Progress 08/01/09 to 06/30/14
Outputs
Target Audience: Our target audience includes researchers in the agricultural and applied economics profession. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest?
Nothing Reported
What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
This project had three main parts and accompanying results: A number of research components fell under the overall project, “Economics of Health-Enhancing Food Products.” These research projects components include the following: (i) efforts on the healthfulness of food purchases by U.S. households, (ii) the estimation of price premiums for certified organic retail food products, (iii) the role that health-related product attributes have on the demand for ready-to-eat breakfast cereals, (iv) the influences that fresh produce (or other general product category) has or food retailing store choice, and (v) how the introduction of an organic store brand affects consumer welfare in the pre-packaged salad sector. 1. Analysis of consumer food purchase data to investigate food-purchase healthfulness by U.S. households: We use USDA recommend food share guidelines to construct a healthfulness score based on households food purchases. Results strongly suggest that a household’s healthfulness score is affected by where they shop. Households that spend a larger share of their food dollar at drug stores, convenience stores, and supercenters have lower healthfulness scores, all else equal. 2. Analysis of consumer food purchase data to estimate organic price premiums for certified organic retail food products: Over the 2004-2010 period, organic price premiums range widely for a wide range of retail products. However, all are significantly positive, and some approach a doubling of the non-organic price. Interesting, results show that the premium decreases as the size of the organic market increases, but increases as the size of the non-organic market increases. 3. Analysis of consumer food purchase data to estimate the effect that health-related product attributes have on the demand for ready-to-eat breakfast cereals: This project component led to the methodological innovation of being able to estimate a censored demand model with household data for a product category that includes 20 brands in the demand system. When this model is applied to breakfast cereal, we find that some health-related attributes (for example, fiber, sugar, and fat content) mostly make consumer less sensitive to price changes. 4. Analysis of consumer food purchase data to estimate category-specific demand and food retailing store choice: This project component also led to the methodological innovation of estimating the correlation between the likelihood of shopping for one store-category with another. Preliminary results suggest that shoppers who purchase fresh fruits and vegetables at grocery stores and supermarkets are most likely to purchase shop for other categories at the same store. 5. Analysis of consumer food purchase data to estimate new brand introduction and consumer welfare in the pre-packaged salad sector: Based on results of a consumer demand model, the value to consumers of an organic store brand of bagged salad is approximately $500,000 per year.
Publications
- Type:
Conference Papers and Presentations
Status:
Submitted
Year Published:
2013
Citation:
Marasteanu, I. J., and E.C. Jaenicke. Agglomeration and Spatial Dependence in Certified Organic Operations in the United States. Selected Paper at the 2013 AAEA & CAES Joint Annual Meeting. Washington, DC, August 4-6, 2013.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2013
Citation:
Li, Jing, E.C. Jaenicke, A. Bonanno, T. Anekwe. Health-Related Product Attributes and Purchasing Behavior in the Ready-to-Eat Cereal Market: An Application with Household-level, Censored Data. Selected Paper at the 2013 AAEA & CAES Joint Annual Meeting, Washington, DC, August 4-6, 2013.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2013
Citation:
Marasteanu, I.J., and E.C. Jaenicke. Agglomeration and Spatial Dependence in Certified Organic Operations in the United States. Selected Paper at the 2013 NAREA Annual Meeting, Ithaca, NY, June 23-25, 2013.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2012
Citation:
Oh, Catherine, and E.C. Jaenicke. Estimating Demand with Brand Choice and Quantity Adjustment from Non-organic to Organic Food. Selected Paper at the Eastern Economic Association Annual Conference, Boston, MA, March 9 11, 2012.
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Progress 10/01/12 to 09/30/13
Outputs
Target Audience: The target audience for this project researchers in the agricultural and applied economics profession. For the year ending October 2013, research finding were presented at seminars at the Cornell University, and at the annual conference of the Agricultural and Applied Economics Association. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest?
Nothing Reported
What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
A number of research components fell under the overall project, “Economics of Health-Enhancing Food Products.” These research projects components include the following: (i) efforts on the healthfulness of food purchases by U.S. households, (ii) the estimation of price premiums for certified organic retail food products, (iii) the role that health-related product attributes have on the demand for ready-to-eat breakfast cereals, (iv) the influences that fresh produce (or other general product category) has or food retailing store choice, and (v) how the introduction of an organic store brand affects consumer welfare in the pre-packaged salad sector. 1. Food-purchase healthfulness by U.S. households: Preliminary results suggest that a household’s healthfulness score is affected by where they shop. Households that spend a larger share of their food dollar at drug stores, convenience stores, and supercenters have lower healthfulness scores, all else equal. 2. Organic price premiums for certified organic retail food products: Over the 2004-2010 period, organic price premiums range widely for a wide range of retail products. However, all are significantly positive, and some approach a doubling of the non-organic price. Interesting, results show that the premium decreases as the size of the organic market increases, but increases as the size of the non-organic market increases. 3. Health-related product attributes have on the demand for ready-to-eat breakfast cereals: This project component led to the methodological innovation of being able to estimate a censored demand model with household data for a product category that includes 20 brands in the demand system. When this model is applied to breakfast cereal, we find that some health-related attributes (for example, fiber, sugar, and fat content) mostly make consumer less sensitive to price changes. 4. Category-specific demand and food retailing store choice: This project component also led to the methodological innovation of estimating the correlation between the likelihood of shopping for one store-category with another. Preliminary results suggest that shoppers who purchase fresh fruits and vegetables at grocery stores and supermarkets are most likely to purchase shop for other categories at the same store. 5. New brand introduction and consumer welfare in the pre-packaged salad sector: Based on results of a consumer demand model, the value to consumers of an organic store brand of bagged salad is approximately $500,000 per year.
Publications
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2013
Citation:
Li, Jing, Edward C. Jaenicke, Alessandro Bonanno, Tobenna Anekwe. Cornell University, Charles H. Dyson School of Applied Economics and Management: Health-Related Product Attributes and Purchasing Behavior in the Ready-to-Eat Cereal Market: An Application with Household-level, Censored Data. October 2013. Presenter: Edward C. Jaenicke.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2013
Citation:
Wu, Yingxian, Edward C. Jaenicke, and Tobenna Anekwe. Store choice for fruits and vegetables: An empirical case study for multiple-store shopping behavior. Selected Poster prepared for presentation at the Agricultural & Applied Economics Associations 2013 AAEA & CAES Joint Annual Meeting, Washington, DC, August 4-6, 2013
- Type:
Journal Articles
Status:
Published
Year Published:
2013
Citation:
Oberholtzer, L., C. Dimitri., and E. C. Jaenicke. International trade of organic food: Evidence of US Imports, Renewable Agricultural and Food Systems 28 (2013): 255262.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2013
Citation:
Jaenicke, E.C., and Andrea Carlson. Estimating and Investigating Organic Premiums for Retail-Level Organic Food Products. Submitted to Agribusiness: An International Journal. Submitted October 2013.
- Type:
Theses/Dissertations
Status:
Published
Year Published:
2013
Citation:
Ph.D.: Xiao Meng, Ph.D., 2013. Strategic Marketing Behavior Of Private Label And Organic Products: A Case Study Of The PrePackaged Salad.
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Progress 10/01/11 to 09/30/12
Outputs
OUTPUTS: The activities of this project have continued focusing on the analysis of the different aspects of the relationship between food, firms' strategic decisions, health and policy. One component of this project has focused on the evaluation of the impact of the Nutrition and Health Claim Regulation (NHCR) - Regulation (EC) No 1924/2006, 20 December 2006 - under the assumption of Type-II error, i.e. that the claims are denied when truthful, in collaboration with researchers at the University of Connecticut. The analysis has continued to use a rich scanner database of yogurt sales in Italy to examine the impact of health claim regulation on both consumers' and producers' welfare. Using the estimated coefficients of a nested-logit demand model, the welfare analysis performed considers both the immediate changes in consumers and producers' welfare occurring in three scenarios 1) products are deprived of their health claims but the manufacturers do not react; 2) manufacturers readjust their prices after de-labeling; and 3) the products whose health claims are withdrawn from the market. In almost all cases we show that, if the regulation stringency results in type-II errors, consumers would be penalized more than manufacturers. Preliminary results were presented at an invited presentation at Wageningen University, The Netherlands, July 5, 2012. In analyzing the U.S. yogurt market, the focus has been given in determining the strategic decisions of food retailers in developing/introducing healthy alternatives in the market, and, by comparison that of the introduction of other product lines differentiated via attributes other than health content (i.e. Greek yogurt). Using a scanner database of weekly sales data of yogurts at the brand-level for 3 large U.S. cities and a nested-logit demand model, the welfare effects for both producers and consumers resulting from the introduction of two new alternatives (one with health enhancing features, the other classified as Greek yogurt) are calculated. The results show that consumers benefit more from the introduction of the Greek alternative, than for that of the health enhancing one, due to both the increased variety and the fact that manufacturers can benefit from increasing pricing power achieved through the lengthening of the product line. Preliminary results were discussed in a presentation part of the FAMPS and FSN Section Track Session "Food Marketing and Nutrition: An Industrial Organization Perspective" at the 2012 AAEA Annual Meeting, Seattle, WA, August 12-14, 2012. A related project focused on modeling consumer demand while specially accounting for simultaneous quantity and quality decisions. Using the retail product "bagged carrots" as an example, we allow consumers to simultaneously choose a higher quality - and higher priced - carrot product while at the same time choosing a lower total quantity. Preliminary results show that consumers who switched to higher-priced organic bagged carrots decreased the total quantity purchased. PARTICIPANTS: Alessandro Bonanno and Edward C. Jaenicke. TARGET AUDIENCES: This project is likely to have national and international impact. Its focus on current topics of interest for national agencies (FDA, ADA and ASN) as well as international ones (EFSA) will grant widespread relevance. PROJECT MODIFICATIONS: Edward C. Jaenicke was added to the project.
Impacts
A first achievement is to produce analyses of health enhancing food products via structural modeling. Stakeholders that can be potentially interested in the results of this project are institutions such as the American Dietetic Association (ADA) and the American Society of Nutrition (ASN), which have shown broad interest in assessing both physiological and behavioral components of the consumption of food products, as well as the Economic Research Service at the USDA. The results will also be disseminated via international channels to inform European policymakers of the potential impacts of a much debated policy (Regulation (EC) No 1924/2006).
Publications
- Oh, S. H. 2012. Structural Estimation on Demand with Brand Choice and Quality Adjustment: From Non-Organic to Organic Food. Edward C. Jaenicke, Ph.D. committee chair. Alessandro Bonanno, committee member. Ph.D. Dissertation. The Pennsylvania State University, University Park, PA. 104 pp.
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Progress 10/01/10 to 09/30/11
Outputs
OUTPUTS: The activities of this project have continued focusing on the analysis of the Italian yogurt market, were leading yogurt manufacturers have invested heavily in developing functional products. The research has moved to assess the potential impact of de-labeling in the Italian yogurt market, in collaboration with researchers at the University of Connecticut. To that end, the analysis has continued to use a rich scanner database of yogurt sales in Italy to examine the impact of health claim regulation on both consumers' and producers' welfare. Regulation (EC) No 1924/2006, 20 December 2006, imposes functional foods manufacturers operating in Europe to provide evidence that the health claims reported on the packaging are truthful. The European Food Safety Authority (EFSA) evaluates food manufacturers' claims requests and, if rejected, food manufacturers have to sell their products deprived of their claims or discontinuing their production. By means of a flexible demand model (discrete-choice random coefficient logit) which accounts for consumers' taste heterogeneity, the occurrence of a large-scale health-claim de-labeling of functional yogurts in the Italian market is simulated. Preliminary results, which were presented at the 2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011, show that both producers and consumers can be severely impacted if reporting health-claims on functional products' packages is not allowed. As the results indicate that consumers' losses are twice as large as producers', the findings can be used as a cautionary tale that implementing strict regulations in health claim labeling could have unintended consequences as to penalize consumers instead of protecting them. Additionally, the analysis of the drivers of product differentiation in the U.S. yogurt market has started. Similar to the European scenario, food manufacturers in the U.S. develop healthy alternatives to revitalize mature segments and achieve larger margins, although it may require long-run investments, which would necessitate higher prices. Using a scanner database encompassing 108 weekly observations of yogurt sales across 8 U.S. cities and a nested-logit demand model, profit margins of different yogurt alternatives were estimated, comparing the profitability of healthy alternatives (low-fat, organic, soy, prebiotic and probiotic/functional) vis-a-vis more traditional ones (e.g., packaging size, flavors, etc.), also including sourcing (local vs. regional) in the analysis. Preliminary results, which show mixed finding with respect to what differentiation strategy could be more profitable for yogurt manufactures in the U.S, market, were presented as part of the NAREA Organized Symposium "Food and Health Trends - Economic Conditions, Healthy Alternatives, Local Foods, and School Lunches" at the 2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: This project is likely to have national and international impact. Its focus on current topics of interest for national agencies (FDA, ADA and ASN) as well as international ones (EFSA) will grant widespread relevance. PROJECT MODIFICATIONS: Decrease the effort from 25% to 15%.
Impacts
A first achievement is to produce analyses of functional foods markets via structural modeling. Stakeholders that can be potentially interested in the results of this project are institutions such as the American Dietetic Association (ADA) and the American Society of Nutrition (ASN), which have shown broad interest in assessing both physiological and behavioral components of the consumption of food products, as well as the Economic Research Service at the USDA. The results will also be disseminated via international channels to inform European policymakers of the potential impacts of a much debated policy (Regulation (EC) No 1924/2006).
Publications
- Huang, R. and A. Bonanno. 2011. Health Claims, Regulation and Welfare. 2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, PA. July 24-26, 2011. http://ageconsearch.umn.edu/bitstream/103809/2/HealthClaimsWelfare_Hu angBonanno.pdf.
- Bonanno, A., Y. Wu, and J. Hyde. 2011. Diffusion and Performance of Healthy Alternatives In the U.S. Yogurt Market. 2011 AAEA & NAREA Joint Annual Meeting. Pittsburgh, PA. July 24-26, 2011. (Abstract). http://aaea.confex.com/aaea/2011am/webprogrampreliminary/Paper13989.h tml.
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Progress 10/01/09 to 09/30/10
Outputs
OUTPUTS: The activities of this project have continued focusing on understanding the extent of substitutability between conventional and functional products in the same category and on the analysis marketing variables' (price, product size and other product's characteristics) role and health-related consumer characteristics importance on the demand for functional foods. As consumers' attention towards functional foods (food products which provide a benefit to the functions of the human body besides nutrition) has increased largely, it becomes a key factor for both marketers and product development specialists to characterize in detail the demand for these products and their profitability. The analysis has focused so far on exploiting a rich scanner database on the Italian yogurt market; since the leading yogurt manufacturers operating in this market have heavily invested in the development of functional products this database ensures the flexibility necessary to explore several research questions. A first analysis of the relationship between market penetration of functional foods and health-related consumers' characteristics has been submitted to a peer-review journal. Results indicate that health-related consumers' characteristics appear to impact largely the likelihood of success of functional products raising interesting questions on the actual health benefits that consumers may receive when consuming health enhancing functional products. The results of ongoing investigations of the extent of product differentiation and profitability of functional and conventional yogurts have been presented in preliminary form at the Dipartimento di Scienze delle Produzioni, dell'Ingegneria, della Meccanica e dell'Economia applicate ai Sistemi Agro-zootecnici (PRIME), University of Foggia, Italy, during an invited presentation that took place in December 18, 2009. More complete results were presented at the 1st EAAE/AAEA Seminar "The Economics of Food, Food Choice and Health" Freising, Germany, September 16, 2010. Overall, results indicate that, inside the same product category consumers vary their price responsiveness and their perception of functional and conventional alternatives, preferring products more innovative and easy to consume and that brand loyalty plays an important role in the market of health-enhancing food products. PARTICIPANTS: Alessandro Bonanno TARGET AUDIENCES: This project is likely to have national and international impact. Its focus on current topics of interest for national agencies (FDA, ADA and ASN) will grant national relevance. As the main case study being the Italian yogurt market, the results of the project are likely to have wide resonance in Europe. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
A first accomplishment is to generate the first formal analyses of a functional foods market via structural modeling. Stakeholders that can be potentially interested in the results of this project are institutions such as the American Dietetic Association (ADA) and the American Society of Nutrition (ASN) which have shown broad interest in assessing both physiological and behavioral components of the consumption of food products, as well as the Economic Research Service at the USDA.
Publications
- No publications reported this period
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Progress 10/01/08 to 09/30/09
Outputs
OUTPUTS: The activities of this project have started analyzing the role of marketing variables (price, product size and other product's characteristics) and health-related consumer characteristics on the demand for functional products. As consumers' attention towards functional foods (food products which provide a benefit to the functions of the human body besides nutrition) has increased largely, it becomes a key factor for both marketers and product development specialists to characterize in detail their consumers. As the existing literature aiming to characterize functional foods' consumers is limited in scope, having used stated preference approaches and ad hoc empirical modeling, this project broadens the analyses of functional food markets introducing formal demand analysis and models used in the mainstream marketing literature. The Italian yogurt market is chosen as a first case study for three reasons: 1) there is a long list of studies highlighting the health properties of fermented milks and yogurts; 2) the leading yogurt manufacturers operating in the Italian market have heavily invested in the development of functional products; and 3) the access to an extremely detailed scanner database of yogurt purchases by Italian consumers will allow to focus more on modeling and on refining the research questions. Preliminary results show that, even inside the same product category consumers vary their price responsiveness and their perception of functional and conventional alternatives, preferring products more innovative and easy to consume. Furthermore, health-related consumers' characteristics appear to impact largely the likelihood of success of functional products raising interesting questions on the actual health benefits that consumers may receive when consuming health enhancing functional products. These preliminary results were presented at the 113th Seminar of the European Association of Agricultural Economics, Crete, Greece. September 03-06, 2009. PARTICIPANTS: Alessandro Bonanno TARGET AUDIENCES: This project is likely to have national and international impact. Its focus on current topics of interest for national agencies (FDA, ADA and ASN) will grant national relevance. As the main case study being the Italian yogurt market, the results of the project are likely to have wide resonance in Europe. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
A first accomplishment of this project is that of generating the first formal analysis of a functional foods market via demand and structural modeling. Stakeholders that can be potentially interested in the results of this project are institutions such as the American Dietetic Association (ADA) and the American Society of Nutrition (ASN) which have shown broad interest in assessing both physiological and behavioral components of the consumption of food products, as well as the Economic Research Service at the USDA.
Publications
- Bonanno, A. 2009. Some Like it Healthy: An Analysis of the Italian Yogurt Market. Contributed Paper, 113th EAAE Seminar: A Resilient European Food Industry and Food Chain in a Challenging World. Chania, Crete, Greece. September 03-06, 2009. pg. 21. (Abstract).
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