Consumer preferences for extra virgin olive oil with Protected Designation of Origin (PDO)

Abstract

Olive oil is one of the main components of the Mediterranean diet1, considered worldwide as one of the healthiest food diets. The consumption of olive oil provides important health benefits because it has been clinically proven that decreases the risk of heart attack and stroke (Kolata, 2013), reduces cholesterol, and prevents cancer mortality (Lopez-Miranda et al., 2010). As result, the consumption of olive oil has increased not only in producing countries (Mediterranean) but also in non-producing countries. However, the trends in consumption differed between them because in non-producing countries, the consumption has enormously increase since low levels, while in Mediterranean countries, consumption was relatively high but it has been a shift towards the consumption of higher quality olive oils. In particular, extra virgin olive oil and olive oil with some quality differentiations have faced an increase of consumption in Mediterranean countries such as Spain. One of the quality differentiations that have received increasing attention by consumers and producers is the Protected Designation of Origin (PDO) indication. Several empirical papers on olive oil consumption focused on analyzing the consumption of extra virgin olive oil (EVOO) and, in particular, extra virgin olive oil with PDO (Fotopoulus and Kristalis, 2001; Van der Lans et al., 2001; Scarpa and Del Giudice, 2004; Espejel et al., 2008; Menapace et al., 2011; Erraach et al., 2014; Yangui et al., 2014). They found that apart from the price that it is an important attribute for consumers, the origin of the olive oil, mainly, the Protected Designation of Origin is of great importance. This paper analyses consumers’ preferences for extra virgin olive oil in one Spanish region and assesses their willingness to pay (WTP) using a real choice experiment to mitigate possible hypothetical bias. In particular, preferences for two origin of production attributes are evaluated the geographical origin and the PDO indication. Error Component Random Parameter Logit model (EC RPL) was used to estimate the effect of the attributes on consumers’ utility and derive their WTP