Food Prices
May-August 1997
13
U .S. consumers of all ages are
involved in the trend toward
eating more healthful foods.
The health consciousness has
spawned a host of food offerings
lower in fat, higher in fiber, and
even produced without chemical
fertilizers or pesticides. This in-
cludes the baby food market, as the
health concerns of parents extend to
their decisions about what foods to
place before the newest family mem-
bers.
Some consumers perceive organic
products as a safe and healthy way
to avoid potential risks of exposure
to pesticide residues in foods. Sales
of organic baby food have been
steadily increasing, and in 1995
stood at over $25 million. This was
despite a price premium of 21 cents
per jar over regular baby food.
When it comes to purchasing deci-
sions about baby food, consumers
were also willing to pay more for
other product characteristics—
notably the lack of added fillers,
such as modified starches. Con-
sumers placed a positive value on
the protein and iron content and a
negative value on fat content in
baby food.
These results are drawn from an
economic model developed by
USDA’s Economic Research Service
(ERS) to estimate what product
characteristics consumers consider
most important when they purchase
baby food. Economists have devel-
oped a characteristics demand
model where the price of products
in a category such as baby food can
be expressed as a mathematical
function of the level of different
characteristics observable in the pur-
chase decision (for example, fat
level, the presence of fillers, and
organic.) This mathematical relation-
ship allows researchers to estimate
consumer values or preferences for
various characteristics using market
prices and purchase data. This
method provides objective valuation
of characteristics because consumers
are revealing their preferences
through actual purchases, as op-
posed to focus groups or surveys
which provide subjective valuation
of characteristics. The model for this
analysis used scanner data reflecting
baby food purchases in U.S.