By Sandra Contreras, Caitlin Lowe, and Kyle Waldie

 Another variable that can affect demand  Must differentiate product to maximize sales  Companies must assess what characteristics are valued by consumers for labeling

Need BasedMarketing Based  Health needs: Low sugar, gluten free, low sodium  The idea behind these labels is that the consumer who will purchase them must know what is in the product before the purchase can occur  Nutritional preference: Fat free, low calorie  Social preference: locally grown, animal welfare, native language labeling  Taste: Real sugar, real butter  Science&Technology: GMO, hormones, antibiotics

 Nutrition Preference  Berning et al. (2011) performed a study using health labels on microwave popcorn in the San Francisco area  Hypothesis: If the product contained a nutrition positive label sales of these healthy popcorns should increase  Result: Nutrition labels in fact decreased sales of the healthy popcorn while unhealthy popcorn products increased in sales.

 Genetically Modified Organisms (GMO)  Issue in domestic and international agriculture  Lack of knowledge, fear and moral reasons influence perceptions of GM products  Colson et al. (2011) – two studies to assess WTP for nutritionally enhanced GM foods  WTP for GM products measured through labeling

 WTP for GM food with nutrition enhancing benefits  Participants from Des Moines, IA and Harrisburg, PA participated in nth price auction  Prior knowledge/perceptions of GMO’s was assessed  Labels: Plain, Transgenic GM, and Intragenic GM  Information: Pro-biotech, Anti-biotech, and both  Results: GM > Plain, Intragenic > Transgenic

 Consumer acceptance of improved nutrient content through GM  Same experimental design  Labels: GM-Free, Intragenic GM, and Transgenic GM  Information treatments were the same  Results: Source and type of information influenced consumer demand and the premium they were WTP for the GM product. It was also shown that consumers preferred Intragenic over transgenic; there was no clear preference for GM over GM-Free  Results were measured through labeling

Broccoli Tomatoes Potatoes

 Critique of Berning et al. and Colson by Jayson Lusk (2011)  Every study can always be improved upon and Lusk points out some of the more glaring issues that he see’s with the two studies along with what he agrees with from the two studies  Lusk criticizes Colson et al. for their experiment method Confusion as to whether plain label was GM just not labeled The way and order in which information was presented biased consumers thoughts on the plain labeled product Colson et al. also simply omit relevant statistical information, but include the very same in their second paper  Lusk liked the Berning article as it used actual grocery store scanner data in a real life setting which is less likely to bias consumers and reveal true WTP and demand

1 2 3 Russet Potatoes (5lbs.) GM-FreeProduct Enhanced levels of Antioxidants & Vit. C Intragenic GM Product Russet Potatoes (5lbs.) Enhanced levels of Antioxidants & Vit. C Transgenic GM Product

 Obesity Issue – how do we control this?  Labeling – put “healthy” on the product Berning et al. (2011) found that labeling healthy popcorn decreased their sale popcorn  Policy: CA in 2011 banned the sale of soft drinks in schools  Combination approach  GMO Issue  Domestic Market: should the U.S. require labeling?  Export Market: EU requires labeling of GM products and acceptance process lags the U.S. 1-4 years

 Information Type on Labels  Berning et al. (2008) Consumer Preferences for Detailed vs. Summary Formats of Nutrition Labels  Summary label was preferred by consumers for those that read the label  What percentage of consumers even read labels?  If a large percentage does not read them why invest money in labeling?  Do people even care about making healthy choices? If not, why should we label?