Could brands benefit from new EU rules on dual food standards?

A new regulation addressing the “dual standard” in the Eastern European consumer market is putting pressure on international brands to sell higher quality products in the region. In spite of the initial difficulties the new legislation poses for brand owners, it is an opportunity and they should make the most of it to win trust.

International brands accused

Accusations have been made that international brands sell lower quality products in Eastern Europe in recent years, attracting attention from the media and the public. Recently, the European Union took a stance against such unfair practices after senior European commissioner of Czech origin Věra Jourová accused certain multinational companies of selling inferior versions of well-known brands in the region.

Although most companies denied the accusation, a few brands improved products sold in Eastern Europe to match their Western versions in response. Some EU member states, however, have reportedly requested that product uniformity is controlled by legislation.

On 11 April an EU directive was announced, banning so called “dual food.” The European Commission will provide a methodology for testing multinational brands in May. If a company is found to have infringed the rights of their customers, they could be fined up to 4% of annual turnover. Additionally, consumer organisations are to be given the ability to launch collective action on behalf of aggrieved people.

Will regulation help?

Justice commissioner Věra Jourová told The Guardian she had faced resistance from the industry and Western member states. Although some brands have taken measures to unify their ranges across Europe voluntarily, in the words of Jourová many others think that “the problem is not that serious.” This suggests that EU legislation will be necessary to eradicate the “dual food” injustice and increase consumer confidence in Eastern Europe.

Differences in product formulations rarely have anything to do with local taste preferences. Hipp’s reformulation of baby food in Croatia to include Omega 3 oils, for example, had nothing to do with the actual taste of the product. Its recipe, which was found not to contain omega-3 oil, was changed to have a ‘97% similarity’ to the German version.

Products unrelated to taste at all also differ in Western and Eastern European countries. Laundry brands Persil and Ariel have been accused of selling a less effective washing product formula in Eastern Europe.

With the introduction of regulation, a legitimate expectation is in place that a brand marketed in many member states will contain the same ingredients. If products, bearing the same branding use different recipes, they would only be allowed on sale if the company can prove that taste preferences in one part of Europe differ from those in another area.

Building up trust

Despite some revived interest in local brands, international brands enjoy a strong presence in Eastern Europe. Complying with the new regulations could be used by brands as the ultimate proof, convincing consumers that they get what they pay for. Building up trust will allow global brands to market their products to even wider consumer group.

 

Related reports: https://www.globaldata.com/store/report/cs1704ts–trendsights-analysis-trust-transparency-establishing-brand-credibility-to-enhance-consumer-confidence-and-loyalty/

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