Consumer preferences for sustainably produced ultra-high-temperature milk in China

Abstract

Contrary to ongoing declines in per capita milk consumption in the United States and Europe, per capita milk consumption in China is experiencing dramatic increases, making China one of the most dynamic global dairy markets. Meeting the rapid growth in milk demand presents environmental challenges under current dairy farm production in China. This article measures Chinese consumer valuation of environmentally sustainable milk and of correlated attributes such as food safety and geographic origin. The authors used a discrete choice experiment to collect survey data from a stratified sample of respondents in 5 cities. Applying a mixed logit demand model to the data, they estimated the probability of choosing sustainably produced UHT pasteurized milk over conventional milk, as well as consumers' willingness to pay for the sustainably produced milk. Empirical results confirm that, overall, consumers value sustainably produced milk as they are willing to pay a premium of $2.01/L, well above the cost of conventional milk. Consumer segments more likely to purchase sustainably produced milk include the young, males, and childless households, as well as those already concerned about the environment and food safety. In addition, this article also finds that consumers exhibit a strong degree of home bias in that they prefer domestic brands with domestically sourced raw milk. Valuable new knowledge is provided for policy makers, producers, and marketers interested in designing marketing strategies, and for other researchers interested in general food sustainability issues.