The role of hedonic, externality and feasibility attributes in consumer demand for organic and local produce – the case of honey and apples

Jørgen Dejgård JensenInstitute of Food and Resource EconomicsUniversity of Copenhagenjorgen@foi.ku.dk

Morten Raun MørkbakDepartment of Business and EconomicsUniversity of Southern Denmark

Slide 2

Background

Policy efforts to sustain economic activity on family farms in rural areas

Development of markets for high value-added food products

Claims made about local food products:Local economic gains, e.g. employmentShort supply chains, better communication with consumers and

lower transaction costsReduced ’food miles’ and lower enviromental strains from

transport etc.

Slide 3

Objectives

Investigate the role of consumers’ values and perceptions of- Hedonic characteristics- Externality characteristics- Feasibility characteristics

as determinants for consumers’ demand for organic and/or locally produced foods

Slide 4

The study

Joint research KU-LIFE project: Department of Food Science & Institute of Food and Resource Economics

Project duration 2009-2012Funding by the Danish Ministry of Food, Agriculture and

Fisheries

Internet questionnaire survey conducted in 2010Sample of Danish adults aged 18-65 (Userneeds panel)20.017 respondents invited, 5.825 initiated, 3.211 respondents

completed

Sample fairly representative of the corresponding population, however with an overrepresentation of middle-aged and high-income respondents.

Slide 5

Questionnaire survey with focus on honey and apples

Stated buying behaviour regarding organic and locally produced foods

Perceived product attributes of organic and local honey and apples, respectively

Stated importance of various attributes (environment, animal welfare, geographic origin, healthiness, availability, price) in different food categories (meat products, dairy products, fruit/vegetable products)

Choice experiments, where respondents were asked to choose between alternative combinations of product attributes for honey or apples

Follow-up questions on choice experiments

Slide 6

Data: Stated buying behaviour

Honey Apples

Most often, I buy... Average Std.dev Average Std.dev

Organic 0,24 0,43 0,26 0,44

Conventional 0,38 0,49 0,59 0,49

Other 0,04 0,21 0,05 0,21

Don’t know/don’t buy 0,34 0,10

Local 0,14 0,34 0,06 0,23

Danish 0,43 0,49 0,54 0,50

Imported 0,06 0,23 0,15 0,36

Don’t know/don’t buy 0,37 0,25

Slide 7

Data: Stated product perception variables for honey and apples, respectively (5-point agreement scale)

Organic products are more environmentally friendly

Organic products are healthier

Organic products taste better

The are no pesticide residues in organic products

Organic products look more appealing

The quality is better in organic products

Organic products are easier to find in the shop

Organic products are cheaper

Locally produced goods are more environmentally friendly

Locally produced goods are healthier

Locally produced goods taste better

The quality is better in locally produced goods

Locally produced goods are more accessible

Locally produced goods are cheaper

Locally produced goods are produced in Denmark

Locally produced goods are produced in a certain area

Locally produced goods are produced in my area

Slide 8

Data: Stated importance of attitude variables: meat, dairy, fruit/vegetable products, respectively (5-point agreement scale)

It is important to me that the product is organic

It is important to me that I can see the origin

It is important to me that the product is produced abroad

It is important to me that the product is produced in Denmark

It is important to me that the product is produced in a certain local area

It is important to me that the product is produced in my local area

It is important to me that the product is easily accessible

It is important to me that the product is produced in an environmentally

friendly way

It is important to me that the product is produced with high animal welfare

It is important to me that the product is low-fat

It is important to me to know the date of production

It is important to me that the price is low

Slide 9

Methods - Two-stage statistical approach

Principal components analysis/Factor analysis:

To identify general dimensions (factors) in respondents’ stated product perception variables and stated importance of different characteristics

Multinomial logit modelling:

To examine the importance of the identified factors for respondents’ stated product choice in their buying behaviour regarding honey and apples, respectively

Slide 10

Factor analysis - results

10 factors identified – 2 types of factors

Knowledge/perception factors

KQualOrg: Organic products perceived to have higher quality (26%)KQualLoc: Local products perceived to have higher quality (11%)KAvailLoc: Local products perceived to have high availability (6%)KEnvOrg: Organic products perceived to have low pesticide residue

content (5%)KAvailOrg: Organic products perceived to be easily accessible (4%)KPriceOrg: Organic products perceived to have low price (3%)KEnvLoc: Local products perceived to be environmentally friendly

(3%)

Value factors

VExt: High emphasis on externality attributes of foods (6%)VGeo: High emphasis on geographical attributes of foods (3%)VAvail: High emphasis on availability attributes of foods (3%)

Slide 11

Factor analysis – share of variation explained by the 10 most important factors

Hedonic Externality Feasibility Total

Values (VGeo) (3%) VExt (6%) VAvail (3%) 12%

Knowledge/

Perception

KQualOrg

KQualLoc

(37%)

KEnvOrg

KEnvLoc

(8%)

KAvailLoc

KAvailOrg

KPriceOrg

(13%)

58%

Total 40% 14% 15%

Slide 12

Factor analysis - results

Only little overlap in the respondents’ perception of attributes in organic and local products, respectively

But some overlap with regard to externality attributes (environment, healthiness)

Respondents that put emphasis on externality attributes when buying foods tend to have more positive perception of organic as well as local products

Slide 13

Multinomial logit model results - honey

Organic Local Organic and local

Coeff. Sgn Coeff. Sgn Coeff. Sgn

Mean dep. 0,244 0,137 0,045

Intercept -1,5448 *** -2,3531 *** -3,4742 ***

Hedonic

KQualOrg 1,1060 *** -0,4249 ** 0,5375 **

KQualLoc -0,1961 0,6556 *** 0,6169 **

VGeo -0,1096 0,0896 0,4624 *

Externality

KEnvOrg 0,2298 * -0,3663 * -0,1185

KEnvLoc 0,2305 0,1203 0,2660

VExt 0,7980 *** 0,6725 *** 0,8939 ***

Feasibility

KAvailOrg -0,2390 * -0,2871 -0,4014 *

KPriceOrg -0,0825 0,0896 0,0318

KAvailLoc -0,4257 *** 0,7879 *** 0,1146

VAvail -0,7202 *** -0,5564 *** -0,4722 **

Slide 14

Multinomial logit model results – apples

Organic Local Organic and local

Coeff. Sgn Coeff. Sgn Coeff. Sgn

Mean dep. 0,260 0,057 0,025

Intercept -1,5213 *** -3,6486 *** -4,5790 ***

Hedonic

KQualOrg 1,5125 *** -0,5283 * 0,9363 ***

KQualLoc -0,1011 0,4691 * 0,3606

VGeo -0,2126 * 0,0775 0,6680 **

Externality

KEnvOrg 0,0370 -0,0027 -0,1900

KEnvLoc 0,1234 ** 0,1219 0,6740

VExt 1,0160 *** 0,8101 *** 0,9808 ***

Feasibility

KAvailOrg -0,5223 *** -0,1184 -0,6645 **

KPriceOrg 0,2066 -0,0557 0,1774

KAvailLoc -0,2957 ** 0,8534 *** 0,4367

VAvail -1,0276 *** -0,4467 -0,6731 **

Slide 15

Conclusions

Respondents’ concern for externalities tends to stimulate the choice of both organic and local products

Concern for product availability tends to be a barrier for the choice of organic as well as local products.

There is only limited overlap in respondents’ perception of hedonic quality in organic and local products, respectively. So the hedonic attributes of these product categories will tend to appeal to different segments of consumers.

Perceived price differential for organic products does not seem to influence respondents propensity to choose organic or local product varieties

Slide 16

Discussion

Study finds many similarities between honey and apples – to what extent does questionnaire design (e.g. sequence of questions) affect these similarities?

Study builds on stated purchasing behaviour variables – but to what extent does this reflect real purchasing behaviour?

Study uses honey and apples as cases – to what extent can findings from these two product categories be generalised to other food categories?

Slide 17

Thanks for your attention