Food Consumption/Nutrition/Food Safety, Marketing,

Goddard, Ellen W.

Lerohl, Mel L.

Lomeli, Jose L.

English

Research Papers in Economics

Effects of Advertising, Food Safety and Health Concerns on 
Meat Demand in Canada
Jose L. Lomeli, Ellen W. Goddard, and Mel L. Lerohl
Recent events in the North American market suggest 
the need for a similar evaluation. It is possible that 
advertising could ameliorate the effects of negative 
information.
Model and Data 
This study employs a two-stage meat-demand sys-
tem with a Generalized Box-Cox functional form, 
with data on the Canadian meat market (beef, pork, 
and chicken) from 1976 to 2001. The creation of 
Food Safety and Health Media Coverage Indices 
over time is undertaken for each meat type through 
careful searches of newspapers, which are used as 
a proxy for all media coverage.
Meat demand in Canada has been following 
a trend similar to that in other developed world 
markets: beef demand has been declining since the 
late 1970s while chicken consumption has been in-
creasing. Per-capita beef consumption declined by 
23.3% from 1980 to 2001, per-capita consumption 
of chicken increased by 91.5% during the same pe-
riod, and per-capita pork consumption has declined 
by 11.3% during those 21 years.
Quarterly meat disappearance in Canada was 
calculated with data published by Agriculture 
Canada and Statistics Canada. Population, CPI for 
all goods, disposable income, and CPIs for fresh 
or frozen beef, pork, and chicken were obtained 
from CANSIM. We include in the model expen-
ditures on generic, brand, and fast food restaurant 
advertising.
The media indices were obtained using the 
publications library of Dow Jones Interactive and 
take into account the number of newspaper articles 
published in Canada per quarter from 1976 to 2001. 
The Food Safety Indices (FSIs) are counts of the 
number of articles related to BSE and E. coli for 
beef, E. coli and Salmonella for pork, and E. coli and 
salmonella for chicken. The Health Indices (HIs) are 
counts of the number of articles linking consump-
tion of each meat type (beef, pork, and chicken) 
with cancer, heart disease, and stroke. 
The demand for meat in North America is a heav-
ily researched area (e.g., Chalfant, Gray and White 
1991; Reynolds and Goddard 1991, Chen and Vee-
man 1991; Brester and Schroeder 1994; Eales 1996; 
Kinnucan et al. 1997; Alston, Chalfant and Piggott 
1998; Patterson and Flake 1999; Schroeder, Marsh, 
and Mintert 2000). However, no previous study has 
taken into account the wide range of media influ-
ences on changes in consumption—for example, 
media coverage related to food safety and health 
concerns, the many different kinds of advertising 
which may affect meat demand, and social-market-
ing strategies of government and NGOs.
Advertising has been popular among producer 
groups seeking to increase sales of agricultural 
products such as beef, pork, and chicken, sometimes 
aimed at reducing the impact of negative media in-
formation related to health and food safety. It is also 
an effective tool used by processors and retailers to 
increase market share of a specific branded product 
or to launch new products. Although advertising, 
particularly generic advertising, has been used as a 
marketing strategy to combat health concerns, other 
kinds of advertising have been aimed at confront-
ing decreased sales in difficult situations. Attempts 
to reduce the impact of negative information have 
been made by the industry in the form of generic 
advertising. In Canada, for instance, beef generic 
advertising is funded by beef producers through a 
check-off that the cattle producer pays at the time 
an animal is sold. These attempts may have been 
helped or hindered by contemporaneous brand and 
restaurant advertising. 
A few European studies have included both 
media coverage and advertising expenditures in 
meat-demand systems in order to measure to what 
degree advertising has helped reduce the influence 
of negative information on consumer food choices. 
The authors are graduate student, professor and Chair, and 
Emeriti professor, respectively, Department of Rural Economy, 
University of Alberta, Edmonton, Canada.144   March 2004 Journal of Food Distribution Research 35(1)
Results
The first stage of the demand system is a double log 
relationship with total expenditure on meats as the 
dependent variable, which is  explained by several 
variables, including the sum of generic, brand, and 
restaurant advertising expenditures for the three 
meats; the percentage of meat servings with re-
spect to total servings recommended in the various 
Canadian Food Guides; and the value of both the 
food-safety and health indices for the three meats. 
The second stage of the model will be composed of 
a system of equations using the Generalized Box-
Cox (GBC) functional form.
TSP 4.5 is used for the estimation of the two-
stage meat-demand system. The equations are 
estimated simultaneously with substitutions of 
endogenous variables from one stage into the 
other stage. A number of lags were tested for the 
various information variables. Ninety-one percent 
of the variation in total expenditure on meats is 
explained by the first-stage equation1. The weighted 
average-price coefficient is positive and significant 
at the 1% level, indicating inelasticity of aggregate 
demand for meat. The meat-safety index is positive 
and significant (1%) at the first stage; the sign may 
be explained by the fact that people could change 
from buying one kind of meat to buying a different 
kind (i.e. less pork but more beef or chicken), or 
even the same meat but of higher quality (i.e. stop 
eating ground beef because of its possible associa-
tion with E. coli and start consuming high-quality 
steaks). Also at the first stage, the health index is 
negative but not statistically significant even at the 
10% level.
The addition of quarterly dummy variables 
detected seasonality; total expenditure on meats is 
significantly different (higher) in the first, second, 
and third quarters of the year relative to the fourth 
quarter. Significant (1%) habit formation was de-
tected through the lagged dependent variable. The 
sum of generic, brand, and restaurant advertising for 
the three meats has a positive and significant (5%) 
effect on total expenditure. Interestingly, recom-
mendations made in the different Canadian Food 
Guides have a negative and significant (1%) effect, 
suggesting that total expenditure on meats has, in 
fact, been affected by such recommendations.
Calculated across the two stages of the demand 
system, all own-price elasticities are negative and 
significant (1%) and the cross-price elasticities are 
all positive except the effect of pork price on beef 
and chicken consumption. All the cross-price elas-
ticities are significant. 2
The own-food safety elasticity for pork is 
negative and significant (10%), suggesting that 
an increased number of newspaper articles linking 
pork with E. coli and salmonella decreases pork 
consumption. The pork-safety index has also cross 
effects, significantly increasing beef consumption. 
Considering other cross-food safety elasticities, an 
increased number of articles about beef-safety is-
sues significantly decreases both pork and chicken 
consumption. The explanation for the beef food-
safety index not having own negative and significant 
effects may have its roots in the fact that, from 1976 
to 2001, BSE was not a beef-safety issue in Canada 
(BSE coverage from other countries makes up the 
majority of the beef food-safety-index values). Ca-
nadian consumers might have perceived external 
beef-safety issues as such and might have believed 
that the domestic supply of beef was safe, thus not 
altering their consumption preferences. With respect 
to the cross-health relations, no own- or cross-health 
elasticity has a significant impact on beef, pork, or 
chicken consumption. Further work to disaggregate 
the health index more clearly into positive and nega-
tive indices is warranted (Dyack 2002).
The own-generic advertising elasticity is positive 
and significant for pork. Thus increased advertis-
ing expenditures from hog producers significantly 
increases consumption of their product. On the other 
hand, pork consumption is negatively affected by 
increased generic advertising expenditures made by 
chicken producers. Both beef and chicken brand ad-
vertising have significant and positive own effects. 
Beef and pork brand advertising have significant but 
positive effects on chicken consumption. Beef fast 
food restaurant advertising significantly increases 
beef consumption and significantly impacts chicken 
consumption (positively).
Conclusions
The model used found that pork-safety issues have 
negative and significant own consumption effects, 
1 Data and parameter estimates are available on request from 
the authors.
2 Elasticity estimates are available on request from the 
authors.Effects of Advertising, Food Safety, and Health Concerns on Meat Demand   145 Lomeli, Goddard, and Lerohl
and positive cross-effects on beef. Pork generic 
advertising has own positive effects, while pork 
consumption is negatively affected by chicken ge-
neric advertising. Both beef brand and beef fast food 
restaurant advertising increase beef consumption. 
Although the econometric analysis has been ex-
tensive, more and deeper work needs to be done. 
Some of the possible extensions are to differenti-
ating more clearly between positive and negative 
articles about both food-safety issues and health 
concerns, and including medical journal articles on 
health issues instead of only newspaper articles. 
References
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EFFECTS OF ADVERTISING, FOOD SAFETY AND HEALTH CONCERNS ON MEAT DEMAND IN CANADA

EFFECTS OF ADVERTISING, FOOD SAFETY AND HEALTH CONCERNS ON MEAT DEMAND IN CANADA

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Research Papers in Economics