Obtaining and managing reputation price premia in markets for experience goods: evidence from academic research on the wine market

September 2009

Value and role of food labels, The: three essays examining information flows in the food system for experience and credence attributes

2012 Summer.Includes bibliographical references.This dissertation investigates the role of food labels as means of conveying information about food product characteristics, with particular attention to experience and credence attributes. Unobserved product characteristics such as taste, food safety, nutrition, or quality are inherently difficult to quantify but are frequent determinants of demand. Since not all these characteristics are measurable (e.g., food safety) or directly observable (e.g., nutrition), there exists information asymmetry in the market between firms and consumers. Product labeling is a way for information that is initially hidden to eventually be disseminated in the marketplace. Different labeling schemes serve different roles in the marketing system. For example, nutrition information is critical in consumption decisions, while other product characteristics (such as "organic", or "fair trade"), may be valued by consumers but not essential for decision-making. Across three essays, we provide an assessment of how different types of labels are used in the food system. We focus equally on labels that have a long and rich history of usage in the food system (such as nutrition labels, and more recently, geographical indication (GI) labeling which denote a relationship between the product origin and specific product characteristics), but also labels that address emerging, public-minded issues which may be increasingly relevant in the future (such as environmental impact labeling and Corporate Social Responsibility (CSR) labeling). First, we meta-analyzed the literature regarding GI valuation to generate a set of guidelines, independent of any particular study, outlining the factors that are instrumental for a GI product to capture a price premium. Our findings across many studies indicate that agricultural produce and minimally processed foods such as grains, fresh meats, fruits and vegetables, benefit the most from association with GIs. These product categories generally do not develop own private reputations (brands), and thus, the premia received from association with GI collective reputations is relatively high. On the other hand, in addition to GIs, products with high value-added and longer supply chains such as wines and olive oils may also use private brands more effectively for differentiation. This suggests that brands and GIs have at least a partial substitute relationship. So, as the most broadly framed of the studies here, this cross-sectional analysis would suggest a further exploration of targeted labeling strategies, used jointly or independently of specific brand-name products, is warranted. Next, using original survey data and looking at nutrition label information, we find that truncated nutrition searches (looking only at the front label), or misleading product claims (such as "organic") are among a broad set of reasons current nutrition labeling practices may be ineffective in uniformly conveying information to consumers. We find that a nutrition index summarizing the information on the back nutrition panel, coupled with the information on the front label, may help to mitigate the incomplete information problems presented above. Moreover, we find that the environmental impact of food production is hard to identify by consumers if there is a lack of proper certification. But, until more consensus about key outcomes is framed by relevant government or consumer-oriented NGOs, a similar "informational index" solution will not be possible, so policy options are more limited. Finally, using original survey data we identify consumer preferences for CSR actions in the dairy industry. We find animal welfare to be the most preferred CSR activity and a top priority for most consumers. Sustainable agricultural practices, energy consumption, and waste management are second, third, and fourth, respectively, in importance for consumers; while company involvement in the community has the lowest priority amongst consumers. Furthermore, we monetize the value of animal welfare claims, identified as the most important CSR activity by consumers, in the context of a trusted third-party certification such as the Validus animal welfare certification program. Together, these empirical analyses provide a diverse set of findings on consumer perceptions, use of information, part-worth valuation of specific characteristics, as well as how these findings may vary by segments of consumers and product categories. By exploring these issues from a variety of perspectives and methods, the studies make both market-relevant and methodological contributions to the food labeling field

Food beliefs

November 2013.Includes bibliographical references (page 3).Product attributes (such as whether the product is organic) have been used to analyze consumer choices in market data. However, rather than generating utility directly, these attributes may instead be valued as a signal of a product outcome (such as nutritional benefits). For example, organic products may be valued because they are perceived as healthier, or they may be perceived as having a reduced environmental impact; "no sodium added" may communicate healthiness and improved flavor; and "cage free" may suggest improved animal welfare. In this paper, we examine how attribute information on food packaging influences outcome expectations. We show that when attributes are labeled but outcomes are unknown, the utility derived from the product attributes depends on the tradeoffs between alternative outcomes (preferences) and the perception of how those attributes determine outcomes (beliefs). In the second part of the research, we study consumer beliefs: specifically, how food labels and other package information influence expectations about nutritional and environmental outcomes for fluid milk products. Here we provide evidence that some attribute labels can bias consumers' expectations and are therefore potentially misleading

Creating loyal customers through social responsibility: how do dairy consumers value issue-based initiatives?

Includes bibliographical references (page 11).Businesses commonly seek ways to increase their competitive advantage in the marketplace, and marketing strategies often include differentiation through brands, promotions, label information or placement in popular marketplaces. An increasing number of food companies are creating loyal customers through connecting to concerns buyers may have about the environment, food safety, community issues and other social issues. This fact sheet explores how the dairy industry could frame their company actions to best match the interests, perceptions and values of dairy consumers.This project was funded by a grant from Aurora Organic Cairy, Platteville, Colorado

What Determines the Success of a Geographical Indication? A Price-based Meta-Analysis for GIs In Food Products

Food Consumption/Nutrition/Food Safety,

Foundations in Wisconsin: A Directory [26th ed. 2007]

The 2007 edition of Foundations in Wisconsin marks the 26th release of the print directory and the 7th year of the online version (www.wifoundations.org). The directory is designed as a research tool for grantseekers interested in locating information on private, corporate, and community foundations registered in Wisconsin. Each entry in this new edition has been updated or reviewed to provide the most current information available. Most of the data was drawn from IRS 990-PF tax returns filed by the foundations. However, additional information was obtained from surveys, foundation Web sites, annual reports, and newsletters. Wisconsin foundations continue to grow in the following key areas: number, grants, and particularly assets. Active grantmaking foundations now number 1,251, with 73 new foundations identified since last year’s publication, resulting in a 25% increase over the past 10 years. Over the past year, total grants increased by 5.8% to a total of almost $479 million, while assets increased by 12.5$6.2 billion.https://epublications.marquette.edu/lib_fiw/1003/thumbnail.jp

A Meta-Analysis of Geographical Indication Food Valuation Studies: What Drives the Premium for Origin-Based Labels?

We conduct a meta-analysis of studies estimating price premiums for agricultural products differentiated by Geographical Indication (GI). Models accounting for differences across product characteristics (food categories) and institutions (PDO, PGI, trademarks) explain a large portion of the variance in estimated premiums. Specifically, GIs capture the highest percentage premium in markets for products with short supply chains and relatively low added value (e.g., agricultural commodities). The premium is lower for wine and olive oil, where alternative means of product differentiation (e.g., branding) exist. Controlling for product characteristics, GIs adopting stricter regulations (PDO) yield larger premiums than less regulated ones (PGI)

Truthful, Misguiding Labels: The Implications of Labeling Production Processes rather than their Outcomes

Using a best-worst ranking exercise we compare the inferences made by consumers regarding the nutritional value and healthiness of fluid milk and soymilk beverages under several combinations of three labeling regimes: front label, back label ( including the nutritional information panel), and an index measure of nutrition value, the Ratio of Recommended to Restricted nutrients (RRR score). We find that, when only front label (process) information is available, consumers tend to overstate the relevance of certain product attributes (e.g. organic) and underestimate the effect of others (soy vs. cow milk). Indeed, product rankings significantly change when the information treatment includes the nutritional panel and/or RRR scores (outcome labels). Interestingly, nutritional panel and RRR scores are found to induce similar product rankings. A similar experiment is conducted to measure consumers’ ability to assess the (relative) environmental impact of alternative milk and soymilk products. We find that rankings and judging criteria are much more heterogeneous for this task, suggesting that environmental impact information contained in existing labels is minimal or subjectively interpreted

How Consumers Respond to Corporate Social Responsibility Initiatives: A Cluster Analysis of Dairy Consumers

Corporate branding has been a key marketing strategy for many decades, but the nature and focus of branding activities has evolved along with the interests and buying motivations of consumers, especially in the food sector. An increasing number of food companies are creating loyal customers by positioning their products in a manner that addresses concerns buyers may have about the environment, food safety, community issues and other social issues. In this study, we highlight the common themes that milk consumers may prefer to support with their buying dollars, some that are common across the whole population (animal welfare) and others that vary across distinguishable consumer segments (support for economy, environmental impact)

Corporate Social Responsibility Initiatives and Consumer Preferences in the Dairy Industry

We conduct a best worst-ranking exercise to investigate consumers’ perception of the importance of twelve possible actions for a dairy farm engaging in Corporate Social Responsibility. Animal welfare is clearly identified as the most preferred activity and a top priority for most consumers. Sustainable agricultural practices, energy consumption, and waste management are ranked as second, third, and fourth respectively. Company involvement in the community has the lowest priority amongst the surveyed consumers. The perceptual profile of four fluid milk labels (Organic, Colorado Proud, Validus and Rbst free) is also investigated, showing that common milk labels do convey some information related to CSR activities. Most prominently, the Validus certification is immediately connected to improved animal welfare. Similarly, Colorado Proud sends a strong message related to locality and community involvement. USDA Organic and RBST-free convey a more complex message, where information cues include better nutrition, taste, and sustainable agriculture. Willingness to pay for the differentiating labels was estimated (stated preferences) to be $0.55/gallon for Colorado proud,$0.64/gallon for USDA organic, $0.49/gallon for RBST-free and$0.46/gallon for Validus. However, a very small share of these price premia could directly be attributed to consumers’ perceptions of implemented CSR activities. The Validus label is a clear exception: as currently framed, it elicits a strong perception of improved animal welfare, which in turn directly affects valuation of fluid milk