Consumer Demand for Quality A/Prof. Wendy Umberger, Ph.D.

Director, Global Food Studies

ABARES 2015 Canberra Tuesday, 3 March 2015

Key Points • Demand for food quality is

complex • Consumer perceptions of

“quality” are heterogeneous • Consumers make trade-offs

among quality attributes • Consumers’ intentions do not

equal demand

• Experience Attributes: Only observable during or following consumption (organoleptic /eating quality and food safety).

• Credence Attributes: Can NOT be determined visually or after consumption (origin, production processes)

Quality • Search Attributes: Evaluated at the point-of-

purchase and prior to consumption (color, brand-name, price, nutrition content).

What is Quality?

Estimating Demand for Quality Values

Knowledge Information

Attitudes Trust

Socio-demographics

Expectations of:

Value for money

Eating enjoyment

Nutrition / Health

Priors

Food Quality Cues Production/

Process

e.g. Organic

GMO-Free

Geographical

Origin e.g. PDO

PGO, COO

Local

Environmental &

Ethical e.g. Eco-labels

Welfare

Fair-trade

Health &

Nutritional

e.g. Fat Content,

Gluten

Traditional e.g. Grades

Flavour, Sensory

Food Safety???

Front-of-Package Quality Cues

Brands Certifications

Production claims Production claims

“Back-of-Package” Information

Consumers are Confused

• Confused about the “benefits” of food claims – Cynicism

– Lack of understanding

– Perceive claims (e.g. organic) to mean • Safer

• Healthier

• Better for the environment

• Guarantee improved welfare

Australian Perceptions of Certifications

Association % % % %

Better value 3 4 3 5

Better quality 10 18 15 19

Safer 20 26 17 19

Healthier 14 37 29 25

Consumers are Conflicted Citizens = Public Values

• Social values – Environment

– Local

– Workers/society

– Animals

Consumers = Private Values • Value for money

• Personal / family benefits – Safety – Enjoyment – Nutrition – Health

• Convenience

• Conducted in June 2010

• Online Panel Provider

• Representative sample of Australian beef consumers

• Qualifications – Must purchase beef at least monthly, – Not involved in beef industry or market research – Must do the meat shopping for household at least monthly

• 1,881 useable respondents • Behavioral, attitudinal and socio-demographic questions Umberger, W.J. and S.C. Mueller. 2010. “Is Presentation Everything? Using Visual Presentation of Attributes in Discrete Choice Experiments to Measure the Relative Importance of Intrinsic and Extrinsic Beef Attributes.” 2010 American Agricultural Econ. Ass. Mtgs. Denver, USA.

Example: Australian Beef Study

Steak Attributes

Source: Umberger and Mueller, 2010

29 30 38

9 10 4 0

20

40

60

80

100

Concerned about the use of antibiotics

Concerned about the use of hormones

Important to buy locally/regionally

produced beef

Strongly Agree or Agree Strongly Disagree or Disagree

Attitudes and Production Methods

30% concerned about Hormones/Antibiotics

38% believe important to purchase “Local” beef

Source: Umberger and Mueller, 2010

0 50 100

Eating Quality Assured

National Heart Foundation

MSA

ISO 9001

Australian Beef

% of Respondents

None apply

No different- marketing gimmick Less risky

A safer choice

More tender

Worth a premium

Healthier choice

More trustworthy

Guaranteed to be better quality Better value for money

Perceptions of Quality Cues

Perceptions of Production Claims

0

5

10

15

20

25

30

35

Better quality Tender Less food safety risks

% A

sso

cia

tin

g S

tate

men

t w

ith

Att

rib

ute

Natural Beef Grass-fed Beef Hormone and Antibiotic Free

Grain-fed Beef Environmentally Sustainable Certified Humane

0

5

10

15

20

25

30

35

40

45

Better for my health Better for society Raised in a more

environmentally

friendly manner

Raised in a more

sustainable manner

Raised in a manner

that treats animals

more humanely

% A

ssoci

atin

g Sta

tem

ent

with A

ttri

bute

Natural Beef Grass-fed Beef Hormone and Antibiotic Free Grain-fed Beef Environmentally Sustainable Certified Humane

Perceptions of Production Certifications

Hormone & Antibiotic Free

Aggregated Attribute Importance Weightings i

Marbling, 46%

Price, 35% Fat Trim, 11%

Health 0.5%

Brands, 0.5%

Production

0.2%

Quality 0.2%

Forage

Claims, 0.1%

i Weighted average of class wise importance measured by partial contribution to model fit – LL (Louviere and Islam, 2008)

Source: Umberger and Mueller, 2010

Demand for Intrinsic Quality Cues

Marbling Levels Estimated WTP

Void 0 $2.69 ***

Marbling 2 $0.94 ***

Marbling 4 -$0.66 ***

Marbling 6 -$2.97 ***

External Fat Trim

2 mm (devoid) $2.22 ***

5 mm $0.86 ***

10 mm -$0.67 ***

20 mm -$2.42 ***

Less Marbling Strongly Preferred... Less Fat Trim Strongly Preferred...

Source: Umberger and Mueller, 2010

Demand for Extrinsic Quality Cues Estimated WTP Relative WTP

Forage Claims

Grass-Fed -$0.00 $0.02 n.s.

Grain-Fed $0.03 $0.06 n.s.

None -$0.03 $0.00 n.s.

Health Claim

Heart Tick $0.47 $0.93 *

None -$0.47 *

Quality Certifications

AusQual -$0.35 -$0.51 ***

MSA $0.33 $0.17 ***

EQA -$0.29 -$0.45 ***

Aussie Beef $0.14 -$0.02 n.s.

None $0.16 n.s.

Production Certifications

Enviro. Sustainable $0.28 $0.34 ***

Hormone & Antibiotic Free $0.15 $0.21 n.s.

Certified Humane -$0.37 -$0.31 ***

None -$0.06 $0.00 n.s.

Source: Umberger and Mueller, 2010

Key messages • Attitudes do not equal demand • Complex set of factors determine consumer demand for quality • Quality = technical vs. extrinsic cues

– Visual (e.g. colour, fat content, brand, price) – Experience (e.g. food safety and organoleptic/sensory) – Credence cues

• Consumer perceptions of quality are – Heterogeneous – Dynamic (Treadmill)

• Strategy is essential for signaling quality and building trust – Brand and labels – Certification

• Credibility is crucial

Thank you! Questions?

http://www.adelaide.edu.au/global-food http://www.adelaide.edu.au/global-

food/blog/wendy.umberger@adelaide.edu.au