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Demand For Organic And Conventional Beverage Milk

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  • Glaser, Lewrene K.
  • Thompson, Gary D.

Abstract

Sales of organic milk in mainstream supermarkets have grown over the last 8 years, reaching $75.7 million in 1999, as more organic milk processors enter the market and more mainstream supermarkets sell organic products. National-level scanner data for mainstream supermarkets are employed to assess market shares and price premiums, as well as to estimate key demand elasticities. Container size is important in analyzing market shares for organics. Half-gallon containers are the principle organic market with volume shares ranging from 1.6% to 2.8% in 1999. Market shares for quarts and gallons of organic milk are considerably below 0.5%. Price premiums for organic milk averaged 60% of branded prices and 75% of private-label prices during the study period (November 1996-December 1999). Own-price elasticities suggest considerable response to lower organic prices, although the magnitude of this response declines as expenditure shares increase in later months. Cross-price elasticities indicate that organic and branded milks are usually substitutes but with considerable asymmetry in responses; branded prices affect organic purchases much more than the converse. Expenditure elasticities for organic milk imply that as milk expenditures decline, quantities purchased of organic milk will increase. Jointly, the elasticities suggest considerable response to changing retail prices.

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File URL: http://purl.umn.edu/36346
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Bibliographic Info

Paper provided by Western Agricultural Economics Association in its series 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia with number 36346.

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Date of creation: 2000
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Handle: RePEc:ags:waeava:36346

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Web page: http://waeaonline.org/
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Related research

Keywords: organic foods; beverage milk; almost ideal demand system; Demand and Price Analysis;

References

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  1. Glaser, Lewrene K. & Thompson, Gary D., 1999. "Demand For Organic And Conventional Frozen Vegetables," 1999 Annual meeting, August 8-11, Nashville, TN 21583, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Gary D. Thompson, 1998. "Consumer Demand for Organic Foods: What We Know and What We Need to Know," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1113-1118.
  3. James Eales & Catherine Durham & Cathy R. Wessells, 1997. "Generalized Models of Japanese Demand for Fish," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1153-1163.
  4. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-19, November.
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