Consumer ethnocentricity and preferences for wool products by country of origin and manufacture

Labelling on apparel products usually focuses on the country where manufacturing takes place, rather than where the raw materials were obtained. A choice experiment of consumers in three southern US states was conducted to determine preferences and marginal willingness to pay (mWTP) for wool blend sweaters based on fibre origin and country of manufacture. Fibre origin choices were Australia, US and US State, with the latter to investigate consumer interest in local over simply domestic. Manufacturing had two possibilities, US and China. Survey questions were used to determine an average consumer ethnocentric tendency (CET) score for each consumer, and a median split was used to place each into a High or Low CET group. Nested logit models were analysed for both groups, and mWTP estimates were computed from the coefficients. Both CET groups were willing to pay significant premiums for State-produced wool over US wool, and for US wool over Australian wool. However, the Low CET group exhibited lower premiums for fibre origins than their High CET counterparts. Ethnocentric consumers, unlike Low CET consumers, were additionally willing to pay significant premiums for wool blend sweaters knitted in the US vs. those knitted in China. Results suggest that labelling fibre by State or by US origin may allow producers to obtain substantial premiums for their apparel products. Promotion of domestic manufacturing though may only be effective for a smaller set of consumers.