Consumer and retailer preferences for local ingredients in processed foods: Evidence from a stacked choice experiment in an African urban dairy market
August 2, 2021 - Author: Ryan Vroegindewey, Robert B.Richardson, David L.Ortega, VeroniqueTheriault
Vroegindewey, R., Richardson, R. B., Ortega, D. L., & Theriault, V. (2021). Consumer and retailer preferences for local ingredients in processed foods: Evidence from a stacked choice experiment in an African urban dairy market. Food Policy, 102106.
West African consumption of processed dairy products has been increasing over the past decades, most markedly in urban areas. In livestock-rich countries such as Mali, local milk production has the potential to meet growing demand. There is evidence, although limited, that consumers in the region prefer local fresh milk over imported milk. Yet, very little fresh milk is marketed in urban areas, where imported powdered milk dominates the market. The dichotomy between agricultural and urban food policies in Mali along with asymmetric information has likely contributed to this mismatch between fresh milk demand and supply. In this study, we bring new empirical evidence on preferences and information flows on processed dairy products. We employ a novel approach of stacked choice experiments to estimate and compare urban consumer and retailer preferences for three dairy product attributes: ingredient labeling, product safety certification, and packaging. Findings indicate that the majority (70%) of consumers are willing to pay a higher price for pasteurized milk that is manufactured purely from fresh milk, compared to powdered milk, pointing to an important market opportunity. Consumer and retailer preferences and willingness-to-pay are well aligned, suggesting that retailers have adequate information on their customers and that information asymmetry exists further upstream in the value chain. Better labeling regulations, government-backed certification, and policies that support packaging alternatives can improve information flows and strengthen the competitiveness of fresh milk value chains. Policymakers and manufacturers could also benefit from coordinating more closely with retailers as an information partner.