FRUIT JUICE MAKING & PACKAGING IN PLASTIC CONTAINER

CHAPTER ONE

INTRODUCTION

1.1 Background

Over the past few decades, food consumption habits have changed immensely. In today’s society, it is common for both spouses to work outside of the home. Consequently, rising average household incomes give consumers a broad range of choices for the basic food bundle. A health aware nation and a rising interest in maintaining and improving human life are just a few reasons why fruit and vegetable demand has risen. Campaigns such as “5 A Day” promoted by the World Health Organization (WHO) encourage people to consume five fruits or vegetables per day. The food industry has responded to this demand by developing fresh and nutritional products with conservation techniques that extend the shelf life of the product (Deliza et al. 2003).

On average, consumers expend more money on fruits and vegetables that any other type of food (Bureau Labor of Statistics, 2008), see figure 1. Other food at home represents sugar, oils and fats, miscellaneous food, and non alcoholic beverages. Annual household expenditures on vegetables and fruits represents 18% of the total amount of dollars spent on food at home, around

$858 per year, followed by cereals and bakery which represent $660. Dairy products accounts for $559, reports of beef account for $308, pork $205, poultry $198, fish and seafood $158, other meats $139, and eggs $63, respectively.

Vegetables and fruits are recognized for their benefits toward healthy living (Cox et al., 1996). They have essential vitamins, minerals, and fiber. A diet high in fruits and vegetables is linked to lower risk for several chronic degenerative diseases, including certain cancers and cardiovascular disease (Van Duyn and Pivonka, 2000). Moreover, it is beneficial in weight management when eaten as part of a reduced-energy diet (Rolls et al., 2004).

Source: Bureau Labor Statistics, 2008.

Figure 1. Average Annual Expenditures

According to Mintel (2008), annual consumer spending for juice and fruit beverages is approximately $19 billion. Fruit juices represent the major form of US per capita fruit consumption (Rosson and Adcock, 2000), accounting for forty four percent of commercially marketed fruit products in 2000 (Thor and Savitry, 2001). Mintel International Group findings reported that thirty eight percent of the respondents are drinking fewer carbonated drinks which could represent a promising future for fruit juices. Mintel’s research reveals seventy three percent of the respondents agreed that a juice’s nutritional value is the most important characteristic when deciding which fruit juice to purchase. In fact, sixty one percent of the consumers stated that they would buy only juices which are a 100% juice (Mintel International Group).

In the U.S., fruit juice can only legally be used to describe a product which is 100% fruit juice. A blend of fruit juice with other ingredients is called a juice cocktail or juice drink (Code of Federal Regulations, 2001). According to the Food and Drug Administration (FDA), a diluted juice which includes fruit juice or puree, water, and which may contain artificial sweeteners is called nectar (CESAN, 2003).

In develop countries where the demand for convenience products is growing, packaged food products account for large shares of total food expenditures among consumers (ERS, 2009).

The U.S. market is divided into the at home and the away from home food and beverage market.

In 2008 the average annual expenditure of consumer for food away from home was $2,698 (Bureau of Labor and Statistics, 2008). In 1970, 26 percent of all food spending was on food away from home; by 2008, that share percentage increase to 48.5 percent representing $565 billion (ERS, 2009). Some factors that have contributed to this increase are women working outside the home, and the smaller size of U.S. households (ERS, 2005). According to the National Restaurant Association (2008), U.S. adults purchase a restaurant snack or meal 5.8 times per week.

Agriculture has a important role in sustainability, sustainable food has been described by The American Public Health Association (APHA) as a move that provides healthy food that meets consumers needs while maintaining healthy ecosystems, with minimal damaging to the environment (Feenstra, 2002; Harmon and Gerald, 2007). The sustainable food movement encourages organic and local production. A study conducted by the USDA (2009) indicated that U.S. sales of organic food have grown from $1 billion in 1990 to $21.1 billion in 2008, accounting for 3.7 percent U.S. food sales.

With an increasing emphasis on health, nutrition and environment, changing life styles and higher incomes, the U.S. market offers several opportunities for new products. Today’s trends for healthy eating habits and “ready to eat” products has increased consumer demand for more detailed and accessible information, primarily on food packaging and labels. Consumers like to know the ingredients and the features related to food safety (Abbott, 1997). Although product attributes such as quality and price are extremely important to consumers, packaging and labeling play a fundamental role on consumer’s intention to purchase. These factors are

important because they represent the first line of contact between the consumer and the product.

1.2 Problem Statement

Today the majority of fruit juice products target children; however there is a need for a nutritional drink for the adult. The purpose of this study is to develop a better understanding of consumer preferences for 100% fruit juice packages and labels. Specifically, to evaluate which types of packaging and labeling will be more convenient and attractive to the adult market (who usually spends more of its time away from home) in terms of the attributes influencing consumer’s intention to purchase as well as the factors that affect these preferences.

1.3 Specific Objectives

• to investigate which packaging and labeling attributes U.S. consumers consider important when choosing 100% fruit juice products,
• to estimate consumer’s willingness-to-pay for selected packaging and labeling attributes, and (3) to identify market segments based on consumers preferences, behavior, attitudes, interests and beliefs, and analyzed differences between the segments.

1.4 Organization of the Study

The study in this thesis use hypothetical fruit juices that are not available in the market.Fruit juices were chosen because it has been shown that nutrients in these products help prevent the risk of several diseases such as certain types of cancers and heart disease. Five attributes were included to measure their relative importance: packaging material, health and nutritional claims, an organic symbol, a locally produced symbol, and price. The experimental design was conducted to assign attributes in different choice sets. Data was collected from approximately 253 households in the U.S. through a web survey. A conditional logit (CL) model for the entire sample, and CL for different subgroups were then applied to analyze consumer preferences and willingness to pay. The next chapter focuses on the literature review. Follow by methodology, which include the theoretical and empirical models, data collection process and the analysis procedures. Chapter V describes the results and discussion. The last chapter concludes with the conclusions, limitations, and suggestions for future research.

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