Milk by Any Other Name … Consumer Benefits from Labeled Milk

Dhar, Tirtha; Foltz, Jeremy D.

doi:10.1111/j.0002-9092.2005.00713.x

Cited by 91 publications

(93 citation statements)

References 14 publications

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“…The significant but unexpected sign of this effect might indicate that consumers do not focus on these attributes as much in the investigated time period as studies of earlier time periods concluded (e.g. Kiesel, Buschena, and Smith 2005;Dhar and Foltz 2005). This might be evidence of a limited attention span by consumers as the discussion about rBGH is not as present and recent anymore as in earlier time periods.…”

mentioning

confidence: 86%

“…Focusing on organic milk, Glaser and Thompson (2000) identified price premiums as high as 103%, and high own-price elasticities for organic milk products. Dhar and Foltz (2005) used a quadratic, almost ideal demand system (AIDS) for differentiated milk types in combination with supermarket scanner data. They found significant consumer valuation of organic milk, and to a lesser extent, rBGH-free milk.…”

Section: Introductionmentioning

confidence: 99%

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Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal

Kiesel¹,

Villas-Boas²

2007

Journal of Agricultural &Amp; Food Industrial Organization

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This paper investigates consumer reactions to changes in information provision regarding organic production. Quantitative analyses focus on the actual implementation of mandatory labeling guidelines under the National Organic Program. The unique nature of the fluid milk market in combination with these regulatory changes allows us to place a value on information sets under different labeling regimes. Hedonic price functions provide an initial reference point for analyses of individual responses. A random utility discrete choice model serves as the primary econometric specification and allows consideration of consumer preference heterogeneity along observable household demographics. Our results indicate that the USDA organic seal increases the probability of purchasing organic milk. An initial hedonic price function approach, as well as simulations within the discrete choice framework, suggests that consumers value the change in labeling regulations with regard to organic production. Our results further suggest that consumers substitute away from milk carrying the rBGH-free label. This may indicate that consumers pay less attention to these labels in the time period investigated compared to results found in studies that use earlier time periods. ____________________________ † We thank participants at the INRA conference in Toulouse, France, and Celine Bonnet for their suggestions. We also wish to thank Azzeddine Azzam and two anonymous reviewers for their helpful comments. Data access and funds for this research were provided via a cooperative agreement between UC Berkeley and the USDA-ERS. We wish to especially thank Elise Golan for her support. The views presented in this paper are those of the authors' and not necessarily those of the USDA, ERS. Our results indicate that the USDA organic seal increases the probability of purchasing organic milk. An initial hedonic price function approach, as well as simulations within the discrete choice framework, suggests that consumers value the change in labeling regulations with regard to organic production. Our results further suggest that consumers substitute away from milk carrying the rBGH-free label. This may indicate that consumers pay less attention to these labels in the time period investigated compared to results found in studies that use earlier time periods.2

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mentioning

confidence: 86%

Section: Introductionmentioning

confidence: 99%

Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal

Kiesel¹,

Villas-Boas²

2007

Journal of Agricultural &Amp; Food Industrial Organization

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“…Glaser and Thompson (2000), through the use of scanner data, find that purchases of organic milk are very sensitive to changes in prices. Dhar and Foltz (2005) considered demand interrelationships for rBST-(bovine growth hormone) free milk, organic milk, and unlabeled (conventional) milk through the estimation of a Quadratic Almost Ideal Demand System (QUAIDS). The data indigenous to this analysis are weekly milk prices and sales for 12 U.S. cities over the period of March 9, 1997, to February 24, 2002.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The direction of the bias is difficult to ascertain. Based on the current literature on milk demand analysis, organic milk and rBST-free milk are complements while conventional milk and rBST-free milk are substitutes (Dhar & Foltz, 2005). Likewise conventional milk and soymilk are complements (Dhar & Foltz, 2004).…”

Section: Issues Of Price Endogeneitymentioning

confidence: 99%

Household demand analysis of organic and conventional fluid milk in the United States based on the 2004 Nielsen Homescan panel

Alviola¹,

Capps

2010

Agribusiness

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Using the 2004 AC Nielsen panel consisting of over 38,000 households, the authors ascertain the influence of selected demographic variables associated with the purchase of organic fluid milk through the estimation of a probit model. From the use of the Heckman two-step procedure, they also calculate own-price, cross-price, and income elasticities by estimating demand relationships for both organic and conventional milk. They find that demographic factors play a crucial role in the household choice of purchasing organic milk. Furthermore, households are more sensitive to own-price changes in the case of organic milk versus conventional milk. Evidence from estimated cross-price elasticities indicates that organic and conventional milk are substitutes. However, quantities purchased of organic milk are more sensitive to changes in prices of conventional milk than vice versa. Consequently, an asymmetric pattern exists with regard to the substitution patterns of the respective milk types. Moreover, evidence indicates that organic milk is responsive to income changes, but conventional milk is not responsive to income changes. Finally, a 1% increase in the price of organic milk reduces total milk sales by 0.20%, but a 1% increase in the price of conventional milk raises total milk sales by 0.31%. [EconLit citations: C25, D12]. © 2010 Wiley Periodicals, Inc.

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“…Up to now, most studies have either looked at demand reactions on a composite level (e.g., Dhar & Foltz, 2005), without differentiating by format, or examined one single format only (e.g., Bell & Latin, 1998). Regarding analyses of multiple retail formats, some of the literature has dealt with market entry of mass merchandisers like Wal-Mart (Basker & Noel, 2007) or pricing strategies of firms such as everyday low-pricing (Shankar & Bolton, 2004), which is typically implemented by discounters.…”

Section: Introductionmentioning

confidence: 99%

Price Sensitivity Within and Across Retail Formats

Widenhorn

Salhofer

2013

Agribusiness

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Applying a synthetic demand system approach, we examine if consumers in discount stores reveal different price elasticities of demand than those in conventional supermarkets. Based on a RollAMA dataset containing information on consumption in 12 different retail chains in Austria, we first analyze demand patterns for a scenario in which consumers only frequent either discounters or supermarkets, followed by an investigation of potential cross-format effects when both types of stores are visited. Our empirical findings suggest that for the three categories of milk products under examination, price elasticities in discount stores are generally higher. Beyond that, demand reactions in supermarkets with respect to price changes in discounters differ from the reverse case, i.e., from demand reactions in discounters when supermarket prices are changed. This is especially true for the case of drinking milk, which confirms the strategic potential of drinking milk as a loss leader product.

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Milk by Any Other Name … Consumer Benefits from Labeled Milk

Cited by 91 publications

References 14 publications

Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal

Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal

Household demand analysis of organic and conventional fluid milk in the United States based on the 2004 Nielsen Homescan panel

Price Sensitivity Within and Across Retail Formats

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