Elsevier

Food Policy

Volume 92, April 2020, 101846
Food Policy

Assessing consumer willingness to pay for Arctic food products

https://doi.org/10.1016/j.foodpol.2020.101846Get rights and content

Highlights

  • The Arctic is a unique food-producing region with the potential for location-specific premiums.

  • Domestic Arctic char from the Canadian Arctic or British Columbia is preferred to Alaskan char.

  • Consumers value wild Arctic char harvested by Indigenous fishers.

  • Certification for sustainability is preferred over certification for origin or authenticity.

  • A generalized mixed logit model accommodates scale heterogeneity in choice behaviour.

Abstract

The food industry increasingly seeks to differentiate food products based on sustainability assurances, the use of traditional or ‘authentic’ production methods, a unique origin, or an association with a distinct cultural identity, often relying on certification to enhance the credibility of a quality claim. The natural conditions of the Arctic circumpolar region, its pristine environment, and the relational tie to Indigenous cultures in many circumpolar Arctic nations, distinguish Arctic foods from other commercially available foods, however, little is known about how consumers respond to foods from the Arctic. This paper examines consumers’ perceptions of and willingness to pay (WTP) for foods originating from the Canadian Arctic, and their receptivity to certification for sustainability, authenticity, and origin in the presence of multiple credence attributes. Data from an online survey of 1342 Canadian consumers show that preferences for Arctic foods are driven by the unique geographic origin and a connection with Indigenous cultures and traditions, as well as a desire to improve social and economic conditions in northern Canada. A discrete choice experiment featuring Arctic char elicits consumers’ WTP for attributes related to origin, certification, wild vs farmed fish, and Indigenous vs non-Indigenous fishers. Random parameters logit and generalized mixed logit models allow for both preference and scale heterogeneity. The analysis informs strategies to promote the Arctic food system, both from a Canadian regional economic development context and across the broader Arctic circumpolar region. Limitations imposed by the current seafood labelling regulatory environment in Canada are noted.

Introduction

Consumers are increasingly interested in the stories that accompany their food: from sustainability assurances, to a focus on traditional and ‘authentic’ production methods, to foods from unique origins or associated with distinct cultural identities. The food industry has seized upon opportunities to differentiate food through an emphasis on specific credence attributes, often relying on certification to enhance the credibility of a quality claim. As a result, food markets are crowded with multiple quality signals and certifications, and consumers are highly heterogeneous with respect to how they respond to these quality signals (Hobbs, 2019). For new entrants to this space, including regional branding initiatives encompassing several credence attributes, understanding how consumers respond to quality assurances, the extent to which geographical origin is associated with specific credence attributes (for example, sustainability, tradition, culture) and the role certification plays in solidifying consumer demand in this multifaceted landscape is particularly relevant.

A rich literature has emerged exploring consumer willingness to pay for sustainability assurances and certifications (see for example, Grunert et al., 2014, Jaffry et al., 2004, Roheim et al., 2011, Innes and Hobbs, 2011, Roheim and Zhang, 2018). Much of this literature, however, examines these assurances in isolation, for example an assurance about sustainable fish and seafood harvesting methods, or sustainable crop production methods. A similarly rich literature has examined consumer willingness to pay for foods from specific origins, including a large number of studies on country of origin effects in food markets (see for example, Umberger et al., 2003, Loureiro and Umberger, 2007, Lim et al., 2013, Balcombe et al., 2016). In reality, however, foods from a specific region often imbue a number of credence attributes, and teasing apart which of these attributes really matter to consumers is valuable from a regional development perspective, as is understanding the role that certification plays in a multi-attribute landscape.

These issues are particularly pertinent for the Arctic circumpolar region. The natural conditions in the Arctic, the pristine environment, and the relational tie to Indigenous cultures in many circumpolar Arctic nations1, distinguish Arctic foods from other commercially available foods. Arctic foods include fish and seafood (e.g. Arctic char, Arctic shrimp, turbot, halibut), seal meat, whale, wild geese and ducks, and land-based species such as muskox, caribou (reindeer), and moose.

Consumers may associate the Arctic origin with images of a pristine environment and the natural condition. Due to the deep cycles of the seasons and specific ecological conditions, food production and processing systems in the Arctic region would not be possible unless practised in a sustainable manner (Sustainable Development Working Group, 2017). The potential exists, therefore, to differentiate Arctic foods based on their unique geographic origin, traditional harvesting methods, and a connection with Indigenous cultures. Little is known about how consumers outside the Arctic region perceive Arctic foods, what factors would motivate their purchase of these foods, and the extent to which certification of attributes such as sustainability, authenticity, and origin contributes to willingness to pay.

We examine these issues in the context of the Canadian Arctic. Drawing upon data from a Canadian consumer survey conducted in 2018, our analysis addresses three research questions:

  • RQ 1: How do consumers in markets outside the Arctic region perceive Arctic foods?

We identify purchase motivations for Arctic foods in Canada. Specifically, we seek to understand to what extent consumers perceive Arctic foods to represent a unique origin, the use of sustainable production methods, a connection with Indigenous cultures, and perceptions related to taste, quality and healthiness, as well as potential impacts on the Arctic environment and economy.

  • RQ 2: What attributes are important to consumers when purchasing Arctic foods?

We explore whether there are opportunities to market Arctic foods based on their unique origin, and the role for certification of specific attributes. As with many other nations in the Arctic circumpolar region (e.g. Norway, Sweden, Finland, Iceland, Denmark (Greenland), U.S. (Alaska)), fish and seafood products represent a significant portion of commercial food production in the Canadian Arctic (Sustainable Development Working Group, 2017). Arctic char is one of the major commercial fisheries in the Canadian Arctic (along with Greenland halibut and northern shrimp). We implement a hypothetical choice experiment featuring a purchase scenario for Arctic char products to understand consumers’ preferences for different product and certification attributes, including geographic origin, farmed Vs wild harvesting methods, Indigenous vs non-Indigenous producers, certification schemes, and price.

  • RQ 3: Are consumers willing to pay a premium for Arctic foods (Arctic char), and does certification matter?

Developing new markets for Arctic foods requires the existence of promising consumer segments who embrace these foods. Drawing upon advances in willingness-to-pay (WTP) methodologies, we assess consumers’ WTP values for Arctic char attributes, along with certification for sustainability, authenticity, or origin, based on stated preference data collected in the choice experiment.

The paper makes two contributions to the literature. First, we provide insights into consumers’ acceptance of Arctic foods, thereby informing strategies to promote the Arctic food system, both from a Canadian regional economic development context and across the broader Arctic circumpolar region. Second, we contribute to the literature on consumer willingness to pay for certification by examining certification for sustainability, authenticity, and origin in the presence of multiple credence attributes.

The remainder of the paper is organized as follows. The next section describes commercial food production in the Canadian Arctic and the broader Arctic circumpolar region. Section 3 reviews pertinent literature on consumer food choices in the context of Arctic food attributes. Section 4 presents the research methodology, beginning with the design of the consumer survey, including the choice experiment, followed by descriptive statistics of the survey sample. We then present the specification of the econometric models used to evaluate willingness to pay – multinomial logit, random parameters logit and generalized mixed logit models. Section 5 presents results of the empirical analysis on consumer perceptions of Arctic foods and willingness to pay for Arctic char and certification attributes. The paper closes with a discussion of policy and industry implications in Section 6.

Section snippets

Commercial food production in the Canadian Arctic

Once limited by geographical distance and challenging environmental conditions, the Arctic circumpolar region is now recognized as a site of considerable economic potential. This potential has been made possible in large part by the effects of climate change and the ice-free conditions that are opening up new opportunities for northern transport. New technologies for accessing and utilizing the Arctic’s natural resources are also being developed in order to keep pace with global demand (Staffas

Consumer food trends and Arctic foods

Arctic food products seem well aligned to current food trends regionally and globally, representing food that may be perceived as clean, natural, ethnic, healthy, sustainable, exotic, genuine, and small-scale (Sustainable Development Working Group, 2017). Previous research has examined the influence of these factors in other contexts and informed the current research design. The origin of food products is noted as an important factor in consumers’ food choices (Balcombe et al., 2016, Lim et

Survey and choice experiment design

To determine how consumers respond to foods from the Arctic an online survey of Canadian consumers was conducted in 2018 featuring a discrete choice experiment (DCE). Consumers’ responses to the Canadian Arctic as a food-producing region, and the potential role for Arctic food certification were primary considerations in developing the survey instrument3. The questionnaire consists of several sections, beginning with

Perception of Arctic foods

The survey gathered attitudinal data that address our first research question (RQ1) “How do consumers in markets outside of the Arctic region perceive Arctic foods”. Many respondents indicated an interest in food inspired by Indigenous cultures, with 78.5% indicating they are very or somewhat willing to try Indigenous-inspired foods (Fig. 2a). A vast majority (86.2%) indicated they were willing to buy foods sourced from the Canadian Arctic (Fig. 2b). Consumer interest and acceptance, however,

Conclusions

The insights into consumers’ acceptance of Arctic foods inform strategies to promote the Arctic food system, both from a Canadian regional economic development context and across the broader Arctic circumpolar region. In this vein, we examine three fundamental questions related to Arctic foods. First, we find that the uniqueness of geographic origin, a pristine environment, cultural connection with Indigenous peoples, as well as the potential to promote regional economic development, are strong

Declaration of Competing Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgements

This research was made possible by the funding support of Circumpolar Affairs, Crown-Indigenous Relations and Northern Affairs, Canada. We gratefully acknowledge the support of Sarah Cox, Anthony McDermott, and members of the Arctic Council’s Sustainable Development Working Group.

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