Consumer demand for cholesterol-lowering enhanced margarine products

Abstract

The development and introduction of nutritionally enhanced margarines in the mid-1990s offered the opportunity to improve public health through the use of a cholesterol-lowering food product. Product approval in the USA followed that in Europe. The public approval and market acceptance of the nutritionally enhanced product illustrate the challenges faced by offering improved health attributes through food product innovation. Although the product Benecol received public endorsement and was relatively quickly accepted by Finnish consumers, public acceptance has been slower in the USA. Our study traces consumer response to the introduction of nutritionally enhanced margarine products in the US market. Household scanner data allow estimation of hedonic price functions and a probit model on the choice of the health-promoting product attribute. US consumers of the enhanced margarine products place a relatively high value on the cholesterol-lowering attribute, although a relatively small share of households purchase the products that include it.

Keywords:

• cholesterol
• demand for healthy food
• functional food

Acknowledgements

The authors are adjunct Assistant Professor in the Department of Economics, and Professor in the Department of Economics, Iowa State University; and Branch Chief, Food Economics Division, ERS, USDA, respectively. We thank J. Michael Harris, Wally Huffman, and participants at the Economic Research Service-USDA Scanner Data Workshop for helpful comments on the paper, and S.P. Batres-Marquez for help with data. We acknowledge the Agricultural Marketing Resource Center at Iowa State University for partial funding support and ERS-USDA for providing the data. The views expressed in this paper are those of the authors and not necessarily those of the U.S. Department of Agriculture.

Notes

1. We did not have an access to advertising expenditure data by month. Excluding the advertising and other non-advertising effort from the estimated demand equation could potentially lead to biased estimates, and it is important to acknowledge this limitation.

2. Benecol was offered as both regular and diet types and thus some Benecol products have both the “cholesterol-lowering” attribute and the “diet” attribute.

3. Although the estimation (the price coefficients) is sensitive to the scaling of the predicted attribute values, we find the signs of the price coefficients are always consistent and significant.

4. The reference group is those adults that have completed a 4-year college degree or more. Since our data lack information on wage rates, the wage effect comes through the education variable, holding age constant. Higher education means higher opportunity cost of leisure.

5. Reference age group is adults less than 50 years of age.

6. In fact, when adjusted for quality, butter became a complement attribute. We used the Cox and Wohlgenant (1986) methodology for quality adjusting of unit values.