Researchers from University of British Columbia published a new paper in the Journal of Marketing that examines whether and how the use of 'ugly' labeling for unattractive produce increases sales and profit margins.
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The study, forthcoming in the Journal of Marketing, is titled "From Waste to Taste: How "Ugly" Labels Can Increase Purchase of Unattractive Produce" and is authored by Siddhanth (Sid) Mookerjee, Yann Cornil, and JoAndrea Hoegg, Matt Weingarden, American Marketing Association, writes.
According to a recent report by the National Academies of Science, Engineering and Medicine, each year in the U.S. farmers throw away up to 30% of their crops, equal to 66.5 million tons of edible produce, due to cosmetic imperfections.
Such food waste has detrimental consequences for the environment: 96% of wasted food is left to decompose in landfills, releasing methane and contributing to climate change.
Additionally, 1.4 billion hectares of land and 25% of the world's fresh water are used to grow produce that will be later thrown away.
These researchers seek to answer two important questions: 1) Why do consumers reject unattractive produce? 2) Does 'ugly' labeling increase the purchase of unattractive produce and, if so, why does it work?
They discover that consumers expect unattractive produce to be less tasty and, to a smaller extent, less healthy than attractive produce, which leads to its rejection. They also find that emphasizing aesthetic flaws via 'ugly' labeling (e.g., "Ugly Cucumbers") can increase the purchase of unattractive produce.
This is because 'ugly' labeling points out the aesthetic flaw in the produce, making it clear to consumers that there are no other deficiencies in the produce other than attractiveness.
Consumers may also reevaluate their reliance on visual appearance as a basis for judging the tastiness and healthiness of produce; 'ugly' labeling makes them aware of the limited nature of their spontaneous objection to unattractive produce.
The research studies the efficacy of 'ugly' labeling in various contexts. First, a field study shows the effectiveness of 'ugly' labeling.
Mookerjee explains that "We sold both unattractive and attractive produce at a farmer's market and find that consumers were more likely to purchase unattractive produce over attractive produce when the unattractive produce was labeled 'ugly' compared to when unattractive produce was not labeled in any specific way.
'Ugly' labeling also generated greater profit margins relative to when unattractive produce was not labeled in any specific way—a great solution for sellers to make a profit while reducing food waste."
In the second study, participants were told that they could win a lottery worth $30, and could keep all the cash or allocate some of the lottery earnings to purchase either a box of attractive produce or unattractive produce.
'Ugly' labeling increased the likelihood that consumers would use their lottery earnings to purchase a box of unattractive rather than attractive produce.
In Studies 3 and 4, 'ugly' labeling positively impacts taste and health expectations, which led to higher choice likelihood of unattractive produce over attractive produce. Study 5 considers how 'ugly' labeling might alter the effectiveness of price discounts.
Typically, when retailers sell unattractive produce, they offer a discount of 20%-50%.
Cornil says that "We show that 'ugly' labeling works best for moderate price discounts (i.e., 20%) rather than steep price discounts (i.e., 60%) because a large discount signals low quality, which nullifies the positive effect of the 'ugly' label." This suggests that by simply adding the 'ugly' label, retailers selling unattractive produce can reduce those discounts and increase profitability.
The last two studies demonstrate that 'ugly' labeling is more effective than another popular label, 'imperfect.'
Although 'imperfect' is used by major brick-and-mortar and online retailers and was preferred by 50+ grocery store managers interviewed, the researchers find that 'ugly' labeling was more effective than 'imperfect' labeling at generating click-throughs in online ads.
Importantly, these findings largely contrast with managers' beliefs. "While grocery store managers believed in either not labeling unattractive produce in any specific way or using 'imperfect' labeling, we show that 'ugly' labeling is far more effective," says Hoegg.
Given retailers' participation in the U.S. Food and Waste 2030 Champions Initiative—with an objective of cutting food waste in half by 2030 — this research urges retailers and sellers to use 'ugly' labeling to sell unattractive produce. ■