Cheng, Hsiang-Tai

Kezis, Alan S.

English

Research Papers in Economics

Difference  In Retail and Foodservice  Seafood  Buyers
Impression of Aquacultural Product
By Hsiang-tai Cheng and Alan  S. Kezis
The aquaculture  industry  in  the  New  Eng-  graphic  location,  and  buyers  perception  of con-
land  area has been  growing steadily over the past  sumer preferences.
two decades with the  1992 farm value reaching an
estimated  $114  million  (New  England  Agricul-  Procedures
tural Statistics,  1992). Aquaculture production has
continued  to  increase  at  a  slower  pace  over  the  To  meet  the  objectives,  a mail  survey  was
past  5 years  but  long-term  projections  indicate  developed  to  gather  data  from  seafood  buyers.
sustained growth of the industry  overall  (Johnson  Questions  in the  first portion of the survey  asked
and  Dore,  1994).  Currently  the  major  shellfish  buyers how they make their purchasing  decisions
species  cultured  in the Northeast include  oysters,  for shellfish and finfish and what factors are most
hard-shell  clams  and  mussels.  Salmon  and  trout  important  in  selecting  a  particular  supplier.  The
are  the  major  finfish  species  produced  in  New  second  question  area  centered  on  the  present
England while states in the southern section of the  status  of their  demand  for  shellfish  and  finfish
region have  branched  out  into production  of hy-  products  and  the  possible  problems  they  may
brid  striped bass and  tilapia (New England Agri-  have encountered with suppliers  and product.  The
cultural Statistics,  1992).  final  section was intended to provide information
While  production  and  total  sales  have  gen-  on  the  attitudes  of buyers  toward  cultured  sea-
erally increased, Northeast producers  are encoun-  food.  The  survey  form  underwent  several  revi-
tering increased  competition  from other domestic  sions and two  pre-tests in  preparation for the  ac-
and  foreign  suppliers.  The  increasing  supply  of  tual mailout.
product has not been balanced  by increasing  de-  The targeted  population was  seafood  buyers
mand;  per  capita  consumption  climbed  dramati-  in the retail  and foodservice sectors. Potential  su-
cally  in the mid-1980's to an all-time  high of 16  permarket  respondents  were  selected  from  The
pounds in  1987, but consumption  has since  stabi-  Progressive  Grocer's  1993  Listing  of Supermar-
lized  at  a  lower  level  of just  over  15  pounds  ket  Distribution  Facts  Marketing  Guidebook.
(Johnson and Dore,  1994). Along with a stagnant  Foodservice  Distributors  were  selected  from  a
demand,  producers  in  the  Northeast  have  con-  1994 Foodservice Distributor Directory published
paratively  higher labor costs and shorter growing  by CSG  information  Services.  Listings  of Chain
seasons. As a result, their ability to fend off com-  and  Independent  Restaurants  were  also  obtained
petitive  pressure  from  foreign  suppliers  through  from  CSG  Information  Services  which  reported
cost reduction is critically hampered.  addresses  and  basic  sales information  for restau-
For the New England aquaculture  industry to  rants with sales of $1,000,000  or more.
develop  optimum  marketing  strategies  in  this  The  buying  offices  and  distribution  centers
competitive  environment  a  better  understanding  associated  with  Supermarkets  within  the  New
of retail  and food service buyers  product percep-  England, Middle Atlantic,  Southeast, East Central
tions is essential.  The objective of this study is to  and  Midwest  were  included  in the  sample  if the
determine  differences  in  buyers  impression  of  buying  data  indicated that the firm  actually  pur-
aquacultured  product  by  business  type,  geo-  chased  seafood.  Similarly,  foodservice  distribu-
tors were  selected  if the firm handled  fresh  fish.
Chain and Independent  Restaurants  were selected The  authors  are,  respectively,  Associate  Professor  and  Chain and Independent Restaurants  were selected
Professor,  Department  of Resource  Economics  and  Policy,  if they  (1)  specialized  in  seafood  or  (2)  were
University of Maine.  classified  as white  tablecloth  restaurants with  an
Maine  Agricultural  and  Forest Experiment  Station Publica-  average dinner check of over $15.00.
tionNo.  1987.122  February 1996  Journal of  Food  Distribution  Research
Altogether  1, 668  surveys were mailed to the  in the East Central  region where there were fewer
seafood  buyers  located  in  the  eastern  half of the  restaurants,  particularly  seafood  restaurants,  that
U.S.  After  two  mailouts  208  completed  surveys  met  the  criteria  for  selection.  Correspondingly,
were  returned,  and  49  surveys  were  returned  as  there  were  relatively  fewer  foodservice  distribu-
undeliverable.  This  yielded  a  response  rate  of  tors  in this region handling  fresh  seafood product
nearly  13%.  National  mail  surveys  of business  lines.
decision  makers  who  have  essentially  no vested
interest in the outcome typically achieve response  Buyer Attitudes Toward Cultured Products
rates of 3 to 5%.  By comparison  to this standard,
the  response  rate  for  this  study  was  reasonably  To assess  retail  buyers  attitudes toward  cul-
acceptable.  tured  products,  respondents  were  asked  in  the
survey  how they  felt about the  cultured  shellfish
Profile of Respondents  and  finfish  in  comparison  to  wild  harvest.  To
make  these  comparisons  more  precise,  respon-
The distribution of respondents  based  on the  dents  were  asked  to  consider  only  two  shellfish
type of business they represent  and their regional  species:  clams  and  mussels  and  two  finfish  spe-
location are presented in Tables 1 and 2.  cies:  salmon  and  trout. The  results  are  shown  in
Tables 3 and 4.
Table 1. Distribution of Respondents  Based  The  most  notable  and  consistent  finding  in
on Type of Business.  each table is that very  few respondents  perceived
N  %  cultured  seafood  as  inferior.  In  fact,  more  than
Chain Restaurants  23  11.1  half of the buyers  felt it was actually  superior to
Independent Restaurants  111  53.4  wild  harvested  product.  For  the  two  shellfish
Supermarkets  (Buying  45  21.6  species,  respondents  felt that  cultured  was  supe-
Office/Distribution Center)  rior  because  the  product  is  cleaner  and  more
Foodservice Distributors  29  13.9 
Total  208  100.0  evenly  sized.  Safety was another reason  given by many buyers who preferred cultured  shellfish and
Table  2. Regional  Distribution of  this is consistent with a consumer study in which
Respondents.  respondents generally  felt more secure  about pur-
N —  chasing  shellfish that  was  cultured  (Wessels,  et.
al,  1994). For  finfish,  price  stability  and  consis- New England  44  21.2 New Eglanid  44  21.2  tent product quality were the major reasons given Mid Atlantic  63  30.3 Mid Atlantic  63  30.3  for the superiority of cultured over wild. South East  38  18.3 EaSuth East  38  18.3  Investigation  of the responses  from  the few
EastCentral  29  13.9  buyers  who  had  a  poor  perception  of  cultured
Central  34  16.3  product revealed two typical  concerns.  These  re-
Total:  208  100.0  spondents were worried about feed or "additives",
and they indicated that this had an impact on taste More than half the respondents are affiliated  as  well  as  the  overall  "wholesomeness"  of the
with  independent  restaurants.  The  smallest  re-  product.  In a similar note,  several  expressed  res-
spondent  groups  are  the  chain  restaurants  ac-  ervations about what aquaculture was doing to the
counting  for  11%  of the returns  and  foodservice  marine environment.
distributors  with  14%.  The  regional  distribution  A  small  but  notable  percentage  of respon-
shows  that half of the respondents  are  located  in  dents  felt  that  some  characteristics  of cultured
New England and the Mid-Atlantic  regions.  This  products  were  better  and  some were  worse.  The
is primarily due to the higher incidence of restau-  usual comment among these respondents was that
rants  meeting  the  selection  criteria  in  these  two  cultured  product  had more stable pricing  but the
regions. The smallest proportion of respondents is  taste was generally inferior to wild product. taste was generally inferior to wild product.Cheng and Kezis  Seafood Buyers Impression ofAquacultural Product  123
Table  3.  Percentage  Distribution of Respondents'  Perceptions  of Quality  Differences  Between
Cultured and Wild  Clams and Mussels.
--- Restaurants-----
Independent  Chain  Supermarket  Distributor  TOTAL
105  obs.  23  obs.  42 obs.  26 obs.  196 obs.
Cultured Shellfish are superior  63.81  56.52  45.24  53.85  57.65
Cultured Shellfish are inferior  3.81  0.00  2.38  0.00  2.55
No difference  between cultured/wild  15.24  4.35  26.19  15.38  16.33
Not sure  11.43  21.74  23.81  30.77  17.86
Some characteristics  are better,  5.71  17.39  2.38  0.00  5.61
some are worse
Total  100%  100%  100%  100%  100%
Note:  Respondents with no experience/familiarity  with cultured product are excluded.
Table  4. Percentage  Distribution of Respondents'  Perceptions  of Quality  Differences  Between
Cultured and Wild Salmon  and Trout.
-----Restaurants-----
Independent  Chain  Supermarket  Distributor  TOTAL
109 obs.  22 obs.  44 obs.  28 obs.  203 obs.
Cultured Finfish are superior  55.05  45.45  52.27  39.29  52.23
Cultured Finfish are inferior  10.09  9.09  4.55  10.71  8.87
No difference between cultured/wild  17.43  18.18  25.00  35.71  21.67
Not sure  11.01  9.09  13.64  10.71  11.33
Some  characteristics  are better,  6.42  18.18  4.55  3.57  6.90
some are worse
Total  100%  100%  100%  1005  100%
Note: Respondents with no experience/familiarity  with cultured product are excluded.
The Probit Model and Results  ui are the disturbance  term with IN(0,1). De-
scriptions  of the  explanatory  variables  are  pre-
To  assess  the  difference  in  buyers  percep-  sented in Table 5.
tions  of the  quality  of cultured  finfish  (salmon  The  estimation  technique  for  the  probit
and  trout)  and  shellfish  (clams  and  mussels)  by  model  was  maximum  likelihood  (Pindyck  and
types  of retail  businesses,  geographic  location,  Rubinfeld).  The  maximum  likelihood  estimates
and  perceived  customers'  preference,  a  probit  are  consistent  and  asymptotically  normally  dis-
model was developed.  tributed.  Consequently,  conventional  tests of sig-
y. = Po +  3SPR7RMK.  +  3S  IR,.  +  1MT,  Anificance  and  likelihood ratio tests are applicable.
Yi =  0  + 0SPR/+3 2D  ' · +  3  M  M-  /'  The  estimated  coefficients  and  corresponding
+3 4SEi + 03 5 C7R4 +  3 6CSTMR  + ui  standard errors of probit models (columns  2  and
where y* is  an unobservable  latent  variable,  and  3,  Table  6)  indicate  the significance  and the  di-
what we observed  is a dummy variable  which  is  rection  of impact of selected  factors  on  buyers'
defined as  perception  of the  quality  of cultured  products.
i  -c  ~~~~* f\  ^LI  Using  these  estimated  coefficients  and  informa-
y=  - if  i  >  ,  Cultured finfish  tion from the data, a marginal effect of change in
(or shellfish) is superior;
y =0  if  i <0,  Indifferentornotsure.124  February  1996  Journal  of Food  Distribution  Research
Table 5.  Description of the Explanatory  Variables in the Probit Model.
Explanatory Variables  Description
Business Type
SPRMKT  = 1 if the retailer was a supermarket, = 0 otherwise
DSTR  =  I if the retailer was a foodservice distributor, = 0 otherwise
Restaurant  The base (omitted) category for business type)
Geographic Location of the Retail Business
MATL  = I if in the Mid-Atlantic,  = 0 otherwise.
SE  = I if in the Southeast, = 0 otherwise.
CNTRL  = I if in the Central region, = 0 otherwise.
New England  The base (omitted) category for geographic  region)
Perceived Customer Preference
CSTMR  =  I if cultured products are superior, 0 = indifference or not know.
Table 6.  The Probit Model Results.
--------Shellfish--------  --------Finfish--------
...............................................................................................................................................................................................
Standard  Marginal  Standard  Marginal
Variable  Coefficient  Error  Effect  Coefficient  Error  Effect
Constant  0.772*  0.255  0.326  0.251
SPRMKT  -0.582*  0.267  -0.217  -0.451  0.291  -0.171
DSTR  -0.620*  0.335  -0.235  -0.917*  0.369  -0.352
MATL  -0.301  0.325  -0.109  0.031  0.328  0.011
SE  -0.354  0.364  -0.131  -0.035  0.368  -0.013
CNTRL  -0.890*  0.324  -0.327  -0.247  0.336  -0.092
CSTMR  1.276*  0.288  0.370  1.817*  0.393  0.462
Pseudo R2 = 0.5034  Pseudo R2 = 0.5223
* Statistically significant at 10% level.
each factor (dummy variables, from 0 to 1) on the  more  likely to prefer  cultured  clams  and  mussels
probability  of considering  cultured  product  to  be  than  supermarkets  and  distributors.  In  terms  of
superior is calculated  . geographic  differences in preferences for cultured
For  cultured  shellfish  products,  clams  and  product, there is no significant differences  among
mussels, buyer perceptions  of quality  differences  regions  along the east  coast. Retailers  located  in
between  cultured  and  wild product  vary by busi-  the Central region, however, had about 33 percent
ness type and  geographic  location.  Supermarkets  lower  probability  of preferring  cultured  products
and distributors are estimated to have a 22 and 24  than retailers in the New England region. In addi-
percent lower probability, respectively, of consid-  tion,  what  buyers  perceived  their  consumer's
ering cultured products as superior in comparison  preference  for culture shellfish was also a signifi-
to  restaurants.  In  other  words,  restaurants  are  cant  factor.  Over  50  percent  of the  respondent
who perceived cultured  mussels and  clams as su-
From the  probit model,  the  probability  that  the  observed  perior indicated that consistent in size/quality and
dependent  variable  equals  I  can  be  expressed  as  cleanness  are the top two reasons.
Prob(CHOICE=  = 1) =  (P 'xi), where xi is the set of explana-  rs  n 
tory  variables specified  above,  i  is  a vector of coefficients,roducts  (salmon  and
and <(.) is the cumulative standard normal  distribution func-  trout) is somewhat different from that on shellfish
tion.  Since the explanatory  variables  included  in the  model  products  (mussels  and  clams).  There  is  no  geo-
are dummy variables,  the partial effect  when an explanatory  graphic difference  in buyers'  perceptions  of qual-
variable xk changes from 0 to I is calculated  by partial effect  i  uu  i  u
of xk =  p(O'xl  xk=l) - 0(P'xIxk=O),  and variables other than  harvested  products.
the kth variable are at the sample means.  Distributors  are  estimated  to  have  a  35  percentCheng and  Kezis  Seafood  Buyers Impression ofAquacultural Product  125
lower  probability  of considering  cultured  finfish  To  illustrate  the  differences  in  buyers  per-
as  superior  than  supermarkets  and  restaurants.  ception  of quality of cultured  products  by  busi-
The most significant  factor affecting  buyers  con-  ness types and  geographic  locations, two  profiles
sideration  of the  quality  of cultured  products  is  are  constructed  using the probit results  in  which
their customers'  preference.  The  top two reasons  are presented  as estimated probabilities of consid-
given  by  buyers  who  perceived  cultured  salmon  ering  cultured  products  as  superior:  mussels  and
and  trout as superior are:  consistent/better  quality  clams (Figure  1),  salmon and trout (Figure 2).
and consistent supply.
Figure 1.  Estimated Probability that Seafood  Buyer Would Consider Cultured Mussels  and Clams
as Superior than Wild Harvest by Business  Type and Region.
0.9  EI Restaurant  · Supermarket  DDistributors
0.8
0.9
0.6
0.5
0.3  _
0.2
0.1
0
New England  Middle Atlantic  Southeast  Central
Geographic  Regions
Figure 2.  Estimated Probability that Seafood  Buyer Would Consider Cultured Salmon  and Trout
as Superior than Wild Harvest by Business Type and Region.
0.9
0.9  - · Restaurant  · Supermarket  [ Distributors 0.8
0.7
0.6
0.5
2  0.4
0.3
0.2
0.1
0
New England  Middle Atlantic  Southeast  Central
Geographic Regions126  February  1996  Journal  of Food Distribution  Research
Summary and Conclusions  References
The  objective  of this  study  was  to  gain  a  Bill  Publications, Institutional  Distribution,  New York,  NY.,
better  understanding  of differences  in  retail  and  January,  1993.
foodservice  seafood  buyers  impression  of  aq-  Johnson,  Howard  and  Ian  Dore'.  United  States Seafood  In-
dustrv  Annual  Report.  H.M.  Johnson  & Associates, uacultural  products.  The  findings  of  this  study  Bellevue,  WA.,  1993,  1994.
may  help  the  aquaculture  industry  in  the  New  Krieder,  Craig,  Conrado  Gempesaw  II, J.  Richard  Bacon,
England  areas  in planing  marketing  strategies  to-  Ulrich  Toensmeyer,  and  Andrew  Groff. "An  Analysis
ward  different  market  segments.  The  relative  of Consumer  Perceptions  of Fresh  Fish and Seafood  in the  Delmarva  Region,"  Journal  of Food  Distribution positions of cultured products  in the  minds of re-  Resarch, September,  1993.
tail buyers  in different  geographic  locations  rep-  New  England  Agricultural  Statistics  Service.  New  England
resent market opportunities as well as challenges.  Agricultural  Statistics  1992 Concord,  New Hampshire,
Since  the  consistency  in  quality  is  the  pri-  November  1993.
mary  reason  given  by  respondents  for preferring  Peavey,  Stephanie,  Alan  Kezis and  Duane  Smith.  "A Profile
mary  reason  given  by  respon  s fr p  g  and Examination  of Eastern  Foodservice  Distributors."
the  cultured  products,  product  inspec-  Journal  of Food  Distribution  Research.  Vol  20,  No.2.
tion/certification  is  likely  to  be  a very  effective  Sept. 1989.
way  for  distinguishing  cultured  products.  This,  Pindyck,  Robert  S. and  Daniel  L.  Rubinfeld,  Econometric
coupled  with  clear  communication that the prod-  Models  &  Economic  Forecasts,  Third  Edition,
uct is farm-raised  cn  e  e  the  p  d  McGraw-Hill,  Inc., New York,  1991. uct  is  farm-raised  can  enhance  the  perceived  Wessells,  Cathy,  Sophia Morse, Alberto  Manalo,  And  Con-
value  of the product  and  allay the  seafood  safety  rado  Gempesaw  II. "Consumer Preferences  for North-
concerns  that  seem  to  be pervasive  among  both  eastern  Aquaculture  Products:  Report  on  the  Results
the seafood buyers and the consumers.  from a Survey  of Northeastern  and  Mid-Atlantic  Con-
sumers." Report to the Northeastern Regional Aquacul-
ture  Center,  University  of Massachusetts  Dartmouth.
December,  1994.

foodservice seafood buyers impression of aq- Johnson, Howard and Ian Dore'. United States Seafood Industrv Annual Report.

help the aquaculture industry in the New Krieder, Craig, Conrado Gempesaw

mary reason given by respondents for preferring

tail buyers in different geographic locations rep- New England Agricultural Statistics Service. New England resent market opportunities as well as challenges. Agricultural Statistics

The objective of this study was to gain a Bill Publications, Institutional Distribution,

way for distinguishing cultured

DIFFERENCE IN RETAIL AND FOODSERVICE SEAFOOD BUYERS IMPRESSION OF AQUACULTURAL PRODUCT

DIFFERENCE IN RETAIL AND FOODSERVICE SEAFOOD BUYERS IMPRESSION OF AQUACULTURAL PRODUCT

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics