AN EMPIRICAL ANALYSIS OF HOUSEHOLDS’ DEMAND FOR ORGANIC AND CONVENTIONAL FLOUR IN THE UNITED STATES: EVIDENCE FROM THE 2014 NIELSEN HOMESCAN DATA
Abstract: Rising concerns about health and food safety, the significant rise in the sales of organic products, opportunities presented by the USDA to transition to organic production, increases in the number of certified organic farms and acreage of the organic wheat, an overall increase in the production and consumption of flour, and finally, a promising rise in the consumption of organic flour serve as basis for a need for research analyzing as to who the buyers of organic and conventional flour are as well as determining the significant drivers affecting the demand for organic and conventional flour.
Using the 2014 Nielsen Homescan panel data on household purchases, the Heckman two-stage sample selection model is estimated to evaluate the impact of household demographic variables and prices on the likelihood of purchasing organic or conventional flour as well as on the quantity purchased of organic and conventional flour.
Conditional on the decision whether to buy organic or conventional flour, the estimation of the second-stage equations from the Heckman two-stage model identified the statistically significant factors of the demand for organic flour such as own price, household income, household size, age, employment status, and race. The statistically significant factors of the demand for conventional flour included own price, organic flour price, household income, household size, education level, marital status, and race.
The results of this study can assist flour manufacturers and distributors in (1) understanding current trends in the organic and conventional flour market; (2) developing products that are better tailored to consumer tastes and preferences; (3) designing various marketing strategies targeting specific demographic groups beyond their traditional consumer base; (4) developing demand forecasts to facilitate input procurement and inventory management; and (5) developing pricing strategies in order to maximize sales revenue.
Armine Poghosyan*, Rafael Bakhtavoryan, Jose Lopez, and Asli Ogunc
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