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MASS. INST. TECH. j
MAY 13 1976,



WORKING PAPER
ALFRED P. SLOAN SCHOOL OF MANAGEMENT



Marketing Issues of "Waste" Grown Aquatic Foods

2
John E. Huguenin

John D. C. Little



Working Paper 837-76



February 1976



MASSACHUSETTS

INSTITUTE OF TECHNOLOGY

50 MEMORIAL DRIVE

CAMBRIDGE, MASSACHUSETTS 02139



fWASS.IWST.TECH.
MAY 13 1976;



Marketing Issues of "Waste" Grown Aquatic Foods

2
John E. Huguenin

John D. C. Little



Working Paper 837-76



February 1976



1 The preparation of this paper has been supported through
the MIT Sea Grant Program by the N.O.A.A. Office of Sea Grant
under Grant OA-5-158-1.



2 John E. Huguenin is an Assistant Professor at the University
of Massachusetts Aquacultural Engineering Laboratory, Wareham, MA.
John D. C. Little is a Professor of Operations Research and Manage-
ment at the Sloan School of Management, M.I.T., Cambridge, MA.






M.I.T. LIB


-iAR1Es"n


MAY 1-6 1975^ |


RECEiV


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Abstract



Are societal wastes all bad? Some of them, including heat from power
plants and certain organic wastes, have been demonstrated to be potentially
valuable for growing aquatic food organisms. The use of such "wastes" promises
the double benefit of a cleaner environment and an increased food supply.
Research and development effort can be expected to solve, for at least some
production methods, the technical, economic and public health problems that
currently exist.

But can foods grown in part with potentially objectionable inputs be
successfully marketed? All evidence indicates that regulatory agencies will
require a much lower health risk for aquaculture foods than "wild" ones and
will ensure explicit labeling of potentially controversial inputs. Knowledge
about potential consumer reaction to such food products is scanty and mixed.
Some "waste" grown or "waste" containing foods (many water supplies, some
farm and aquaculture products) are regularly consumed, but the public has
also reacted swiftly against foods incriminated on health grounds (shellfish
affected by red tide, cranberries contaminated by pesticide) and has sometimes
been polarized by controversies (fluoridation) .

Under these circumstances a likely marketing strategy is to concentrate
on aquatic organisms that are not directly used for human consumption but can
be used for animal food or processed for their extracts. For sea foods that
are eaten directly (fish, shellfish), a promising strategy is to take advan-
tage of the quality control possible in aquacultural products to produce and
market premium foods. These can be sold first to the restaurant trade with
direct distribution to preserve maximum freshness, and later to consumers. An
interesting possibility in between direct and indirect use is as components
of processed and prepared seafoods (fish sticks, fish cakes). Separately and
simultaneously a public information campaign can stress the merits and
societal advantages of waste utilization.



072732S



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Introduction

It has become customary to consider any and all of the waste products of
our society as pollutants and to view their discharge into the environment as
undesirable. However, the characteristics and effects of man's wastes are so
highly variable that their common designation and implied common impact on the
ecosystem is both simplistic and misleading. There are at least some concepts
for aquatic "waste" recycling that from a scientific and technical viewpoint
seem very promising for turning "pollutants" into valuable resources. Thus,
the possibility now exists of simultaneously improving food production and
environmental quality. This does not mean that there are not many serious
obstacles to be overcome before some of the proposed systems can be considered
ready for large scale operational use. Others, on the other hand, are already
being used on a large scale both intentionally and unintentionally. While at
the present time most of the substantial recycling into our aquatic food
supplies is both unplanned and unmanaged, this is sure to change. At some
point, the increasing demands on coastal and inland waters for both "waste"
disposal and food production can be safely met only by acquiring control over
the systems involved. Only in managed situations can the risks be contained
and production increased. Our real choice is whether this is to be done
methodically or haphazardly.

Agricultural and fishery processing wastes and even offal are commonly
used in formulated diets for animals both terrestrial and aquatic, possibly
without fully understanding some of the risks involved. The potential for the
beneficial use of waste heat from power plants is widely recognized and is an
aspect of waste utilization currently receiving substantial attention (Mather
and Stewart, 1970; Yarosh, 1973; Huguenin and Ryther, 1974). The use of algae



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in processing domestic sewage is accepted practice in many parts of the United
States. Considerable research has been done on means to harvest this algae.
Current efforts seek to extend these practices to produce useful food organisms
in a marine environment (Ryther e_t al. , 1972; Ryther ^ al . , 1975) and a great
number of variations are possible. The use of freshwater sewage ponds to grow
aquatic food animals is an idea with a great deal of history and precedent
(Allen, 1970). Sewage products are dumped in large quantities into our coastal
waters and contribute, at least in part, to the high sea food yields of our
estuaries and coastal areas (Ryther, 1971). However, increased productivity
due to fertilization with wastes is often unintentional, generally not recognized
and does not lend itself to management. Health risks are nevertheless present.
Other possibilities include the use of slaughter house waste blood as a food
source for shellfish (Adler and Claus, 1972) and various kinds of fish protein
concentrate (F.P.C.) made from trash fish and fishery processing wastes.

Time and research effort can be expected to make some of these concepts
both technically feasible and economically attractive. It is not clear,
however, whether even strong technical and economic justifications are
sufficient to assure the application and exploitation of these new developments
by our society. Quite possibly not, for there are many other considerations
and constraints on such systems (Huguenin and Kildow, 1974). This paper will
concentrate on those that pertain to marketing.

Regulatory Agencies

In many "waste"-food uses there are technical and scientific uncertainties
with public health and/or aesthetic aspects. It falls to government regulatory
agencies to make judgements about these issues. The two principle agencies



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involved are the Food and Drug Administration and the Federal Trade Commission.

The Food and Drug Administration (FDA) is empowered by the Food, Drug &
Cosmetics Act of 1938 to regulate any or all food products in interstate
commerce. A major part of the FDA's work concerns adulteration and misbranding.

The word "adulteration" has been held to mean to "corrupt", debase or
make impure by the mixture of foreign or base materials. The Act terms food
adulterated for several reasons but the one of the most concern is the pro-
vision condemning food which "consists in whole or in part of any filthy,
putrid or decomposed substances", or "is otherwise unfit for food". Unfor-
tunately, the courts have interpreted the act and especially the phrase
"otherwise unfit for food", very broadly in the common rather than in the
possible scientific meanings. In addition, where "added substances", whether
intentionally or unintentionally added by man, are concerned, the mere
possibility of a health hazard is sufficient grounds for condemnation. The
presence of any scientific or technical uncertainty can thus preclude acceptance.
In contrast, the same substances when found "naturally" in foods must be shown
to be in fact dangerous to health in order to be condemned. This in effect is
a double standard loaded against the recycling of potentially valuable substances
for use in aquaculture. The only mitigating factors are the societal pressures
for the development of aquaculture, better waste management, and increased
seafood production, which may result in the weakening of this powerful legal/
political obstacle.

"Misbranding" refers to false or misleading labeling or packaging as
well as omissions of salient information relating to harmful conditions of
product use (Howard, 1964). Where a standard of identity has been established,
the food must conform to the pre-set quality standards, and the label must bear



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the name of the food as specified in the FDA regulations. Where such standards
have not been established, the label must show the common or usual name of the
food and its ingredients. This can be a severe marketing disadvantage, as
has been found in the case of squid because the name evokes negative attitudes
(Kalikstein, 1974). In another instance considerable efforts have been expended
to find a positive yet accurate descriptive phrase for irradiated foods
(Yankelovich, 1966).

The positions of the FDA are sometimes controversial. For example,
FPC (fish protein concentrate) is a white powder usually made by processing
whole fish. FPC is considered completely safe from a health point of view,
but, since whole fish contain some amount of offal, the FDA raised objections
to the product on grounds of adulteration and labeling. In labeling, it was
not enough to say the product was made from whole fish; mention had to be made
of the intestines. Since the product was particularly designed for export to
protein-poor countries, a situation arose where the U.S. company developing
the product might be charged with trying to sell abroad a food deemed unfit
for Americans. The project finally failed. The company had technical and
financial problems besides the issues raised by the FDA, but the case illustrates
the critical and sometimes controversial role played by the regulatory agency.

It would be obviously a mistake to make plans on the assumption that
very explicit labeling of waste grown seafood products will not be required by
the FDA, but this could happen in the case of aquatic foods grown in conjunction
with power plants, and in the case of processing wastes that are already being
used to some extent in food production. It is much more unlikely if sewage
products are used. All statements about regulatory agency behavior are, at
the present time, extremely speculative. Actual behavior will depend not only
on the specific circumstances, the future decisions of advocates and opponents.



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nocietal pressures and FDA attitudes, but also on the advances in related
technologies and the degree of opposition which they encounter.

The Federal Trade Conunission (FTC) is empowered, under the Wheeler-Lea
Amendments of 1938 , to regulate false advertising of food products, excluding
that involving the label or package. The FTC regulates what it considers to
be deceptive advertising practices. (This is part of the activity of the
Bureau of Deceptive Practices, FTC). Gist (1971) has defined deception as
"the communication, verbally or visually, directly or symbolically, of a message
that has the reasonable capacity of misleading, deluding or beguiling the
audience to whome the communication is directed". The audience may be the
final consumers, industrial buyers or users, or institutional buyers or users.

The Division of Investigations of the FTC audits all major communications
media. However, complaints from the public or from threatened business interests
are the most common method of bringing issues to the attention of the FTC.
Due to the direct competition in the market place with alternate sources of
similar aquatic foods, it would be surprising if there were no complaints. If
the Division believes that deceptive or misleading communication is underway,
it may issue a stipulation to the advertiser, upon receipt of which the mis-
leading advertisement may be discontinued. The FTC then does not take further
action. If the advertiser does not discontinue the advertisement, the FTC
may serve a "cease and desist order". Non-compliance with the "cease and
desist" order is punishable with imprisonment or fine or both.

It is anticipated, but must be proven in each case, that the products
will look, taste and smell the same as their managed counterparts that are
not grown with "waste" inputs. It is well established that off-tastes in fish
flesh can result from undesirable substances in their water or diet. However,
cultured fish, due to the advantages of management, are less susceptible to



to these problems than "wild" fish. Furthermore, over a period of time,
management is likely to bring about genetic improvements. Whether the
advantages of management are sufficient to assure "waste" grown products,
indif f erentiable from other cultured products is obviously a critical assump-
tion, which will have to be demonstrated in each situation. As an example of
what can be done, the fish grown in the Munich, Germany, sewage treatment-
aquaculture system go through a conditioning process that removes potential
odors and off flavors prior to marketing (Allen, 1970). Oysters on Long
Island and Coho salmon in Maine, grown with the aid of power plant thermal
effluents, do not need any special processing and are regularly marketed.
These products are of high quality and command premium prices. If the products
are identical or superior in their marketing characteristics and little or no
packaging or labeling differentiation is required, the marketing problems will
in all likelihood be greatly reduced. Past rulings of the Food and Drug
Administration and the Federal Trade Commission, suggest assuming the worst
case conditions. State agencies are another variable but the majority are
likely to follow the positions of Federal agencies.

Consumer Attitudes

Assuming that all other problems are solved, there is still the question
of consumer acceptance of "waste"-grown aquatic foods. Given that distinct
labeling will be required, to what extent does a consumer's feelings of repug-
nance for wastes, which are known to be acquired rather than innate or physio-
logical (Sears, Maccoby, Levin, 1957), carry over to food products grown with
such materials? Unfortunately, there does not appear to be any available
research directly dealing with this interesting question. However, if the
fishing for human consumption aspects of the Santee Project (Merrel et^ al . , 1967)



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which is an innovative sewage treatment system, and the common use of wastes
in agriculture are any indication, this associative link may be avoided or
nullified for a significant fraction of the public, even when the physical
facts are known. As an additional example, many city water supplies are pro-
cessed from river water into which sewage has been dumped upstream. There is
also some literature on public attitudes towards the closely allied concept
of directly using reclaimed sewage water (Bruvold and Ward, 1970; Bruvold, 1971;
Bruvold, 1972a; Bruvold, 1972b; Gallop Poll, 1973). Small scale surveying at
M.I.T. (Kildow and Huguenin, 1974) has shown comparable consumer attitudes
towards seafoods grown with sewage inputs. Even studies on attitudes toward
irradiated fish (Yankelovich, 1966) and on fluoridation (Sapolsky, 1968) show
similarities. These all have the common denominator of a potentially object-
ionable input and a food or injested output (see Table 1). In all cases where
it has been investigated, the level of public ignorance about the processes
involved is very high (Table 2). In addition, much of the public's factual
krtowledge, as limited as it may be, is incomplete, inaccurate and even incorrect.

It should be pointed out that in the only case of actual usage of
reclaimed sewage water for potable supply during a drought emergency (water
reused 8-15 times), consumer attitudes were strongly negative (Metzler et al. ,
1958). However, the recycled water had some very undesirable properties
including a yellow coloration, unpleasant odor and taste and upon agitation
would froth, all of which unquestionably affected consumer attitudes. This
highlights the practical problems often encountered in trying to separate
technical and psychological issues in real situations. Modern technology
undoubtedly can and must do better.

However, while it is relatively certain that a large segment of the public
would not oppose the use of at least some "wastes" in aquaculture, there is



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TABLE 1
GENERAL ATTITUDES TOWARD CONTROVERSIAL FOODS



Of the people who had heard of radiation

processed food "Would you eat radi-
ation processed food?"

"Would you buy irradiated fish which could
be purchased along with the rest of
the weeks groceries and prepared
when convenient?"

"Would you consider buying the cultured
product (waste grown) if your
favorite kind of fish were locally
available along with the cultured
product?"

Of the people who had heard of squid,

their attitude toward squid as a
food source

Respondents not opposed to reclaimed

water for drinking water and in
food preparation.

"Suppose Health Authorities in your

community determined that it was
safe to drink recycled water - that
is water that has been purified and
treated for taste appearance and so
on "Would the water be acceptable?"



Yes 53% (369)* Yankelovich, 1966
No 11% (77)



Yes 35.3% (38) Moore, 1969



Strong yes 39% (16) Kildow &
Strong no 2% (1) Huguenin, 1974



Positive 18% (24)
Negative 35% (46)



43.6% (424)



Yes 38% (626)
No 55% (906)



Bruvold & Ward, 1972



Gallup Poll, 1973



*Numbers in parenthesis indicate quantity represented by percentage.



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TABLE 2
THE PUBLIC'S AWARENESS



"Have you heard of radiation processed
food?"



Yes 24% (705)* Yankelovich, 1966



"Have you ever heard of this process
(irradiation)?"



Yes 33.6% (36) Moore, 1969



"Have you ever heard of squid?"



Yes 64% (85) Kalikstein, 1974



Knowledge question on reclaimed waste
water



Adequately

correct 27% (262)

Incorrect 11.9%

(116) Bruvold, 1972



*Numbers in parenthesis indicate quantity represented by percentage.



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little information on the numbers or degree of activism of either strong
supporters or strong opponents. This is a critical void, since small vocal
minorities have often swayed public opinion in similar situations as demon-
strated by the history of local fluoridation decisions (Sapolsky, 1968). Since
any opposition can acquire advocates with at least some quasi-scientific
credentials, possibly in unrelated fields, the controversy to the average
person takes on the aspects of a confusing disagreement among "experts" leading
him to the only safe decision of not "buying".

The available literature indicates that those individuals who approve of
the use of potentially objectionable inputs do so under the assumption that
such systems, if established, would have adequate controls. Acceptance by
Governmental regulatory agencies carries a great deal of weight in consumer
decisions (Table 3) . Having a government inspected and "certified" product
would provide significant marketing advantages. These feelings of assured
quality may be strong enough for some consumers to make "waste"-food products
preferred over sea foods of "unknown" quality from other sources. This
apparently happened in Israel with irradiated vegetables, where the processed
product was preferred by a factor of from 2:1 to 4:1 (Lapidot, 1972). In all
studies, the major sources of consumer opposition have been uncertainties and
intuitive feelings concerning uncleanliness , impurities and lack of public
health safeguards. Studies have shown that concerns about water pollution do
lead to reduced fish consumption (Kelly, 1972). As another example, "red tide" scares
have tended to reduce all fish consumption, not just the affected shellfish.
Thus, the public's confidence in the safeguards and quality control of the
final products may well be the single most important factor in consiomer accep-
tance of "waste" grown foods. Obviously one incident of bad publicity involv-
ing the quality of the products could be extremely damaging. While the quality



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TABLE 3
IMPORTANCE OF REGULATORY ACCEPTANCE ON CONSUMER ATTITUDE



In a listing of important
psychological factors
(4th on list out of 12)
for irradiated foods.



'The wide spread acceptance by
the public of any product
actually present on the
shelf, coupled with the
assumption that no dangerous
food product would be allowed
on to the market by the
authorities"



Lapidot, 1973



Questionnaire on consumer

acceptance for irradiated
foods.



'Do you feel that an approval by
the U.S. Food and Drug Admin-
istration of this treatment
is sufficient indication of
safety ... Yes 46.7% (50)*



Moore, 1967



In a summation of consumer
attitudes to irradiated
foods (3rd item out of 5)



"FDA approval, signifying the

approval of the government,
appears to be a vital element
in reassuring consumers about
radiation processing"



Yankelovich,
1966



*Number in parenthesis indicates quantity represented by percentage,



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control capability must be excellent, it, by itself, is no assurance of
avoiding a disaster. Such a case occured in Holland with irradiated mushrooms,
which were initially extremely well received by the public (U.S. Department of
Commerce 1973). The new product was labeled "irradiated mushrooms" while the
equivalent non-radiated package was labeled "fresh mushrooms". Unfortunately,
press reports publicized the idea that the irradiated mushrooms were not fresh,
since they were not marked as such, with such an impact on the consumers as
to kill the program completely.

MarketinR Strategies

Taking into account the foregoing information, what marketing strategies
will be most likely to achieve the potential benefits from "waste" grown
aquatic foods? The complexity of the issues suggest the desirability of using
contemporary marketing research techniques for identifying dimensions of con-
sumer perceptions and using such knowledge to determine appropriate product
positions in the market (Urban, 1975; Silk and Urban, 1976). Even without
major new research, however, the information so far uncovered points toward
possible marketing strategies.

First, observe the potential aquacultural products can usefully be
arranged in a hierarchy of food use:

1. Animal forms

a. eaten raw (oysters, clams).

b. bought fresh but cooked (fish, lobsters).

c. frozen or canned (fish, shellfish).

d. processed and/or contained in other products

(fish sticks, chowder, F.P.C.)

e. fed to other animals (brine shrimp, components

of fish pellets).



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2. Plant Forms

a. eaten directly (dulse).

b. extracts used in other foods (agar).

c. fed to animals (algae) .

Interestingly enough, the lower end of the hierarchy not only faces
fewer technological difficulties in the control of health risks but also has
less severe marketing problems. Products at this end enter industrial markets
and are sold primarily on the basis of quality and cost. They confront less
threat from a negative emotional customer response than do corresponding
consumer products. Because of this, the lower end of the scale, if economically
feasible, seems particularly attractive for early commercial development.
Unfortunately, this end of the scale also tends to have lower unit prices.

Higher in the hierarchy are the direct food products with the greatest
intrinsic economic, nutritional, and culinary value. These are the real
challenge: Can they be successfully marketed if "waste-grown"? Wliat are the
likely product positions, prices, communications themes, and distribution
channels?

First of all, it is taken for granted that any public health risks
associated with "waste"-assisted growth would be reduced below those of the
corresponding wild products and that government approval would be available.
In other words the marketing program is not designed to foist hazardous food
on an unsuspecting public. It is trying to distribute food value without
raising self-defeating apprehensions in consumers.

The most promising marketing strategy is to go first-class: produce and
sell a premium product. The controlled environment of aquaculture can achieve
a product superior in taste, texture, appearance, and freshness to its "wild"



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counterpart. This fact is a strong selling point that is exploited by all


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Online LibraryJohn Edward HugueninMarketing issues of waste grown aquatic foods → online text (page 1 of 2)