Consumers Will Pay 15-25% More For Some Cheese Attributes, Such As Artisan, Local
Consumers Also Willing To Pay More For Farmstead, Organic Cheese; Cheese With All Attributes Could Sell For Up To Twice As Much
Burlington, VT—Quality-seeking cheese consumers are willing to pay 15 percent to 25 percent more for each of several attributes, including farmstead, artisan, organic, local, and use of renewable energy in cheese production, according to a recent survey.
“Preferences for Farmstead, Artisan, and Other Cheese Attributes: Evidence from a Conjoint Study in the Northeast United States” was published in a recent edition of the International Food and Agribusiness Management Review. Study authors are Qingbin Wang, Ethan Thompson and Robert Parsons, all with the University of Vermont.
The study was motivated by the growing interest in on-farm production of value-added dairy products such as cheese, yogurt, butter and ice cream, and by the lack of information on the market potentials for such products.
The major purposes of this study were to examine consumer preferences and willingness to pay (WTP) for artisan and other attributes of cheese and to provide market information to dairy farmers who are interested in producing and marketing cheese as a value-added product.
Specifically, a conjoint survey was conducted in Vermont, Manhattan, and Boston to collect primary data, and the data were then used to analyze the relative importance of selected cheese attributes, assess WTP for artisan and other quality attributes, and derive marketing information and recommendations.
Conjoint analysis has been widely used in marketing research and provides a means of empirically estimating consumer preferences and WTP for attributes of a specific product.
The empirical results of the study suggest four major conclusions with what the researchers called “significant implications” for cheese marketing, especially for cheeses with special attributes such as artisan, farmstead, local, and organic.
First, although cheese consumers are not homogenous in their preferences, survey participants in this study fell into two groups: quality seekers with strong preferences for cheeses carrying designations of artisan, farmstead, local, organic, and produced with renewable energy, and a price-sensitive group whose preference ratings are influenced primarily by retail price.
Also, preferences of the quality-seeking cluster are significantly influenced by all attributes, while preferences of the price-sensitive group are significantly influenced by local designation and price. Local designation has a significant positive influence on the preferences of both groups, but the researchers said it is important to note that there are many definitions of local, and individual perceptions of what local means varies. This study defined local as produced in the same state and within 250 miles of the purchase location.
Second, quality seekers were found to be willing to pay 15 to 25 percent more for each of the attributes of farmstead, artisan, produced locally, USDA certified organic, and made using 50 percent or more renewable energy, allowing a cheese with all of these attributes to sell for approximately twice as much as a cheese with none of the attributes.
Third, quality-seeking cheese consumers can be distinguished from price-sensitive cheese consumers by socio-demographic and cheese purchasing behavior variables.
Quality seekers are found to be more likely to be younger, live in smaller households, and purchase a larger percentage of artisan and farmstead cheese than price-sensitive cheese consumers.
Quality seekers are also more likely to buy artisan and farmstead cheese at grocery cooperatives, farmers’ markets, restaurants, specialty cheese shops and through CSA shares than their price-sensitive counterparts.
Fourth, quality seekers were found to be willing to pay more for artisan cheese than for farmstead cheese. This preference may stem from a lack of clear market information regarding the specific meanings of these two designations. Indeed, in almost all cases, farmstead cheeses are of artisan quality but have the additional attribute of being made on-farm, generally providing a greater economic support to regional dairy farms, the study noted.
Both artisan and farmstead cheesemaking provide a strategy for dairy farmers to transition from fluid milk production toward diversified product lines and value-added niche markets, but the artisan designation was found to garner more market support than the farmstead designation.
This finding indicates an area for focused market attention and efforts toward consumer education about the farmstead designation, to highlight that the cheese is made on the farm and so provides the dairy farmers with the revenue benefit of adding value to their milk, the study noted.
Farmstead cheeses possess the same attributes as artisan cheeses — traditional practices, handmade techniques, and small batch size — so, with their additional attribute of small-farm support, farmstead cheese could likely realize greater market support than artisan cheese,
he study noted.
“In summary, this study found significant WTP for selected cheese attributes, including artisan, farmstead, local, organic, and use of renewable energy in production,” the study said. “Consumer WTP for these attributes translates to additional revenue potential for cheese makers who use milk from their farms or purchase milk from local farms, certify their products as USDA organic, and opt to use a label indicator when renewable energy is used during the production process.
“Regardless of the desirability of product attributes perceived by quality-seeking consumers, an associated price increase tied to each attribute will cause a segment of the market to be unwilling to pay the premium necessary to support the attribute.”
“In a dairy market that continues to experience steady losses of small and medium farms, artisan and farmstead cheese production and marketing provide an opportunity to enhance the economic viability of struggling farms, preserve traditional working landscapes, create more resilient and diversified production systems, and increase the availability of unique and exciting regional cheeses,” the study added.