What's driving the organic milk market?
MetadataShow full item record
Using Nielsen Homescan data, this study intends to model consumer demand for conventional and organic fluid milk through three analyses. Heckman’s (1979) two-step sample selection model is used to investigate consumption of conventional and organic milk. The results suggest that organic households are less sensitive to changes in price than conventional households. A probit model is then employed and key findings suggest that once a household has entered the fluid milk market, income, the presence of children under the age of six, and households headed by persons under the age of forty increases the probability of entering the organic fluid milk market. Lastly, a hedonic model is constructed to estimate price premiums and discounts associated with market factors, product attributes, and branding with an emphasis on the organic attribute. Findings suggest the organic premium ranges from 28% to 119% above conventional prices depending on container size, fat content, and branding.