European Commissioner for Health and Consumer
Labelling and its implications for consumers
Conference on Consumer Policy Perspectives
Luxembourg, 2 May 2005
Ladies and Gentlemen let me begin by thanking the Luxembourg Presidency for organising this conference.
The subject is well chosen. Labelling is a central part of the communication of information to consumers. But although labelling is central to several EU and national policies, this is, to my knowledge, the first time it has been examined as a whole.
So we are at an early stage. We don’t have the answers yet. Indeed I don’t think we have the right questions about labelling firmly established. I hope this conference will begin to clear the way and identify where the challenges exist. Let me try and set out some areas that require investigation.
First of all, are we entirely clear what labelling is and is not? Is labelling only the information physically attached to the product, or does it cover accompanying instructions for use or other material available at the point of sale? Is labelling therefore only linked to goods or is it relevant to talk about labelling in relation to services?
It is clear that labelling is designed to meet a huge variety of objectives and purposes. The information on product labels is as heterogenous as the different products available on the market. Very few labels look entirely alike.
But we can, I think, see some common elements in their purposes. Labelling is simply a specialised form of consumer information. Consumer information is of course, absolutely central to health and consumer policy, to ensure consumers can effectively take responsibility for their lives.
The particular value of labelling is that it accompanies the product. This ensures that the information is communicated to the consumer at the moment of purchase and also at the moment of use and disposal.
It is therefore potentially one of the most effective vehicles of communication. Three broad purposes of labelling can perhaps therefore be identified.
1. Public Interest labelling – Regulatory requirements
First of all, we could speak of labelling in the public interest.
Regulators have long recognised that labelling can be the key way to ensure that vital health, safety or other public policy messages actually get to the consumer.
Food labelling is an excellent example – it covers food content, origin, ethical labelling and nutrition labelling. We are in the process of evaluating EU legislation that covers these areas – a report was published last year for public comment and we still welcome comments on this.
Labelling is also crucial to product safety. Producers and distributors are required by the Directive on General Product Safety to provide consumers with sufficient information to assess risks and dangers inherent in a product.
Legislation also exists to ensure that chemical substances or preparation comes with appropriate labels on the toxic or physical properties – e.g. ‘irritant’, ‘flammable’ etc.
2. Labelling as advertising and marketing
Thus, labelling is also used as an advertising and marketing vehicle.
As an essential commercial tool, labelling should be regulated in the same way as all other commercial practices. The recently adopted unfair commercial practices directive provides the EU with a single set of harmonised rules for regulating the commercial aspect of labels, in particular to ensure that labels to do not mislead or deceive consumers.
The Directive on Unfair Commercial Practices is a framework directive and some specific sectors may therefore need a more detailed regulatory approach. The current proposal on nutrition and health claims in relation to food products is an excellent example. We want to make sure that any such claims, including on labels, conform to standard criteria, and that in particular health claims can be scientifically demonstrated. Nutritional labelling, for instance, plays to my mind an essential note for the consumer to be in a position to make informed choices. In this case I am clearly determined not to open hand of essential elements of the Proposal on Nutrition and Health claims.
3. Voluntary schemes
My third category is voluntary labelling. There are a number of areas, such as the environment, where labelling schemes exist - at EU, or at national level – where producers can choose to use a certain type of label, but once they do, they have to conform to the label’s specifications.
There are also voluntary labelling schemes and marks based on self-regulatory codes – which can be industry developed, such as labels that describe conformity with some form of industry standard, or labels which are related to third-party codes – such as labels that indicate whether a product was produced and sold according to specific rules benefiting developing country producers.
Good industry schemes have also led to the development of pictograms for extra safety (‘keep out of the reach of children’) and the indication of poison control centre phone numbers. At EU level, the Key mark has been developed by CEN, the European Committee for Standardisation.
Consumers and Labelling
So we can see that labelling sits right at the crossroads between markets and governments. It offers a privileged means of access to consumers and everyone – manufacturers and regulators – wants a piece of this prime real estate to communicate their messages.
But what about the consumers, confronted by this battle for their attention? As always with consumer information, you can have too much of a good thing. Information overload is as much a challenge as a lack of information.
So we have seen the development of an increasing supply of consumer information without looking at the demand side. Before rethinking regulatory requirements or encouraging new voluntary schemes we do need to step back and consider the consumer perspective.
We know that consumers do not always react to labelling in the way which we want them to. They do not always read the information on labels. They may not always understand everything that is indicated on a label – in particular symbols may not always be as easy to understand as one might think.
For example the Commission has carried out a number of surveys in this area. One survey found that although 61% of consumers could identify the CE logo, most did not know what it signified. Another revealed that only one third of consumers pay attention to the safety symbols when making a purchase of a detergent.
We have therefore launched a focus group exercise related to the consumer perception and understanding of labelling in order to improve our understanding of consumer behaviour. You will have the opportunity to hear about some of the results this afternoon.
I am pleased that some of the work that is being done for us in trying to understand the uses, the benefits, and the deficiencies of labeling across products and services will be presented here: after my statement you will hear from Mr. Debomy, who has been in charge of a focus group study commissioned by my services, on the perception of labelling by EU consumers.
As this study has just been concluded, I have only had time to skim over some of the results. Only a much more in-depth analysis will allow us to draw more definitive conclusions. What I do think this study confirms though, is that labelling is one of the most important tools we have for informing consumers – and that more can and should be done to ensure that it plays this role fully. There is much work to be done here, both in understanding how labelling works and how it can be improved to the benefit of all, consumers and businesses in the marketplace.
Understanding consumer attitudes to labelling is one part of the problem we need to get right. But there are other challenges. Also the proliferation of national voluntary labelling schemes and marks may hinder the development of the internal market, if a national mark becomes essential in practice to access a market. My colleague Gunter Verheugen has launched a comprehensive study on voluntary marking at national and EU level.
Of course labelling does not come for free. Every regulatory labelling requirement has to be paid for by the manufacturer and ultimately the consumer. Every square centimetre of label contains a regulatory requirement is also one less for marketing and advertising. So we have to be alive to scope for simplification of labelling requirements for both businesses and consumers.
New technologies may also be shifting the entire context of labels. Electronic tagging of products provides new possibilities for communicating information through labels. The internet also provides, for those consumers online, new means of supplying public information to consumers that were not feasible when labels were first developed.
Finally of course, the public policies which use labelling to meet their goals are also changing, as new challenges arise. Nutrition and obesity in one area where the role of labelling needs consideration.
The European Platform for Action on Diet, Physical Activity and Health aims to catalyse action from a range of interested parties to encourage healthier diets and more physical activity. Its founding members include the key EU-level representatives of the food industry, advertisers, retailers, fast-food restaurants, the cooperative movement, the consumer movement and health NGOs.
This is a good example of how discussions on labelling should proceed. First of all we need involvement from all stakeholders. And second we need to ensure that labelling discussions are properly situated in the context of wider policy discussions on, in this area, nutrition, health claims, and advertising.
At this early stage I hesitate to draw many conclusions. It is clear that we need a horizontal discussion on labelling and one that is properly informed by an understanding of consumer behaviour. But we also need to consider the needs of all stakeholders carefully and to understand the opportunities and challenges from new technologies and consumption patterns.
It also seems clear that labelling goes to the heart of all the major policy discussions. The recently adopted Health and Consumer Policy Strategy includes consumer information as one of its main objectives, and indeed, tries to maximise the synergies between health and consumer policy, where precisely in the area of information and labelling, consumer interests converge with interests in the areas of health and safety.
I therefore look forward to the outcome of today’s discussions. The Directorate General for Health and Consumer Protection will continue to collect information and data and the reflection exercise which had already begun.
I wish you fruitful discussions.