1. Willingness to pay for functional foods: Experimental results from France and Quebec Maurice Doyon Lota Dabio Tamini Laure Saulais Journée du Pôle Parisien Alimentation Analyse des choix alimentaires et méthodes expérimentales

2. Outline of the presentation 1.Background 2.Research objectives 3.Methodology 4.Results 5.Discussion

3. Background Link between food and health Ageing of the population Favorable context for the development of functional food Information on willingness to pay for functional food is scarce

4. Background Existing information on consumer preferences for functional food products is mostly revolving around perceptions and attitudes Some studies about willingness-to-pay for functional food products : - gathered mostly through surveys - no link to functionality intensity or to information level

5. Objectives To measure the willingness to pay for functional food products according to the functional intensity and under different information conditions.

6. Objectives Specific research questions: Are participation and willingness to pay impacted by The level of information given and by the functional intensity of the product ? Individual variables (health status, demographic and social variables) and cultural background (France vs Quebec)? The interaction effect between level of information given and cultural background and between functional intensity and cultural background?

7. Methodology The methodology used to meet the objectives is experimental economics ( homegrown value) Experimental economics is believed to be superior to surveys in two ways: 1.links consumers’ intentions and their real behavior in purchasing situation (desirability bias and consequentiality) 2.allows for greater control than surveys

8. Methodology Experimental sequence: 1.Participants are asked to fill a short survey containing health and socio-economics questions. 2.Participants are familiarized with a 4 th price auction Oral explanation of the optimal strategy with an example. Two practice rounds with chocolate bar (real transaction) and explanation of the optimal strategy.

9. Methodology Fourth price auction

10. Methodology Experiment sequence: 3.Participation to twelve 4 th price auctions: 4 types of yogurts and 3 different levels of information. 4.Participants are asked to fill a short questionnaire on their perceptions on food.

11. Methodology Experiment detail: Four types of yogurts are auctioned: 1.Traditional 2.Bifidus 3.Omega-3 4.Phytosterol (by intensity order) For each type of yogurt, there are three levels of information: 1-minimal, 2-normal, 3-specialized.

12. Methodology Experiment detail: Among the resulting 12 auctions, three are randomly selected. Real transactions occur only for the selected auctions. Simulations took place in Grenoble (France) (93 participants in 2006) and Montreal (89 participants in 2007) Participants were yogurt consumers selected from the general population

13. Results Level of informationmarket price Functional intensity price offered participation Demographic and social variables

14. Sample comparisons

18. Participation : total sample

19. Impact of some variables on participation probability Logit model, individual as a random effect: VariablesCoefficient (variance)P>|z| Quebec0.609 (0.253)0.016 Traditional2.521 (0.195)0.000 Bifidus1.001 (0.151)0.000 Omega-31.187 (0.154)0.000 Information: minimal (1)0.397 (0.138)0.004 Information : normal (2)0.754 (0.143)0.000

20. Participation : Grenoble

21. Participation : Montreal

22. Analysis of variance Proc MIXED with SAS Yijk= μ + αi + βj + (αβ)ij + ξijk Where Y y is price offered or market price μ reference parameter αi effect of the information level i, i= 1,2,3 βj effect of the functional intensity j, j= 1,2,3,4 (αβ)i jinteraction effect ξijk (residual error)

23. Impact of information and functional intensity on WTP EffectF-ValuePr >F Product 32.48<0.0001 Information 27.7<0.0001 Product * Information 10.00<0.0001 Type III tests of fixed effects

24. Impact of functional intensity : total sample T T T B B B O O O ST

25. Impact of information level : Total sample

26. Impact of information and functional intensity on WTP : bidding behavior in France and in Quebec EffectWhole sample GrenobleQuebec Product <0.0001 Information <0.0001 Product * Information <0.00010.0004<0.0001 Type III tests of fixed effects - Pr >F

27. Impact of functional intensity : Montreal

28. Impact of functional intensity : Grenoble

29. Impact of information level: Montreal

30. Impact of information level: Grenoble

31. Impact of information and functional intensity on WTP : a specific country effect ? Type III tests of fixed effects - Pr >F EffectFPr >F Information32.31<0.0001 Product27.75<0.0001 Country00.040.8433 Information* Product09.83<0.0001 Country*Product00.690.5553 Country*Information01.470.2292

32. Average offered prices, by increasing order, in dollar Total sampleGrenobleMontreal T12,35T1 2,34 T1 2,36 T22,59T2 2,63 T2 2,56 B12,71B1 2,73 ST1 2,63 ST12,79B2 2,86 B1 2,68 T32,87O2 2,87 ST3 2,83 ST32,90T3 2,91 T3 2,83 O12,90O1 2,93 O3 2,85 O32,91ST1 2,94 O1 2,88 O22,93O3 2,98 O2 2,98 B22,98ST3 3,01 B2 3,09 B33,24B3 3,12 ST2 3,26 ST23,25ST2 3,23 B3 3,37

33. Impact of socio-demographic variables If we add to the previous model Gender, Age Income, Education Presence of children BMI Y(t) = μ + αi + βj + (αβ)ij + ωn + (αω)in +(αω)nj +(λt)k + (λt)a (λt)b+αi (λt)k + βj(λt)k + ωn (λt)k +ξ(t)

34. Complete model Effect testedF ValuePr > F Product3.510.0147 Product*information10.13<.0001 BMI2.870.0903 Age3.480.0310 Product * Age2.490.0212 Product * Gender2.170.0902 Product * Income1.920.0457 Information*BMI3.770.0234 Information*Income2.410.0253 Type 3 Tests of Fixed Effects, significant variables reported

35. Relation between age and price offered

36. Relation between price offered and age * product

37. Relation between price offered and BMI*information

38. Relation between price offered and BMI

39. Discussion The variable Country and its interaction (information, product) has no significant impact on price offered Country only impact on the probability to participate : French consumers seem less likely to participate in auctions for functional yogurts than Quebec consumers

40. Discussion Both the level of information and the functional intensity have an impact on WTP. The perceived functionality (interaction) impact on WTP BMI and age have a significant impact on WTP

41. Discussion Willingness to pay of younger and healthier participant increases with functionality intensity. But more information favors low intensity products and reduces willingness to pay for high intensity products. Willingness to pay of older and less healthy participant increases with the intensity of functionality, but their status reduces the information sensitivity for high intensity products.

42. Discussion WTP is the highest among «late» baby boomers (1950-69). Especially for the vegetal sterol product Gender, education, income and the presence of children in the house have no significant impact on WTP (for some products gender has a marginal significant effect)

43. Discussion Traditional and Bifidus yogurts seem to have the most to gain from more information Omega-3 is the less sensitive to information Vegetal sterol, the most to lose from information

44. Discussion Specialized level of information reduces willingness to pay, in average Specialized level of information reduces the probability of participation even further Governments have to make sure that the right information is available to consumers

45. Thank you for your attention! Maurice Doyon Professeur titulaire Directeur du programme de maîtrise Département d’économie agroalimentaire et des sciences de la consommation Université Laval Tél. : (418) 656-2131 poste 4546 Téléc. : (418) 656-7821 Courriel maurice.doyon@eac.ulaval.ca