By Arindam Debbarma, Analyst, MIHM
Fruits and vegetables (FV) are an integral part of what constitutes a healthy diet, which in turn helps in preventing malnutrition as well as a range of non-communicable diseases (NCDs) . Nevertheless, socioeconomically disadvantaged people consume fewer fruits and vegetables, and thus, they are at higher risk for diseases . According to a survey conducted in 5 major Indian cities, the average intake of FV is 3.5 servings (280 gm) per day, whereas the WHO recommended intake is that of 5 per day . In rural India, the situation is far worse. Analysis of the National Sample Survey (2011-12) data, the average household per capita daily consumption of FV is only two servings . Hence, effective interventions are urgently needed to increase FV intake .
Price discounts or subsidies are often considered as effective intervention strategies to stimulate healthy food purchases  . There are many pricing strategies such as increased taxes on high-calorie foods  , snack foods , sweetened drinks  as well as subsidizing healthy food . In a systematic review study on the effectiveness of monetary subsidies in incentivizing healthy food consumption, interventions in several high-income countries with one in South Africa were studied . The research designs ranged from price discounts to vouchers worth a certain amount. The level of subsidies varied from 10% to 50%, and the monetary values of coupons were mostly between $7.50 and $50 . This review study showed that subsidies on healthier foods were effective . Another systematic study assessing the relationship between change in food price and dietary consumption showed that with a 10% decrease in FV price, consumption increased by 14% . Though there have been many studies conducted in high-income settings, studies are scarce in low-medium-income countries (LMICs). Hence, our study contributes to this body of literature.
The primary objective of the study done by the ISB team is to incentivize consumption of FV in peri-urban Hyderabad, India. To start with, we conducted a thorough review of articles to understand the scope of research design . Additionally, we reviewed several loyalty programs used by big-box FV retailers in Hyderabad. We studied eight such retailers; all of them offered loyalty programs in some form or the other. Point redemption was the most prevalent one in which customers accrue shopping points, which was dependent on their purchase amount. A few of them offered flat discounts as well. Thus, we gained a deeper understanding of the several incentivizing mechanisms and loyalty programs. As our study took place in a low-medium-income country (LMIC) peri-urban setting, several of the research methods couldn’t be directly implemented. Hence, we started by understanding the supply side of FV. Most FV vendors operated on a small scale and didn’t have a brick and mortar setting. They would set shop temporarily for a limited period at a particular place in the village market. They always dealt in cash and didn’t have any technology interface for transactions. The infeasibility of using an electronic point of sale posed a significant challenge to our study design as most of the other studies used a technological medium or had some regulators to monitor or conduct transactions.
Based on our understanding, we designed a survey for village vendors to seek their inputs, which would be instrumental in developing the program. Initially, we presented a few options to them, which ranged from complicated ones such as points system to simpler ones such as flat discounts. Feedback on each of the options was gathered in the form of four parameters- convenience, cost-effectiveness, adoption likelihood, and complexity. Next, the retailers mentioned what they would prefer and why so. Results from the survey indicated that respondents preferred flat discounts ranking it high on all the parameters. Post this, we re-examined our options and designed a coupon-based program. The designed coupon had ten circles placed next to one another in two horizontal rows to be stamped when a customer made a purchase equal to or above INR 20. The number of stamps a customer gets depends on his expenditure in multiples of INR 20. When a customer crossed an overall spend of more than INR 200 in a week on FV, they were eligible to claim a reimbursement of INR 40. Though this wasn’t like a traditional upfront discount, it could be interpreted as a 20% discount on FV expenditure.
To evaluate the effectiveness and uptake of the designed program, the field investigating team conducted a pilot in one of the study villages. Through the Panchayat office, we distributed 50 coupons, and we selected five vendors as our partners for the pre-pilot program. To spread awareness about the program, we designed a banner that was put up in prominent places in the village. The Panchayat administrative officer collected demographic details and delineated the salient characteristics of the program while distributing coupons to individuals from a household. He ensured that one household only received only one voucher and not more. At the end of the program, vouchers were collected and analyzed. Only 8% of the participants satisfied the criteria of getting reimbursed. Because of the low uptake, we did customer and vendor debriefs to improve the program and mitigate the challenges that we faced in the first phase. One participant commented, “I didn’t use the coupon because it wasn’t explained to me how the program works.” Another respondent mentioned, “I didn’t use the coupons because my vendor isn’t a partner in the program.” Next, we decided to run the program for another week by distributing the coupon by the field team and including all the available village vendors, and this time we saw a higher uptake than our first round. This showed an increase in awareness levels over some time.
Once we completed the two pilots, several issues came to the surface, such as how do we determine the right threshold, how do we mitigate chances of fraud and how do we make the program sustainable. To achieve a sustainable model, the vendors need to run the scheme on their own without any financial aid. Further, they need economies of scale to offer discounted FV. Additionally, they need to improve upon their quality and variety of FV that they sell. Simultaneously, people also need to get used to the program. With businesses scaling and a change in consumer behavior, such interventions can be useful and sustainable in the long run.
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