW has been conducting a study into the possible role of oligosaccharides24) for the last few years. Results so far indicate that doubt has to be cast on the concepts generally accepted in the literature. Further research is required into the various fermentation processes in the large intestine. Proposals for a follow-up are being prepared.
5.1.
Research into the relationship between food, chronic diseases and genetic aspects. Action: NWO priority programme Nutrition and Chronic Disease: the Role of Genetically Determined Sensitivity.
Research into bio-active components in food. Action: NWO Nutrition Incentive Scheme.
Research into the effects of intestinal flora on human health. Action: VLAG graduate school.
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6. Translating market wishes into technological development

The many changes in the market for the agri-food sector raise the question of the extent to which and the way in which the various wishes of the market can be translated technologically while maintaining efficiency. At the request of the NRLO, Jongen et al. of the LUW have written an essay: Consumerdriven technological development25), in which consumer wishes are viewed in the light of the state of the art. Which developments will need additional encouragement? The essay outlines the developments in food-processing technology. Product groups are then linked to consumer types, and the technologies that have a key role to play in the further development of products in a particular category are identified for each of the product groups. This is illustrated below with the aid of a number of examples. The nature and environment-friendly consumer prefers unprocessed food such as fresh fruit and vegetables. This involves controlled growing and the best possible preserving and packaging technology. Genetic modification offers opportunities to reduce the environmental impact in the growing phase and cut down on processing steps (minimal processing). Will consumers accept this sort of growing method? This group is also likely to be attracted by products that replace products which have a major environmental impact, such as meat. One example is Novel Protein Foods, where the texture the consumer wants requires the further development of extrusion technology. The health-conscious consumer wants products that are low-calorie, are part of a cholesterol-reducing diet, are high in vitamins and minerals, and protect - or even improve - health. But above all these products have to have an excellent flavour. This calls for modified preparation technology. Biotechnology can also help, for example by increasing the content of health-promoting components in things like fruit and vegetables. Modern separations technology (membrane technology, chromatography), for instance, can help to increase this content: for example in extracts. Fermentation is also regarded as a technology that can be used to increase the keeping quality of products in a natural way, improve their sensory qualities and, above all, have a positive effect on health. The convenience-minded consumer wants ready-prepared meals. As we have already noted, the increasing blandness of such products is an area that needs attention. Compartmentalisation and hurdle technology, a succession of conservation processes, can help to achieve the desired combination of freshness and shelf life in the end product.
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Packaging technology also plays an extremely important role here. We are already hearing about active packaging, which not only protects the product but also actively affects the keeping qualities during storage. The variety-seeking consumer is perpetually looking for something new for a change. Products have shorter life cycles and constant innovation is essential. Automation and flexibilization based on advanced process control are needed to deliver this diversity while maintaining efficiency. This means, among other things, the further development of information and sensor technology.
The attention devoted to Sensor and Microsystem Technology will have to be comparable to that given to IT; in other words, without good in-line measurements you cannot have optimal process control. Discussion during the Dynamics in Science and Technology29) workshop.
A number of these technological developments are often to be found on the current research agenda. The approach, however, often reflects earlier thinking, whereas the more differentiated and more rapidly changing range of the future calls for a different approach26). How can this diversity of market wishes be translated into demands that products and production processes must meet? What requirements does this impose on end products, semi-manufactures and raw materials? What possibilities, for example, does biotechnology offer in terms of the modification and improvement of the properties of commodities and ingredients (made-to-measure raw materials)? Can it be done by modifying processes or are new production systems required? The essay by Jongen et al. suggests some directions in which to look for solutions:
dedicated production systems that are more in line with the dynamic of the market and use the technologies of the future, such as biotechnology, separations technology, sensor technology27) and modern IT;
a structured approach to product development and the integration of knowledge, for example through ECR and Quality Function Deployment, including relationships between structure and function;
integrating knowledge from other fields of research: materials technology, the physiology of smell and taste perceptions, market research, etc.
The Science & Technology investigation, in which four subsidiary studies looked at the inherent dynamic of Science & Technology, leads to similar conclusions. For the study Sales, Processing, Food, Health and (Chain) Quality28), ATO-DLO was asked specifically to take inspiration from what is happening in other sectors too, and to see what significance these developments might have for the agrosector. It emerged that there are interesting things going on in the transitional areas between materials science,
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biotechnology and process/production technology with ICT performing an important booster function. Transport and Logistics were important as the bridge to the market and society at large. This study also describes sensor technology as an important integration technology.
With reference to the tremendous acceleration in the speed at which a computer can do a calculation: In 2010 something that takes a fortnight now will be done in the time it takes to drink a cup of coffee. Dr Bruin (Unilever) during the Dynamism in Science and Technology29) workshop.
6.1.
Working out the concept of dedicated production systems for the food sector. Action: LUW Integrated Product Science Faculty, ATO-DLO and TNO-Voeding.
Research into aspects of product and process technology, such as quality perception (for example smell, taste) and consumer acceptance, including research into new products for outlets outside the home. Action: VLAG graduate school, Wageningen Centre for Food Sciences, ATO-DLO and TNO-Voeding.
Developing sensor technology for the agrosector. Action: DTO Sensor Technology Programme: Institute of Agricultural and Environmental Engineering (IMAG-DLO), ATO-DLO and MESA.
Structured approach to product development (methodology development), for example ECR and Quality Function Deployment. Action: LUW Integrated Product Science Faculty, ATO-DLO and TNO-Voeding.
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References
1) Markt en Consument 2010, containing essays by van Gaasbeek on consumption outside the home, Meulenberg on consumer behaviour, and Steenkamp on markets. NRLO report no. 96/4. 2) 3) 4) 5) 6) 7) 8) 9) Kennissysteem nieuwe markten, LEI-DLO study. NRLO report no. 97/38. Ontwikkelingen in het Grootwinkelbedrijf, information obtained from Foodworld. De toekomst voor de supermarkt, information obtained from CBL. De Virtuele Onderneming, Van Aken (TUE). Flexibele Agrarische Ketens in de 21e eeuw, co-production with AKK. NRLO report no. 96/25. The environment of consumers in 2010, M.R.C. Salmon. WRR report Duurzame risicos: een blijvend gegeven. Productgericht Milieubeheer, RMNO report no. 78 (1993).
10) Consument, Voeding en Milieu, NRLO report no. 95/7. 11) Voedingsmiddelen, Milieu en Gezondheid, NRLO report no. 96/1. 12) De milieubewuste consument, NRLO report no. 96/6. 13) Toepassing van LCA voor Agrarische Producten, LEI-DLO, CLM, CML 1996. 14) NWO-Stimuleringsprogramma Verantwoorde Voeding. 15) Behoefte-Veld-Analyse Voeden. Base-line document. 16) DTO study Water. 17) AKK report Agro Food Supply Chain Management, 19 December 1996. 18) AKK report Verbondenheid door ketenkennis, June 1997. 19) Ketenlogistiek, NRLO report no. 96/3. 20) SMILE project, TNO-INRO. 21) 1991 Report of the Human Nutrition Task Force Visie op voedingsonderzoek in Nederland. 22) NWO-Prioriteitprogramma Voeding en chronische ziekten en de rol van erfelijk bepaalde gevoeligheid. 23) Report of the NRLO/RGO workshop Bioactieve componenten in voeding, NRLO report no. 97/16. 24) Research programme Non-digestible Oligosaccharides (LUW). 25) Essay Consumentgestuurde Technologieontwikkeling: van wenselijkheid naar haalbaarheid en doeltreffendheid bij productie van levensmiddelen, by Jongen et al. (LUW). NRLO report no. 97/22. 26) Work programmes of the Onderzoekschool VLAG and Technologisch Topinstituut Voedselwetenschappen. 27) DTO programme Sensor technology.
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28) Ontwikkelingen in Wetenschap en Technologie, kansen voor verwerking en distributie, ATO-DLO. NRLO report no. 97/26. 29) Dynamiek in Wetenschap en Technologie workshop, NRLO report no. 98/6. 30) Ketens in Beweging, Chains & Logistics in Development programme for ICES-2.
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List of abbreviations
AKK ATC ATO-DLO CBL CLM CML DLO DTO ECR EKO FLAK ICES ICT IMAG-DLO IT LCA LEI-DLO LNV LNV-I&H LUW MESA NRLO NWO R&D RGO RMNO SME SMILE TNO-INRO TNO-Voeding TUE TVA VLAG WRR
Agri Chain Competence Foundation Agricultural Telematics Centre Agrotechnological Research Institute DLO Central Bureau of Provision Trade Centre for Agriculture and Environment Centre of Environmental Science Leiden Netherlands Organisation for Agricultural Research Organisation for Sustainable Technology Development Efficient Consumer Response ecologic(al) Flexible Agricultural Chains Interdepartmental Committee on Economic Structure Information and Communication Technology Institute of Agricultural and Environmental Engineering Information Technology Life Cycle Analysis Agricultural Economics Research Institute DLO Ministry of Agriculture, Nature Management and Fisheries Department for Trade and Industry LNV Wageningen Agricultural University Research Institute for Micro-Electronics, Materials Engineering, Sensor & Actuators National Council for Agricultural Research Netherlands Organisation for Scientific Research Research and Development Health Research Council Council for Environmental and Nature Research Small and Medium Enterprises Strategic Model for Integral Logistics and Evaluation Infrastructure, Transport and Regional Development Division TNO Nutrition Division TNO Technical University Eindhoven T. van Asseldonk Developments (Consultancy Bureau) Graduate School of Food Technology, Agrobiotechnology, Nutrition and Health Sciences Scientific Council for Government Policy
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