<%BANNER%>

Consumer Knowledge and Preference for Western Food

Permanent Link: http://ufdc.ufl.edu/UFE0045532/00001

Material Information

Title: Consumer Knowledge and Preference for Western Food a Case Study of China's Orange Juice Market
Physical Description: 1 online resource (54 p.)
Language: english
Creator: Chen, Xuqi
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2013

Subjects

Subjects / Keywords: china -- demand -- juice -- orange
Food and Resource Economics -- Dissertations, Academic -- UF
Genre: Food and Resource Economics thesis, M.S.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: With increasing income per capita, Chinese consumers have not only increased their demand for almost every agricultural product, but also have experienced a change in consumption patterns. With a quickening pace of life, more consumers begin turning to more convenient western food products, such as pizza, fried chicken, sandwich, fruit juice and etc., to both save time and meet nutritional needs. For instance, the increase of orange juice in China is very significant and attractive to the world’s largest orange juice producers such as the United States and Brazil. In order to decide the types of orange juice products that best satisfy Chinese consumers’ all kinds of needs, a mall intercept survey was conducted to investigate Chinese consumer knowledge, perceptions, consumption patterns and willingness to pay (WTP) for orange juice products. The survey contains 1,454 participants and about 980 responders eligible for final statistical analysis. The results showed that most Chinese people have some limited knowledge and biased perceptions of orange juice. Although they are willing to pay more for higher quality orange juice, they may lack the ability to distinguish it from the lower quality one.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility: by Xuqi Chen.
Thesis: Thesis (M.S.)--University of Florida, 2013.
Local: Adviser: Gao, Zhifeng.
Local: Co-adviser: House, Lisa Ann Offenbach.

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2013
System ID: UFE0045532:00001

Permanent Link: http://ufdc.ufl.edu/UFE0045532/00001

Material Information

Title: Consumer Knowledge and Preference for Western Food a Case Study of China's Orange Juice Market
Physical Description: 1 online resource (54 p.)
Language: english
Creator: Chen, Xuqi
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2013

Subjects

Subjects / Keywords: china -- demand -- juice -- orange
Food and Resource Economics -- Dissertations, Academic -- UF
Genre: Food and Resource Economics thesis, M.S.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: With increasing income per capita, Chinese consumers have not only increased their demand for almost every agricultural product, but also have experienced a change in consumption patterns. With a quickening pace of life, more consumers begin turning to more convenient western food products, such as pizza, fried chicken, sandwich, fruit juice and etc., to both save time and meet nutritional needs. For instance, the increase of orange juice in China is very significant and attractive to the world’s largest orange juice producers such as the United States and Brazil. In order to decide the types of orange juice products that best satisfy Chinese consumers’ all kinds of needs, a mall intercept survey was conducted to investigate Chinese consumer knowledge, perceptions, consumption patterns and willingness to pay (WTP) for orange juice products. The survey contains 1,454 participants and about 980 responders eligible for final statistical analysis. The results showed that most Chinese people have some limited knowledge and biased perceptions of orange juice. Although they are willing to pay more for higher quality orange juice, they may lack the ability to distinguish it from the lower quality one.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility: by Xuqi Chen.
Thesis: Thesis (M.S.)--University of Florida, 2013.
Local: Adviser: Gao, Zhifeng.
Local: Co-adviser: House, Lisa Ann Offenbach.

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2013
System ID: UFE0045532:00001


This item has the following downloads:


Full Text

PAGE 1

1 CONSUMER KNOWLEDGE AND PREFERENCE FOR WESTERN FOOD: A CASE STUDY By Xuqi Chen A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENT S FOR THE DEGREE OF MASTER OF SCIENCE MASTER OF SCIENCE UNIVERSITY OF FLORIDA 2013

PAGE 2

2 2013 Xuqi Chen

PAGE 3

3 ACKNOWLEDGMENTS I would like to take thi s opportunity to express my sincere gratitude to those who have helped me in the way of ac complishin g this important goal. At first place I would like to give my thank s to the Food and Resource Econo mics Department for offering me the professional training. Without its support, nothing could be possible. Most gratefully, I would to give my app reciation to my major professor Dr. Gao, Zhifeng for his tremendous support, help and encouragement throughout this fruitful and wonderful journey It would not hav e been possible without his advice and guidance to fulfill all the achievements His pati enc e and kindness have impressed me so deeply. He is a friend and a mentor who I have always believed in. Additionally, my great thanks go to my co chair professor Dr. House, Li sa. She has offered remarkable guidance and helps in various aspects such like sol ving my study program, giving me instructions and giving me encouragement. Besides, my thankfulness also goes to my committee member, Dr. Zhihua Su for her suggestions and help in the software and models. Although they are not on my committee, my thank s al so go to Dr. Steven M. Slutsky, Dr John J. tremendous helps and instructions given to me. Besides, I would also thank my fellow friends and graduate classmates here in Gainesville for their help s which m ake my lif e here much mo re enjoyable and fun At last, I would like to give my most grateful appreciation to my parents for their supports and loves.

PAGE 4

4 TABLE OF CONTENTS page ACKNOWLEDGMENTS ................................ ................................ ................................ ........... 3 LIST OF TABLES ................................ ................................ ................................ ...................... 5 LIST OF FIGURES ................................ ................................ ................................ .................... 6 LIST OF ABBREVIATIONS ................................ ................................ ................................ ...... 7 ABSTRACT ................................ ................................ ................................ ............................... 8 CHAPTER 1 INTRODUCTION ................................ ................................ ................................ ............... 9 2 LITERATURE REVIEW ................................ ................................ ................................ ... 15 Prior Studies of Western Convenience Foods in China ................................ ....................... 15 Factors Influencing Demand for Orange Juice ................................ ................................ .... 18 3 DATA ................................ ................................ ................................ ................................ 22 4 MODEL ................................ ................................ ................................ ............................. 24 5 RESULTS ................................ ................................ ................................ .......................... 26 Demographics of Participants ................................ ................................ ............................. 26 Consumer Knowledge of Orange Juice ................................ ................................ ............... 26 Consumer Perception and Attitudes toward Orange Juice ................................ ................... 29 WTP for Different Kinds of Orange Juice ................................ ................................ .......... 30 Factor Affecting Consumer Knowledge, Expenditure on Orange Juice and WTP ............... 31 6 CONCLUSION ................................ ................................ ................................ .................. 47 LIST OF REFERENCES ................................ ................................ ................................ .......... 51 BIOGRAPHICAL SKETCH ................................ ................................ ................................ ..... 54

PAGE 5

5 LIST OF TABLES Table page 5 1 S ample demographic descriptive statistics ................................ ................................ ..... 36 5 2 Statement testing knowledge of fruit juice ................................ ................................ ..... 36 5 3 nowledge of orange juice ................................ ............... 37 5 4 ................................ .................. 38 5 5 Statement testing perceptions of orange juice ................................ ................................ 38 5 6 Result for testing significance of variables ................................ ................................ ..... 38 5 7 Parameter results of regression of consumer knowledge ................................ ................. 38 5 8 Parameter results of regression of expenditure on juice/juice drink last month ............... 39 5 9 Parameter results of regression of WT P for 10% OJD ................................ .................... 39 5 10 Parameter results of regression of WTP for 100% FCOJ ................................ ................ 40 5 11 Parameter results of regression of WTP for 10 0% NFC ................................ ................. 40 5 12 Parameter results of regression of marginal WTP between 10% OJD and 100% FCOJ ................................ ................................ ................................ ............................. 40 5 13 Parameter results of regres sion of marginal WTP between 100% FCOJ and 100% NFC ................................ ................................ ................................ .............................. 41

PAGE 6

6 LIST OF FIGURES Figure page 1 1 Total orange juice consumption of major countries (Unit: 1, 000 metric tons at 65 degrees brix ) ................................ ................................ ................................ .................. 14 5 1 Frequency of consuming orange juice last month (percentage) ................................ ....... 41 5 2 Basic knowledge of fruit juice ................................ ................................ ....................... 42 5 3 Basic knowledge of definition of different types of orange juice ................................ .... 42 5 4 Answers of recognition of orange jui ce ................................ ................................ .......... 43 5 5 Distribution of index of knowledge ................................ ................................ ................ 43 5 6 Perceptions of fruit juice ................................ ................................ ................................ 44 5 7 Perceptions of orange juice ................................ ................................ ............................ 44 5 8 Average WTP for each type of orange juice (RMB) ................................ ....................... 45 5 9 Recognition of o range juice ................................ ................................ ........................... 46

PAGE 7

7 LIST OF ABBREVIATIONS FDOC Florida Department of Citrus FCOJ From Frozen Concentrated Orange Juice FSOJ Fresh Squeezed Orange Juice MT Metric Tons NFC Not From Concentrate Orange Juice OJD Orange Juice Drin ks with less than 100% juice OLS Ordinary Least Square ROJC Refrigerated Orange Juice from Concentrate WTP WTP

PAGE 8

8 Abstract of Thesis Presented to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Science CONSUMER KNOWLEDGE AND PREFERENCE FOR WESTERN FOOD: A CASE STUDY OF C By Xuqi Chen May 2013 Chair: Zhifeng Gao Cochair: Lisa House Major: Food and Resource E conomics With increasing income per capi ta, Chinese consumers have not only increased their demand for almost every agricultural product, but also have experienced a change in consumption patterns. With a quickening pace of life, more consumers begin turning to more convenient western food produ cts, such as pizza, fried chicken, sandwich, fruit juice etc ., to save time and meet nutritional needs. consumption gain attraction from many international food exporters. For instance, the increase of oran producers such as the United States and Brazil. In order to decide the types of orange juice ey of 1,454 participants was conducted to determine Chinese consumer knowledge, perceptions, consumption patterns and willingness to pay (WTP) for orange juice products. R esults showed that most Chinese consumers have limited knowledge and biased perceptio ns of orange juice. Although they are willing to pay more for higher quality orange juice, they may lack the ability to distinguish it from the lower quality one.

PAGE 9

9 CHAPTER 1 INTRODUCTION With a huge population of over one billion and a rapidly growing ec onomy, the People s Republic of China has been a new land for western food industries to exploit a n d discover. The increasing purchasing power and China s huge population indicate an incredibly large potential market for western food producers; especially in those areas where China s domestic industries are not well developed such like the convenience food industries. Additionally, China s entry into the World Trade Organization (WTO) in 2001 facilitated the opening of its market and gave western companies convenient access (Tacconelli et al. 2009) The agricultural product exporters have greeted a booming demand from China. By one report of U nited States Department of Agri culture (USDA) China surpassed Mexico to become the second largest market for U.S. agricultural exports in 2010 with a total c onsumption of $15.1 billion of America made agricultural products ( Interna tional Agricultural Trade Service 2010 ) On the other hand, with the rapid growth in econom y and increasing income per capita, Chinese consum ers not only increase the demand for almost every agricultural product but also experience a change in consumption pattern s One obvious change is that Chinese people consumed more high fat food like dairy products, meats oils fruits and vegetables but f ewer staples like rice and flour than before ( Fan and Agcaoili Sombilla 1997 ; Guo et al., 2000 ). Besides, Chinese consumers are increasing their consumption of western foods, especiall y western convenience foods, including both meals pre packaged food fr om fast food restaurant s and pre prepared western food like pizza from Wal Mart (Veeck & Veeck, 2000). R estaurants such like McDonalds, KFC and Pizza Hut that serv e western style foods have successfully opened their market in China. For instance, KFC, the most popular western restaurant in China now ha s over 3 000 locations by 2012. Even Pizza Hut that entered Chinese

PAGE 10

10 market very late now has over 560 locations by 2012. The increasing appearance and success of western restaurant indicted the great changes in both food consumption patterns and life style s Besides changes in consumption patterns brought by the influx of western fast food restaurants vegetables fruits, meats and non alcoholic beverages account for the majority of Chinese expenditures in gro cery stores (Bhandari & Smith, 2000). The Chinese consumption patterns now provide western food products with great opportunities For instance, although China is still the world largest consumer of fresh orange s generally the consumption of orange jui ce in China increased by 42.86% from 200 7 to 201 2 while the consumption of fresh orange only increased by 21.72% in the same time period. Despite the rapid increase in orange juice consumption, the annual consumption per capita in China is 10.1 liters, wh ich is much lower than Russia (20.1 liters per person) and the United S tates (30.3 liters per person). O range juice continues to lead the juice market despite the declining market share of all kinds of fruit juice from 2008 with 57 percent to 2011 with 47. 2 percent ( Global Agricultural Information Network 2012 ) T he increasing demand and changing consumption patterns in China indicate potential opportunities in the orange juice market of China for global orange juice exporters. It was pointed out by USDA Annual Citrus Annual China (2012) that the production of frozen concentrated orange juice (FCOJ 1 ) and not from concentrate (NFC 2 ) reached 25,000 metric tons (MT) (converted into a Brix value of 65) in China in MY2011 /12 (October September). Although this was an increase of 80 perce nt compared with the previous year, domestic supplies 1 FCOJ: Is orange juice obtained from concentrated orange juice (COJ) that is reconstituted with water. COJ is orange juice made by removing, through evaporation, th e water from the orange juice of fresh, ripe oranges that have been squeezed in extraction machines. 2 NFC: Is orange juice processed and pasteurized by flash heating immediately after squeezing the fruit without removing the water content from the juice.

PAGE 11

11 for which the imported juice account for about 75% of total juice consumption in China As a result, ket may continue to depend largely on imports because of domestic supplies of the varietal oranges for juic e production B everage companies were expected to source more imported FCOJ to accommodate the escalating demand for juice and juice beverages in China The increasing consumption of orange juice in China is likely the result of a combination of factors, i.e. increasing income, changes in lifestyle and convenient access to a variety of brand options (Abbott 1990) Other than income, the changes in lifestyle of Chinese consumers might play a very important role in the structural changes to the consumption With the rapid pace of life, more consumers may choose to substitute fresh fruit with more convenient products, such as fruit juice, t o save time and meet their demand for nutrients. Additionally, orange juice wins over soft drinks is the result of people considering health outweighs price (Granato et al. 2010) This is another factor that likely leads to the increased consumption of ora nge juice. In addition, western fast and convenience food products are in fashion in China. Chinese consumers can show their social status by consuming western food as the symbol of powerfulness and wealth ( Sklair 1994) Since China has had a rapid and sus tained growth in gross domestic product about 9% annual rate since 197 9 (Morrison 2009) Chinese consumers are wealthi er than ever. The enlarged purchas ing power enables Chinese consumers to purchase th e more expensive beverage s like imported orange juice. T he increasing demand for fruit juice is very attractive to world largest or ange juice exporters such as the United States, Brazil and others. Increas ed demand for fruit juice of China will not only benefit juice producers but also fruit growers due to the increased demand for raw

PAGE 12

12 materials from the juice processors However, i t is critical for the exporters to provide the right type of products to satisfy consumer demand otherwise excessive supply will incur loss for the exporters, producers as well as gr owers. T he fruit juice market is complicated by the diversity of pr oduct types in the market. For instance, orange juice products are classified as fresh squeezed orange juice (FSOJ 3 ), NFC, from FCOJ, and orange juice drink s with less than 1 0 0% juice (OJD 4 ). Although some consumer s may not know the difference among those different types of orange juice products, the production and shipping cost differ significantly. For instance, NFC orange juice has been a major type of orange jui ce served on the American dining table for a couple of years. Although NFC orange juice has always been favored for its high quality of being freshly produc ed and have a natur al taste, its high production and shipping cost made it beatable when competing with other cheap er orange juice. W orldwide, NFC orange juice seem s to be more popular in the high er income regions and countries such as European Union Japan and Canada besides the United States ( Figure 1 1) Because China has sustained a n economic growth and become the second largest economy in the world, China may have potential to develop this relatively new kind of orange juice market Therefore, it is essential for the worldwide and the U.S. juice producers to have a better understanding of Chinese consumer current k nowledge as well as their attitude and WTP for different type s of juice products This is particularly true for country like China where juice market is at its young age and consumers may probably have little knowledge to differentiate the somewhat confusi ng juice products. 3 FSOJ: Is orange juice squeezed from fresh fruit and packaged in paper cartons, glass or plastic containers, without being pasteurized. No additional water or other ingredients are added. 4 Is sweetened beverage that is made from diluted orange juice cont aining no less than 10% orange juice content with other ingredients added such as sweetener and acidulant.

PAGE 13

13 The objective of the study is to have a better understanding of current Chinese orange juice market and determine Chinese consumer knowledge, consumption habits and perception of different types of orange juice, with an emphasis on cons umer WTP for different types of orange juice. The determination of Chinese consumers knowledge, perception and WTP for different types of orange juice, could provide valuable information on Chinese people s new consumption habit s and lifestyle. In additio n this study can offer useful references to the U.S. and the world major orange juice producers who are interested in the development of citrus juice market in Chin a It also p rovid es valuable information for world major juice exporters to better balance their plans and adjust their strategy in this young and pre mature market. Moreover, this study can be used as a basis of further research to build a more in depth and conclusive study of orange juice market in China

PAGE 14

14 Figure 1 1. Total orange juice con sumption of major c ountries (Unit: 1,000 metric tons at 65 degrees b rix )

PAGE 15

15 CHAPTER 2 L ITERATURE REVIEW The re have been some prior studies on western convenience food s in China and factors that influenced Chinese food preferences. The majority of those rese arches mainly focused on consumption habits and consumption patterns. This literature review starts with the previous research on western food consumption in China, followed by those prior studies on factors influencing Chinese preference of western conven ience foods and at last preference of orange juice. Prior S tudies of Western Convenience F oods in China KFC was the first western fast food chain that arrived in China in 1987 and now is the most popular one in China. By the end of 2010, there were 2,100 K entucky Fried Chicken (KFC) restaurants in 459 cities. This number comes to over 3,000 by the end of 2012 and KFC is still opening new sites across the country. Besides the great success of KFC, Pizza Huts and McDonald s are also very successful in China. Veeck and Veeck (2000) used the survey data of 150 household primary shoppers in Nanjing, China collected in 1993 to study the changes in Chinese food consumption patterns By clustering the respondents into convenience shoppers, frequent shoppers, and tra ditional shoppers their results showed that those convenience shoppers who were mostly younger, single, primarily male adults with above average incomes would purchase more convenience foods than the other two groups. However, those mid class younger p art icipants who go t married which made the majority of frequent shoppers also ate out and consumed convenience food at a considerable frequency (Veeck & Veeck 2000) Hu and Duval (2003) conducted a study on the food consumption patterns of Chinese who lived i n the United States. They collected the data by interviewing Chinese consumers in

PAGE 16

16 four major American cities: New York, Chicago, Los Angeles and Miami. The results showed that the participants consumed an increasing amount of convenience food, such as hamb urgers, pizza etc in the United States. However, the most participants claimed that they ate convenience food not because they preferred it, but because of the time saved from convenience food. The data also showed that almost half of the interviewees inc reased their consumption of convenience food after they came to the United States. Hu and Duval concluded that the advantages of western convenience food somewhat outweighed the custom and tradition when preparing time is a significant value to the partici pants. To examine why the western convenience food is so popular and successful in China, many researchers examine factors influencing behaviors of the Chinese consumers. With the rapid pace in China, Sklair (1994) and Watson ( 2006 ) argued that this trend is the result of increased incomes and the easy access to a larger variety of food options besides the lifestyle changes. They also pointed out that western food and culture are in fashion because Chinese consumers viewed foreign brands as symbols of socia l status and an indicator of even drinking star bucks when shopping are all symbols of social status (Sklair 1994). The phenomenon will continue going on and the c onsumption for western convenience food will continue increasing not only due to its convenience but also because of the status value. Jussaume (2001) conducted a study of 5 42 households in Qingdao, China with a focus on household food consumption patterns. In this study, Jussaume divided the whole sample into two categories: modern one and traditional one according to their consumption pattern of meat and fresh fruits, assum ing meat and fresh fruits were modern foods in China at that time. The results

PAGE 17

17 showed that people with higher income were more likely to buy a higher percent of meat and better quality fresh fruits as showed in the modern group, while the low income consum ed lower level of meat and fruits as showed in the traditional group. Bhandari and Smith (2000) also concluded that there was a significant link among education, income and consumption patterns. The studie s of Jussaume (2001) and Veeck and Veeck (2000) als o concluded that an increasing frequency of eating out and increasing consumption of snack foods accounted for the increasing consumption of western style convenience foods. Western fast food restaurants not only provided the most convenient food service, but also attracted people by promoting themselves as excellent places for socialization Serving a lot of popular snack foods and attractive for dining out, western fast food restaurants grow more and more popular and on of western convenience food. Chinese consumers preferring western convenience food has other reasons. According to the study of Shone, Nobuhiro, and Kaiser (2000), success of western style convenience foods were changeable in functions but unchanged in quality. For instance, KFC in China acted as meeting and party locations where people could stay for hours, with much more functions than that in the United States where the restaurant is just a place for people to get fast food and would at most stay for minutes. Those changeable functional characteristics brought prosperous life to Marr and Hatfield (2001) conducted a survey in Shanghai to investigate the brand value effect on consumption. By interviewing the Chinese consume rs in Shanghai, they concluded that brand loyalty was a factor that contributed to the popularity of western convenience food. They focused on western snacks and noticed that Pringles potato chips were the most popular potato chips in Shanghai although the ir prices were higher than the domestic brand chips. The loyal

PAGE 18

18 customers continued to purchase Pringles chips rather than others in spite other brands might advertise more frequently. Curtis et al. (2007) investigated the consumer preference for western s tyle convenience foods through a survey by choosing convenience sample of 599 consumers in Beijing, China. The study mainly focused on three kinds of representative western style convenience food: French fries, potato chips and mashed potatoes. The results of analysis show that significant variables that influenced French fries consumptions included gender, income level, marital status, and existence of children in the household. The opinion that western foods are equally healthy or healthier than tradition al Chinese foods and western foods taste no worse than traditional Chinese foods also counts (Curtis et al. 2007). While in general, gender and positive opinions on taste superiority of western foods remarkably leads to the increased consumption of all thr ee potato products. To sum up, the western convenience food industries are developing very fast in China. There are several factors facilit ate this popularity, including the advantages of convenience food itself, hinese consumption habits and patterns. F actors I nfluencing D emand for Orange J uice and orange juice might be a convenient substitute of fresh oranges. F actors influencin demand for orange juice has been investigated extensively A mainly interest was on the impact of various factors that may decrease or increase the demand for orange juice. In general, the possible variables that may affect the demand for orange juice include prices of orange juice, prices of substitute beverage, household income, seasonality, brands, demographics and advertising (Davis et al. 2008). Of those factors, advertising is significantly important in some

PAGE 19

19 situations (Ward 1978). The foll owing literature review mainly focuses on the factors that have a significant influence on demand for orange juice. Davis et al. (2008) used the ACNielsen data to determine the impact of demographics on consumer demand for orange juice. They firstly built the model using total orange juice gallons as dependent variable and and per capita income, percent age of Black, Asian, and Hispanic as explanatory variables ( Davis et al. 2008). They also added nine intera ction terms into the model for the first run. Davis et al. concluded that income, price of orange juice and substitutes were significant regressors The outcome also indicated that there was difference in demand of orange juice when there were changes in e thnicities. For the cities with higher percentage of Black and Hispanic, there was less demand for orange juice while the opposite stood for cities with higher percent of Asians. In the United States, about 99 percent of orange juice market was shared amo ng FCOJ, NFC and refrigerated orange juice from concentrate (RECON 2008). Of them, NFC is considered as the juice with the highest quality and thus is sold in greatest amount in gallons in the United States (Brown 2000). Besides, many American families hav e formed a habit of intake orange juice at breakfast for nutrition needs. It is becoming a somewhat tradition or customs to drink orange juice when having breakfast. As this tradition of eating habits spread over non white family, the demand of orange juic e may also increase as a result. When coming to the effect of advertising on the demand of juice, different researchers had opposite conclusions. According to the study of Kinnucan et al. (2001), juice advertising had the largest influence within the nonal coholic beverage group compared with other beverages. They also found that only juice had a positive and statistically significant own advertising elasticity (Kinnucan et al. 2001).

PAGE 20

20 Zheng & Kaiser (2008) conducted a study of the advertising effect on the U.S. nonalcoholic beverage demand using survey data T hey concluded that advertising positively affects demand for milk, soft drinks, and coffee/tea, but not for juice or bottled water (Zheng & Kaiser 2008). They also summarized the cross effect among the goods as the result of advertising. For instance, advertising of juice is good for milk but bad for soft drinks; advertising of bottled water is good for milk but bad for juice; and advertising of coffee/tea is food for milk but bad for juice. Therefore, j uice can be considered as supplement of milk, but substitutes for bottled water, soft drinks and coffee/tea. Besides the advertising effect, Zheng & Kaiser also concluded that some other effects like customs and culture that may affect the beverage demand. For instance, Americans have always been more concerned about their body fitness. The perception of eating healthier is spreading all over the world from the United States. Under this circumstance, orange juice, especially NFC, which substitutes for soft drinks and coffee/tea, but more healthier will have a increasing amount of consumption with the spreading of idea of eating health and keeping fit. In conclusion, demographics such like income, gender, education may have an effect on the demand of orange j uice. Besides, consumption and living habits, advertising may also account for the increased consumption. The role that this study play s is a reflector of Chinese many studies determined various variables influencing the orange juice demand few studied Chinese consumer juice demand due to the limited consumption in the previous years. This study will mainly focus on the burgeoning Chinese orange market and investiga te the Chinese A simple linear regression method will be

PAGE 21

21 used to determine the impacts of demographics and other factors that have been shown to have significant influence s on consumer demand for orange jui ce by previous studies.

PAGE 22

22 CHAPTER 3 DATA s different types of orange juice was conducted by using semi structured interviews as the primary research approach. From March to June of 2012, mall intercept surve ys were conducted in four major cities in China Beijing, Shanghai, Zhengzhou and Shenzhen by randomly stopping grocery shoppers in major stores in the cities. These four cities partially represent the diverse types of cities in China: Beijing is the politi cal an d cultural capital city of China while Shanghai is the financial and c ommercial capital ; Zhengzhou is an average city in central China and Shenzhen in the south is characterized by a large number of immigrants from other places of China. In each city about 365 people participated in the surveys and total of 1,454 questionnaires were collected. The sample was carefully chosen to accommodate all age groups and a proportional gender ratio. Participants received 15 20 RMB ($2.41 3.22) cash to e nsure engag ement and improve the quality of the survey s The interviewees could choose either to provide their a nswers were recorded and field notes were taken down in conjunction with the interviews for l ater reference. All the original survey answers, memoranda, and field notes were entered into computer files for further analysis. In the survey each participant was asked thirty five short questions regarding their knowledge, preferences, attitudes and W TP as well as the demographic s such as gender, age, income, education, employment status, marital status, number of children in the family, monthly expenditure on food and times eating. The first part of the survey asked participants about their juice con sumption pattern s as well as basic shopping habits when purchasing orange juice T he primary purpose of buying orange juices and frequency of consuming orange juice in the last month befo re the survey was also collected The second part of the survey asked

PAGE 23

23 agreement/disagreement with some statements about different types of orange juice products The se questions were designed to test consumers basic knowledge and perceptions of different types of orange juice such as consumers opinions of o range juice safety tastes and availability in the market when compared with other fruit juice. The last part of survey concerned the respond ent s WTP for different types of orange juice. There were six types of orange juice in the questionnaire : 1) Oran ge juice drink with juice content >=10% (OJD 10%) 2) Orange juice drink with juice content>=25% (OJD 25%) 3 ) Orange juice drink with juice content >=50% (OJD 50%) 4 ) Orange juice drink with juice content>=75% (OJD 75%) 5) 100% Reconstituted Orange Juic e from Frozen Concentrate ( FCOJ) 6)100% NFC orange juice (NFC) In the Chinese market, OJD 10% is the most popular types of orange juice product currently; FCOJ is gaining in popularity due to its high percentage of juice content; and NFC is very new with very small market share despite that NFC is the most popular orange juice product in most weste rn developed countries

PAGE 24

24 CHAPTER 4 MODEL Regression models estimated with ordinary least square methods (OLS) were used to determine the factors that have sign ificant impacts on consumer knowledge, consumption patterns and WTP. For the knowledge of fruit and orange juice, the expenditure on orange juice last month and WTP for different types of orange juice, t he underlying response model s are : (4 1) (4 2) (4 3) Where And is the knowledge index of fruit juice f or consumer Gender, Age, Edu cation, Income, number of kids in the family ( ) are consumer demographics; and are the frequency and expenditure of consuming orange juice in the last month before the survey was taken, respectively; and WTP is con sumer stated willingness to pay for different types of orange juice products; is unobservable random component Only WTP models (equation 4 3) of OJD 10%, FCOJ and NFC are estimated because these three products are the major t ypes of orange j uice products current ly in the Chinese market. F or the variables in the regression model, d ummy variables were created f or gender (1 for Males and 0 for Females) and for education (if primary school and below, EDUC1=1, otherwise EDUC1=0; if high school or equivalent, EDUC2=1, otherwise EDUC2=0; if university or

PAGE 25

25 equivalent, EDUC3=1, otherwise EDUC3=0; if postgraduate EDUC4=1, otherwise EDUC4=0) For age, employment, income, an index corresponding different levels were created and used. For kids in the fam ily and expenditure on orange juice, original numbers were used. For knowledge and perceptions of fruit and orange juice, a numeral index was created corresponding to their answers to the relat ive questions and its accuracy which would be displayed in deta il in Chapter 5.

PAGE 26

26 CHAPTER 5 RESULTS Demographics of P articipants After data cleaning, about 980 respondents were eligible for the statistical analysis because not all the people answered the same questions Females accounted for 62. 4 % of the total responde nts, which is reasonable because the survey targeted at household shoppers and females are the primary shoppers for household products in China. Most participants in the sam ple were less than 40 years old, with the majority in the range of 16 25 years old. A bout 93% of the participants had at least one child in the family : most (67%) had one while few (9%) had three or more children. People with f our year college degrees or higher (48.21%) made up the largest propo rtion of participants The largest group o f the participants had a fu ll time job ( 41%) while the second largest is full time students (38%). Most of the participants had a monthly household income ranging from 2,500 RM B ($401.5) to 15,000 RMB ($2409) The medium income in the survey falls in the r ange from 5,000 RMB ($804) to 7,000 RMB ($1126), which seem s higher compared to the national average 2,679.5 RMB ($430.33) This is plausible because three of the cities (Beijing, Shanghai and Shenzhen) surveyed are the first tier cities in China with the highest living standard (Table 5 1) average monthly expenditure on orange juice orange juice last month is displayed in Figure 5 1. Consumer Knowledge of Orange Juice M o st respondents (86.4 9%) agreed that there is d ifference between fruit juice and fruit juice drink. Chinese consumer knowledge of fruit juice was determined by asking their agreement /disagreement with the statements listed in Table 5 2, and results are show n in Figure 5 2. Overall, a majority ( 52.58%) of consumers did not agree with the correct statement that

PAGE 27

27 fruit juice must h ave 100% juice, and they believed water or other ingredients could be added; However, nearly half of the consumers (about 50.69%) di d not agree with the correct statement that juice drinks could be made by adding ingredients such as sweeteners and preservatives. Interestingly 46.04% of the respondents were not sure whether most fruit juice drinks in the market had more than 10% juice c ontent although 10% OJD had the largest market share in Chinese market These results indicate that knowledge of fruit juice was generally very limited and they may not even tell the differences between 100% orange juice and juice drinks Despite their desire to drink healthier beverages, they had little knowledge to distinguish healthy juice from unhealthy ones C onsumers' knowledge of different types of orange juice products was also tested by asking whether they thought the four defini tions listed in Table 5 3 were correct The survey was designed to present incorrect definitions of NFC and fresh squeezed juice while present the correct definitions of concentrate juice and juice drinks Outcomes ( Figure 5 3 ) show that o ver half of respo ndents (54.67%) mistakenly thought the definition of fresh squeezed juice was correct. A lthough 43.65% of the consumers realized the definition of NFC juice, was wrong, it was still the most unfamiliar type of juice product compared with concentrated juice and juice drink. For all four juice products, around 20% t o 30% of respondents were uncertain about the def initions provided in the survey (Figure 5 3) The ability to recognize different kinds of orange juice products was tested by asking participants to identify several juice products that were available in the market. I mages of four popular orange juice product s in China were presented to participants The images were Huiyuan 100% FCOJ, Minute Maid OJD, Tropicana OJD and Great Lake 100% FCOJ. The respond ents were asked to indicate whether each product shown was NFC, Fresh Squeezed, F rom

PAGE 28

28 Concentrate, or Juice Drink They could also choose about the type of juice products presented The specific survey questions and ima ges are below. The results showed that about 29.41% and 28.29% of respondents answered the first and last question correctly, compared to about 61.05% and 46.26% who answered the second and third question correctly. This indicates that Chinese co nsumers we re more familiar with OJD than 100% FCOJ This is consistent with the current situation in China orange juice drink is one of the most popular beverage products in the market, while reconstituted 100% FCOJ and NFC are relatively new orange juice products a nd thus have a much smaller market share. The sum of correct answers of the above three set of questions was used as an index to knowledge more accurately, accordi ng to the previous study, different weight s were assigned to different question s according to their difficulty. More specifically, i f the question was easy, more weight ( score of 2) was assigned while if the question was difficult, less weight ( score of 1 ) was I do not know the answer, they would score 0 for that question. For example the answer to the question do you think fruit juice and fruit juice drink are the same i I f the participants answered No Yes to this question, they would gain a score of 2 and 2, respecti vely while they I For questions in Table 5 2, if the participants strongly agree/disagree with a true statement, they will get a score of 2 and 2 respectively. Agree/disagree with a true statement will lead to a score of 1 and 1 respectively. If the participants answer Neither agree nor disagree they would get a zero score. For questions testing consu mers knowledge of different types of orange juice in Table 5 3, if the participants answer Correct/Wrong to the first two false definitions, they would gain a score of 1 and 1.

PAGE 29

29 The s ame method of accounting scores of knowledge works for the last two tr ue definitions. For the recognition of the four brands of popular orange juice (Figure 5 9) if the participants recognize the juice and choose the correct answer successfully, they would gain one point; otherwise, they would get nothing. In this way of ca lculating scores of knowledge, t he maximum possible score of this index is 24 (if a respondent answered all questions right), and the minimum possible score of this index is 24 (if a respondent answered all questions wrong). The distribution of the knowle dge index is shown in Figure 5 5 Although the graph of distribution of knowledge looks like bell shape after adopting the Anderson Darling test, we gain a p value which is much less than 0.005. Hence we reject the null hypothesis and conclude that the knowledge index is normally distributed. Consumer Perception and Attitudes toward Orange Juice P articipants were asked about their agreement /disagreement with the statement s in Table 5 4 to investigate their perceptions of fruit juice compared with other b everages, with results shown in Figure 5 6 O ver 30% of the respondents at least agreed that fruit juice was healthier and more nutritious than other types of beverages. About half of the participants at least agreed that fruit juice tasted better and coul d be easily found in the market. However, about 40% of the respondents at least disagreed that fruit juice was safer than other beverages. In addition, about 67% respondents were not sure or unwilling to pay more for fruit juice than other types of beverag es. These results indicate that although Chinese consumers had positive attitudes toward s fruit juice, they need more stimulation to change their attitude into purchasing power. Like some other food products in China, fruit juice products are also subject insufficient confidence in food product safety (Figure 5 6 ). on of orange juice was determined by aski ng about their agreement /disagreement with the statements in Table 5 5 with results displayed in Figure 5 7.

PAGE 30

30 The data showed that over 41% of the respondents at least disagreed with the claim that orange juice had more nutritional value than other fruit juice, and over 80 % of the respondents disagreed or not sure that orange juice was safer than other juices. A minority of the respondents (about 20% ) agreed that orange juice was a good choice for diet and can boost energy About 30% of the respondents at least agreed that orange juice could improve the appearance of skin. About 54.31% of the respondents at lea st agreed that there were more brands of orange juice than other kinds of fruit juice and over 70% thought that it was quite easy to find orange juice in the market. In addition about 25% of the respondents would pay more for orange juice than other fruit juices (Figure 5 7 ). The results indicated that Chinese consumers considered orange juice and other juice almost equivalent regarding safety, nutrition and taste. The obvious advantages of orange juice are that it is widely available and has more brands. W TP for Different Kinds of Orange Juice C onsumers were asked about the prices they are willing to pay for different types of orange juice with different juice percentag es. The container size of 450 mL was used because it is the most popular size of juice dr inks in the Chinese market, and juice drinks with juice content higher or equal to 10% ac count for most of the sales of juice and juice related drinks. Overall, the WTP (Figure 5 8) for each kind of juice/juice drink increased as the juice content increas ed. For an orange juice drink containing at least 10% juice, the average price people were willing to pay was 3.34 RMB ($0.57). The average price increased to 3.83 RMB ($0.62) when the juice content increased to 25%, to 4.69 RMB ($0.75) for 50% and 5.81 RM B ($0.93) for 75%. The 100% reconstituted orange juice received an offered price of 6.83 RMB ($1.10) and the WTP for 100% NFC orange juice was 8.69 RMB ($1.40) for a 450 mL (0.12 gallon) bottle (Figure 5 8 ).

PAGE 31

31 Factor Affecting Consumer Knowledge, Expenditure on Orange Juice and WTP Statistical Analysis Software (SAS) was used to analyze the model presented in Chapter 4 and re sults were reported in Table 5 7 to Table 5 11 For the regression of knowledge, the estimated par ameter is displayed in Table 5 7 ; all coefficients are statistically significant at level of K nowledge is an index of the score orange juice. Higher value indicates better knowledge o f fruit and orange juice. The r esults indicate that and freqOJ Models with other demographic variables, such as age, education and etc. were also estimated H owever, results in Table 5 6 show that we cannot reject the null hypothesis that all other variables are jointly equal to zero. Based on the rule of parsimony only the three variables with significant coefficients are included in the final model. The positive and signifi cant coefficient for male implies that on average, males gain ed more scores in answering the questions than fe male s In addition, consumers who had a higher income and those who consume d juice more frequently had a better knowledge of fruit juice. The ou tcomes of the regression of expenditure on fruit juice /juice drink in the month before the survey are provided in Table 5 8 All of the variables are significant at the level. Among all the demographics, the influence of Income and Kids on ju ice/juice drink expenditure s is significant The coefficient of male is about 1 2.42 which means males on average spent 12.42 RMB ($2. 00 ) less than females on juice/juice drink. The outcomes also show that Income and Kids ha ve significant positive impacts on juice/juice drink expenditure. For one level increase in income, there would be an average increase of 3. 03 RMB ($0. 49 ) in juice/juice drink expenditure. With one mor e child in the family there was about 5.07 RMB

PAGE 32

32 ($0. 82 ) more spending on juice/juice dri nk. Education also plays a negative role in juice/juice drink expenditure. The more advanced education one consumer received the relatively less they spent on juice/juice drink in that month. There were three perception variables, SaferFruit, Paymore and Easyfound that ha ve significant influence on the expenditure. SaferFruit implies participants agreement of statement whether juice/juice drink is safer than other beverages. Paymore reflect s statement whether they would pay more for orange juice. Easyfound agreement of whether orange juice is easy found in the market compared with other fruit juice. The result come s as no surprise that people who thought the fruit juice/juice drink was safer than other foods and ag ree d that they would pay more for orange juice did spend more on the juice /juice drink last month. However, although also very significant, the influence of the variable Easyfound turned out to have a very negative effect. People who thought orange juice w as easily found in the market, tu rned out to spend less on average for juice/juice drink in the last month. The results of regressions of WTP are displayed in Table 5 9 for 10% OJD, in Table 5 1 0 for 100% FCOJ and in Table 5 1 1 for NFC. Results in Table 5 9 show that demographics seem to have nearly no significant influence on the WTP for 10% OJD. Income turn s out to be the most insignificant variable in this model because it has the lowest P value. This might indicate that the price of 10% OJD in China is relatively low and become most common so that consumers can easily afford it. Hence, income as well as other demographics has no obv ious influence on the WTP for 10% OJD since almost every consumer could afford it no matter what their age, income level, e ducation and etc are On the other hand, knowledge, perception and consumption habits have significant impact on consumer WTP for 10% OJD. Knowledge, which

PAGE 33

33 has a coefficient of about 0.16, has a very strong negative influence on the WTP. Consumer with mor e knowledge of juice products would rather pay less for the 10% OJD, which makes sense because orange juice drink is actually not very healthy and nutritious. The coefficient of expenditure of orange juice is significant positive at 0.009, which implies th at participants who spent one RMB more on juice/juice drinks last month would be willing to pay 0.009 RMB more for 10% OJD. The only perception variable that shows a significant impact on the WTP is Easymixed Participants who thought ora n ge juice was easi er to be mixed with other fruit juice tended to pay more for the 10% OJD. Regarding WTP for 100% FCOJ, results in Table 5 1 0 show that only gender and juice expenditure of last month have significant positive impacts on consumer WTP for 100% FCOJ. Gender plays a significant role in influencing the WTP for 100% FCOJ. The coefficient of 1.25 of Male indicat es that males are in average willing to pay about 1.25 RMB ($0.20) more for 100% FCOJ than females. The juice expenditure of last month has a coefficient of about 0.03 which mean s that respondents who spent 1 RMB ($0.16) more on juice products last month are on average willing to pay 0.03 RMB ($0.005) more for 100% FCOJ. The last regression model aim s to determine the factors that have a significant impact on consumer WTP for 100% NFC orange juice. The results in Table 5 1 1 show that only gender and juice expenditure of last month have significant positive impacts on consumer WTP for 100% NFC, which is similar to the results of WTP for 100% FCOJ. The coeffic ient of Male is 1.72, which indicates that males are generally willing to pay about 1.72 RMB ($0.28) more for the 100% NFC orange juice than females. The results also indicate that participants who spent 1 RMB ($0.16) more on juice products last month woul d on average be willing to pay 0.022 RMB ($0.004) more for the 100% NFC orange juice.

PAGE 34

34 Comparing t he results across the Table 5 9 to Table 5 11 the results show that although better knowledge of juice and juice products lead to lower WTP for 10% OJD, this knowled ge does not transfer to a higher WTP for healthier 100% FCOJ and NFC. Larger juice expenditure is associated with higher WTP for all the three juice products, but in general, juice expenditure has larger impacts on consumer WTP for 100% FCOJ and NF C. In addition, males are willing to pay more for healthier juice product s such as 100% FCOJ and NFC, while there is no significant difference in consumer WTP for 10% OJD between males and females. All the results indicate that 10% OJD is a very popular an d common product that can be afforded by most Chinese consumers while consumer s with more knowledge of juice products start to realize its negative characteristics. However, consumers may still not be able to differentiate the healthy 100% FCOJ and NFC fro m the unhealthy OJD because better knowledge of juice product is not associated with higher WTP for FCOJ and NFC. To study the marginal WTP for those three types of orange juice, MarginalWTP1=WTP100 WTP10 and MarginalWTP2=WTPNFC WTP100 are adopted and anal yzed by regression. The results are in Table 5 12 and Table 5 13. From the results in Table 5 12 the knowledge stands out as the most significant variable that affects the marginal WTP. With the positive sign, it means that the people who have better know ledge of fruit/orange juice would probably have larger gaps between the WTP for 10% OJD and 100% FCOJ. Male and expjuice are the other two significant variables. Males tender to offer higher marginal price than females. People who spent more on fruit juice last month are likely to have larger gaps between WTP for 10% OJD and 100% FCOJ. In the Table 5 13, only expjuice has significant influence on the marginal WTP between WTP for 100% FCOJ and 100% NFC. The slightly negative sign

PAGE 35

35 of the variable indicates th at people who spent more on fruit juice last month tender to have smaller gaps between WTP for 100% FCOJ and 100% NFC.

PAGE 36

36 Table 5 1 Sample demographic descriptive s tatistics Variable Variable Description Sample % (N=993) Gender Female 62.4 Male 37.6 Age <=25 52.0 26 40 34.0 >40 15.0 Kids in f amily One 67.0 Two 17.0 More than three 16.0 Education Less than some college 28.5 Some college 22.4 College and more 48.2 Employment Student 38.0 Full time 41.0 Others 21.0 Househo ld income (RMB) Less than 2,500 19.2 2,500 5,000 19.1 5,000 7,500 17.1 7,500 10,000 17.7 10,000 15,000 11.33 15,000 20,000 6.85 20,000 25,000 3.51 25,000 30,000 2.11 Over 30,000 4.65 Table 5 2 Statement testing knowledge of fruit j u ice Label Statement 1 Fruit juice must have 100% juice content and no water or other ingredients can be added. (True) 2 Fruit juice can be made from concentrated juice that is reconstituted with water. (True) 3 Fruit juice can have less than 100% percen t juice and sweetener and preservative can be added. (False) 4 Fruit juice drinks have less than 100% of juice and ingredients such as sweetener and preservative can be added. (True) 5 Most fruit juice drinks in the market have more than or equal to 10% juice content. (True)

PAGE 37

37 Table 5 3. Statement Label Statement 1 NFC Juice: Juice that is squeezed from fresh fruit and packaged in paper cartons, glass or plastic containers without being pasteurized and wi thout additional water or other ingredients being added. (False) 2 Fresh Squeezed Juice: Juice that is processed and pasteurized by flash heating immediately after squeezing the fruit without removing the water content from the juice. (False) 3 Conce ntrated Juice: Juice that is obtained by removing the water, through evaporation, from the orange juice of fresh, ripe oranges that have been squeezed in extraction machines. (True) 4 Juice Drink: Drink that is made from concentrated juice with water bein g added. (True)

PAGE 38

38 Table 5 4 Statement Label Statement 1 Fruit juice is healthier than other beverages 2 Fruit juice has more nutritional value than other beverages 3 Fruit juice is safer than other beve rages (e.g. more hygienic) 4 Fruit juice tastes better than other beverages 5 I will pay more for fruit juice than for other types of beverages 6 I can easily find fruit juice at the market place Table 5 5 Statement testing perceptions of orange juic e Label Statement 1 O range juice has more nutritional value than other juices 2 O range juice is safer than other juices (e.g. less pesticide) 3 O range juice tastes better than other juices 4 I will pay more for orange juice than other types of juice 5 O range juice is easy to find in the market 6 O range juice is easy to mix with other juices 7 W ith careful planning orange juice is a good choice for dieting and weight loss 8 O range juice can boost energy 9 O range juice can improve the appearance of my skin 10 O range juice is less expensive than other juices 11 O range juice has more brand varieties than other juices Table 5 6 Result for testing significance of variables Source Mean Square F Value Pr > F Numerator 7.821 0.53 0.71 2 Denominat or 14.67 7 Table 5 7 Parameter results of regression of consumer knowledge Variable Parameter Estimate Standard Error t Value Pr > |t| Intercept 1.975 0.56 1 3.52 < 0.00 1 *** Male 1.39 1 0.248 5.60 < 0 .001*** Income 0.104 0.046 2.25 0.02 5 ** FreqOJ 1 0.12 4 0.0 70 1.79 0.074* Number of Observations Used: n=983. Adj R Sq: 0.0343 ** *** 1 Frequency of consuming orange juice last month

PAGE 39

39 Table 5 8 Para meter results of regression of expenditure on juice/juice drink last month Variable Param eter Estimate Standard Error t Value Pr > |t| Intercept 33.4 70 15.083 2.22 0.0267 ** M ale 12.063 3.751 3.22 0.0013 *** I nc ome 3.069 0.709 4.33 <.0001 *** K ids 5.030 1.276 3.94 <.0001 *** SaferFru 6.122 2. 229 2.75 0.0061 *** P aymore 5.137 1.954 2.63 0.00 87 *** E asyfound 4.980 2.053 2.43 0.0155 ** EDUC1 5.929 11.933 0.50 0.6194 EDUC2 1.563 9.610 0.16 0.8708 EDUC3 7.169 9.098 0.79 0.4309 EDUC4 0 Number of Observations Used: n=988. Adj R Sq: 0.0667 ** nt at 5% *** Table 5 9 Parameter results of regression of WTP for 10% OJD Variable Parameter Estimate Standard Error t Value Pr > |t| Intercept 4.667 1.247 3.74 < 0.00 1*** P aymore 0.24 9 0.171 1.46 0.14 6 M ale 0.439 0.330 1.33 0.1 84 Income 0.031 0.06 4 0.50 0.620 Knowledge 0.1 60 0.041 3.86 < 0.00 1*** E xpjuice 0.008 0.00 3 2.82 0.00 5 *** E asymixed 0.398 0.184 2.16 0.031 ** EDUC1 0.889 1.085 0.82 0.41 3 EDUC2 1.518 0.872 1.74 0.082* EDUC3 1.50 3 0.82 6 1.82 0.069 EDUC4 0 Number of Observations Used: n=948. Adj R Sq: 0.0325 ** ***

PAGE 40

40 Table 5 1 0 Parameter results of regression of WTP for 100% FCOJ Variable Parameter Estimate Standard Er ror t Value Pr > |t| Intercept 4.473 2.302 1.94 0.052 P aymore 0.364 0.316 1.15 0.250 M ale 1.361 0.614 2.21 0.027** I nc ome 0.081 0.118 0.69 0.492 Knowledge 0.058 0.077 0.76 0.450 E xpjuice 0.030 0.005 5.62 <.0001*** E asymixed 0.059 0.341 0.17 0.862 EDUC1 2.148 2.003 1.07 0.284 EDUC2 2.248 1.595 1.41 0.159 EDUC3 1.338 1.507 0.89 0.375 EDUC4 0 Number of Observations Used: n=960. Adj R Sq: 0.0328 ** *** Table 5 1 1 P arameter results of regression of WTP for 100% NFC Variable Parameter Estimate Standard Error t Value Pr > |t| Intercept 5.21 1 2.624 1.99 0.047 P aymore 0.30 2 0.35 8 0.84 0.399 M ale 1.8 50 0.693 2.67 0.00 8*** I nc ome 0.138 0.133 1.04 0.297 Knowledge 0.0 1 1 0.086 0.12 0.903 E xpjuice 0.023 0.006 3.85 < 0.00 1*** E asymixed 0.292 0.385 0.76 0.449 EDUC1 1.723 2.26 9 0.76 0.448 EDUC2 1.155 1.839 0.63 0.530 EDUC3 0.316 1.746 0.18 0.857 EDUC4 0 Number of Observations Used: n=968. Adj R Sq: 0.0162 ** *** Table 5 12 Para meter results of regression of m arginal WTP between 10% OJD and 100% FCOJ Variable Param eter Estimate Standard Error t Value Pr > |t| Intercept 1.438 1.060 1.36 0.175 P aymore 0.27 5 0.198 1.38 0.167 M ale 1.00 9 0.384 2.63 0.009*** I nc ome 0.05 6 0.072 0.77 0.441 K nowledge 0.232 0.048 4.81 <.00 1 *** E xpjuice 0.012 0.003 3.64 <.00 1 *** E asymixed 0.324 0.215 1.51 0.131 Number of Observations Used: n=968. Adj R Sq: 0.0162 ** ***

PAGE 41

41 Table 5 13. Para meter results of regression of m arginal WTP between 100% FCOJ and 100% NFC Variable Parameter Estimate Standard Error t Value Pr > |t| Intercept 1.762 1.132 1.56 0.120 P aymore 0.003 0.213 0.01 0.990 M ale 0.340 0.411 0.83 0.409 I nc ome 0.077 0.077 1.00 0.318 Knowledge 0.007 0.052 0.13 0.897 E xpjuice 0.010 0.004 2.86 0.0044 *** E asymixed 0.218 0.229 0.95 0.343 Number of Observations Used: n=968. Adj R Sq: 0.0162 ** *** Figure 5 1 Frequency of consuming orange juice last month (percentage )

PAGE 42

42 Figure 5 2 Basic knowledge of fruit j uice Figure 5 3. Basic k no wledge of def inition of different types of orange j uice

PAGE 43

43 Figure 5 4. Answers of recognition of orange j uice Figure 5 5. Distribution of index of k nowledge

PAGE 44

44 Figure 5 6. Perceptions of fruit j uice Figure 5 7 Perceptions of orange j uice

PAGE 45

4 5 Figu re 5 8. Avera ge WTP for each type of orange j uice (RMB)

PAGE 46

46 ( ) NFC ( ) Fresh Squeezed Juice ( ) Reconstituted Juice from Concentrate ( ) Fruit Juice Drink ( ) I Do Not Know ( ) NFC ( ) Fresh Squeezed Juice ( ) Reconstituted Juice from Concentra te ( ) Fruit Juice Drink ( ) I Do Not Know ( ) NFC ( ) Fresh Squeezed Juice ( ) Reconstituted Juice from Concentrate ( ) Fruit Juice Drink ( ) I Do Not Know ( ) NFC ( ) Fresh Squeezed Juice ( ) Reconstituted Juice from Concent rate ( ) Fruit Juice Drink ( ) I Do Not Know Figure 5 9. Recognition of orange j uice

PAGE 47

47 CHAPTER 6 CONCLUSION This study investigates Chinese consumer preference s for western food through a case study on consumer knowledge, perception and WTP for differ ent types of orange juice products. As the characteristics in knowledge, perceptions, and consumption patterns become diverse, the demand and consumers willing ness to pay for orange juice in China will be significantly different, and thus lead to a great d ifference in the consumption of orange juice. The results in ce products is relatively low and is largely influenced by gender, income and frequency of consu ming juice products. Males, high income con sumers and those who purchased juice products more frequently generally have better knowledge of juice. It is not surprising that richer people and people who purchased juice more frequently have more chance to obtain the information on different types of juice products. Regarding the expenditure on juice products, it is obvious that young females with relatively lower education tend to spend more on juice and juice products. In addition, consumer s with higher income, more kids in the family, and those who agree to pay more for orange juice and those think fruit juice is safer than other kinds of beverages would also spent more on juice and juice products. The results are reasonable because Chinese orange juice market is currently made up mainly of juice d ri nk, one type of juice product with added sugar and other ingredient s Consumers with higher education level s may have other better alternative beverages to substitute for juice drinks. In addition, these results also reflect the fact that the major cons ume rs of juice drinks are youth and children, who just use the juice drinks as an alternative of water, with the idea that the juice drinks are at least better than water because they at least have some the product. Interestingly, consumers who tho ught orange juice were easily found in the market

PAGE 48

48 spend less on juice products, which indicates that all brands of different orange juice may hold consumers back from purchasing more juice products. The results of consumer WTP for 10% OJD, 100% FCOJ and N FC reflect the dynamic nature of the current juice product market. On one hand, more knowledge of juice products is associated with smaller WTP for 10% OJD, which is in fact a less healthy juice product. On the other hand, Chinese consumers may still be co nfused with different types of juice products, because more knowledge does not result in high WTP for 100% FCOJ and NFC, which is healthy and used as the major resource of vitamins in some western developed countries. From a marketing perspective, it is ve ry difficult to differentiate the market of 10% OJD by demographics, because Chinese consumers are very familiar with these types of juice product and it is a low price and low end product. Increasing sales of this type of products depend s on the growth in the total expenditure on all juice products and thus should focus on the expansion in the second or third tier cities or rural sides of China. In addition, the producers of all types of juice products should target consumers that normally spend more on ju ice products. The producers of 100% FCOJ and NFC should pay particular attention to those consumers because juice expenditure has a much larger impact on consumer WTP for 100% FCOJ and NFC. In addition, males also should be targeted as future consumers of 100% FCOJ and NFC because they are more likely to spend more money on these types of juice products The major focus of this research is basically focused on knowledge, perception and WTP for orange juice. Although the some results of the study like co nsume rs WTP for orange juice do not have enough significant variables there still might be some appealing implications to both the industries and academics.

PAGE 49

49 This study might be useful to the world food exporters and juice makers such like the Florida citrus in dustries who are interested in the Chinese market. It has been proven by the histor ical data that the Chinese market is a p otential market for western food and new types of orange juice. For western food industries to provide Chinese consumers with the sa fe foods and service is very important. To indicate whether there is a potential market of NFC orange juice in current WTP for 100% NFC orange juice is averagely 9.21 RM B ($ 1.48) for a volume of 450mL while the actual price from 15 RMB ($2.41) to 20 RMB ($3.22) for the same volume. Although the Chinese average market price of NFC in the United States, which is $0.85 for the same volume, the market price in China still highly exceeds lower the market price of NFC in China as low as that in the United States or at least lower than WTP there is little possibility to open the market for 100% NFC under current Considering the current level of s not as competitive as 10% OJD in current Chinese market. To exploit the market of 100% NFC juice in China in the future besides to lower the market price by cutting down the cost, more attention is also suggested to placed on males who spend m ore on fr uit juice/juice drinks A few more studies are also needed to provide base for sales strategies. One drawba ck of current research is that it did not take the market conditions into consideration, suc h as the price effect of pre existing orange juice (OJD a nd 100% FCOJ) on the relatively new coming orange juice (100% NFC) in China. Since the current market is most made up of OJD, and it is quite cheap compared with 100% NFC due to the lower juice contents, the cross price effect should have a significant

PAGE 50

50 eff ect on consumers WTP for 100% NFC. Future research might adopt contingent valuation to study this cross price effect. In addition to provide the industry with more current information of C hinese citrus market, attributes that consumers consider importan t should also be investigated and summarized. It would be also interesting to adopt choice experiment s to specifically study consumers WTP for orange juice with different attributes. This study might be also useful for further research on behavio r on western food and orange juice in China. For instance, the western brand effect might be an interesting topic to study. In order to evaluate the western brand effect the WTP for both western brands such like Minute Maid and domestic brands such like Hu iyuan might t o be estimated and compared.

PAGE 51

51 LIST OF REFERENCES Abbott, J. C. (1990). Supply and Marketing Organization for Agricultural Processing in the Developing Countries. Journal of International Food & Agribusiness Marketing 1 (3 4), 31 43. Bhandari, R., & Smith, F. J. (2000). Education and food consumption patterns in China: household analysis and policy implications. Journal of Nutrition Education 32 (4), 214 224. B lock G., D resser C. M., H artman A. M., & C arroll M. D. (1985). Nutrient sources in the American diet: quantitative data from the NHANES II survey I. Vitamins and minerals. American Journal of Epidemiology 122 (1), 13 26. Brown, Mark, Lee, Jonq Orange Juice: A Switching Regre American Agricultural Economics Association (1985): 647 653. Brown, M. G., & Lee, J. Y. (1999). Health and Nutrition Advertising Impacts on the Demand for Orange Juice in Fifty Metropolitan Regions. Journal of Food Products Marketing 5 (3) 31 47. Curtis, K. R., McCluskey, J. J., & Wahl, T. I. (2007). Consumer preferences for western style convenience foods in China. China Economic Review 18 (1), 1 14. Davis, A., Gunderson, M. A., Brown, M. G., & House, L. (2008). The Effect Demographics Ha ve On The Demand For Orange Juice. In 2008 Annual Meeting, February 2 6, 2008, Dallas, Texas (No. 6794). Southern Agricultural Economics Association. Dooley, R., Eales, J., & Binkley, J. (2000). The Demand for Nutritionally Enhanced Varieties and Implicati ons for Food Product Competition: The Case of Orange Juice. In 2000 Annual meeting, July 30 August 2, Tampa, FL (No. 21802). American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). Fan, S., & Agcaoili So mbilla, M. (1997). Why projections on China's future food supply and demand differ. The Australian Journal of Agriculture and Resour ce Economics, 41(2), Global Agricultural Information Network [Internet]. Citrus Annual Washington: USDA Foreign A gricultural Service (US); [updated 2012 Dec 17; cited 2013 May]. Available from : http://gain.fas.usda.gov/Recent%20GAIN%20Publications/ Citrus%20Annual_Beijing_China%20 %20Peoples%20Republic%20of_12 17 2012 .pdf Granato, D., Branco, G. F., Nazzaro, F., Cruz, A. G., & Faria, J. A. (2010). Functional foods and nondairy probiotic food development: trends, concepts, and products. Comprehensive Reviews in Food Science and Food Safety 9 (3) 292 302.

PAGE 52

52 Guo, Z., Mroz, T. A., Popkin, B. M., & Zhai, F. (2000). Structural change in the impact of income on food consumption in China, 1989 1993. Economic Development and Cultural Hu, J., Duval, Y. L., & Wahl, T. I. (2003). An a nalysis of household food consumption of Chinese expatriates in the US: implications for future food consumption in China. Journal of Food and Produce Marketing 1 41 47. Internat ional Agricultural Trade S ervice [Internet]. China Emerges as the Second Largest U.S. Agricultural Expo rt Market. Washington: USDA Foreign A gricultural Service (US) ; [updated 2010 Dec 20; cited 2013 May]. Available from : http://www.fas.usda.gov/China%20Import122010.pdf Internat ional Agricultural Trade Service [I nternet] Orange Juice: Production, Supply and Dist ribution in Selected Countries. Washington: USDA Foreign A gricultural Service (US) ; [updated 2013 Jan 24; cited 2013 May]. Available from : http://www.fas.usda.gov/psdonline/ psdReport.aspx?hidReportRetrievalName=Orange+Juice%3a+ Production%2c+Supply+a nd+Distribution+in+Selected+Countries+++++++++++++++++++++++++++++&hidRe portRetrievalID=2181&hidReportRetrievalTemplateID=8 Jussaume Jr, R. A. (2001). Factors associated with modern urban Chinese food consumpt ion patterns. Journal of Contemporary China 10 (27), 219 232. Kinnucan, H. W., Miao, Y., Xiao, H., & Kaiser, H. M. (2001). Effects of advertising on US non alcoholic beverage demand: Evidence from a two stage Rotterdam model. Advances in Applied Microeconom ics 10 1 29. Kohls, R. L., & Uhl, J. N. (1990). Marketing of agricultural products (No. Ed. 7). Macmillan publishing company. Marr, J., & Hatfield, A. (2001). Shanghai snack market geared to young buyers: USDA FAS. Available online at http://www.fas.usda .gov. Morrison, W. M. (2009, December). China's economic conditions. LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE. Pollack, S. L. (2001). Consumer demand for fruit and vegetables: the US example. Changing Structure of Global Food Consump tion and Trade 6 49 54. Pollack, S. L., Lin, B. H., & Allshouse, J. E. (2003). Characteristics of US orange consumption US Department of Agriculture, Economic Research Service. Shono, C., Suzuki, N., & Kaiser, H. M. (2000). Will China's diet follow west ern diets?. Agribusiness 16 (3), 271 279. Sklair, L. (1994). In C. J. ShultzII, R. W. Belk, & G. Ger (Eds.), The culture idealology of comsumerism in urban China:

PAGE 53

53 Some findings from a survey in Shanghai, research in consumer behavior, Vol. 7. Greenwish, CT : JAI. Tacconelli, W., & Wrigley, N. (2009). Organizational Challenges and Strategic Responses of Retail TNCs in Post WTO Entry China. Economic Geography 85 (1), 49 73. Veeck, A., & Veeck, G. (2000). Consumer segmentation and changing food purchase pattern s in Nanjing, PRC. World Development 28 (3), 457 471. Watson, J. (Ed.). (2006). Golden arches east: McDonald's in East Asia Stanford University Press. Zheng, Y., & Kaiser, H. M. (2008). Advertising and US nonalcoholic beverage demand. Agricultural and Res ource Economics Review 37 (2), 147 159.

PAGE 54

54 BIOGRAPHICAL SKETCH Xuqi Chen was a student of the Master of Science program in Food and Resource Economics Department at the University of Florida. Xuqi was born in Zhenjiang, China. He attended Wuhan University in China and gain ed d ual b achelor s degree s in e conomics and m athematics from 2007 to 2011. After successful ly graduat ed he was admitted to the University of Florida majored in food and resource e conomics. He graduate d in May 2013. After graduation, he might continue his education and seek for a PhD degree in economics or agricultural economics.