Australian consumers' willingness to pay and willingness to purchase a hypothetical lower cholesterol pork product

Abstract

The Australian pig industry is experiencing a period of declining slaughter numbers while facing increasing competition from imports. Simultaneously, the developed world is undergoing what has been described as an 'obesity epidemic', with associated health problems increasing market demand for 'low fat', 'cholesterol reduced' and other 'health enhanced' products. The Pork Cooperative Research Centre recognises the potential that this growing market may offer the Australian pig industry and has R&D projects underway that aim to reduce the cholesterol content of pork. This study investigated whether there would an increase in consumer willingness to pay and purchase if reduced cholesterol pork was introduced to the Australian market. A stated choice analysis was used, with the following questions addressed. How are current purchases of fresh pork affected by concerns about cholesterol content? What financial premium, if any, would consumers place on reduced cholesterol pork? Would consumers buy more pork if a low cholesterol option were available? Is there a group of consumers, such as those with high cholesterol, who have an increased willingness to pay for or purchase reduced cholesterol pork when compared to consumers without this health problem? An online survey with 861 participants conducted in mid 2009 was used to gather data on consumer willingness to pay and purchase, and these stated choice results were analysed with the use of Pearson's Chi-Squared test. The results indicated that at present the majority of consumers are relatively unconcerned about the cholesterol content of fresh pork and that there is a minimal effect of such concerns on fresh pork purchases. However, a niche market was identified: a group of consumers who currently reduce purchases of fresh pork because of concerns about the cholesterol content had a significantly higher willingness to pay than other respondents to the survey, and had a distinctive set of socio-demographic characteristics and shopping habits. The results also predicted a significant financial premium for the reduced cholesterol product at the retail level, with increased willingness to pay for and consume reduced cholesterol pork by the average pork consuming family. Based simply on what these surveyed consumers said they would do, the possible increase in demand for pork that was low cholesterol by the average pork consuming family was up to 32 per cent and they could spend up to 43 per cent more than they currently do with regular pork. Willingness to pay was found to be significantly higher for females and those aged 65 and above. However, as these results are the product of a stated choice analysis and not a revealed preference study, and therefore simply reasonable expectations, it is likely that the reported increase in demand in both quantity and price by potential consumers is overstated to some extent.