Are Local and Organic Claims Complements or Substitutes? A Consumer Preferences Study for Eggs

This paper provides an analysis of consumer preferences for product claims, specifically about origin and production methods. In particular, it addresses two important questions: i) whether consumers are willing to pay a premium for food products carrying these claims; and ii) whether local and organic claims are complements or substitutes. A choice experiment designed to estimate two-way interactions was undertaken in Spain for eggs. The findings show first, that consumers are willing to pay a positive premium price for an enhanced method of production (that of barn, free-range and/or organic instead of cage produced eggs) as well as for the proximity of production (local, regional and national over imported). Second, the findings show that consumer preferences for the claims are heterogeneous with two consumer segments being identified: origin preference, the larger segment, and the production method preference. Results show that organic and local claims were complements for the larger first segment but that free-range and local/regional claims were substitutes for the second smaller segment. These results provide the marketing chains with insights applicable for pricing strategies.