Informed Consumers Won’t Pay More For ‘Natural’

Consumers are willing to pay more for steak labeled “natural,” unless they know the definition of “natural.”

Researchers at Arizona State University asked 663 beef eaters about their willingness to pay for steak labeled with different attributes: natural, grass-fed or corn-fed, fed without genetically modified feed and produced without growth hormones or antibiotics. Half of the participants were provided with the definition of natural and half were not.

Those consumers who were unfamiliar with USDA natural labels were willing to pay $1.26 per pound more for those steaks labeled natural. But those provided the definition of natural were unwilling to pay more for those steaks.

USDA’s Food Safety and Inspection Service says all fresh meat qualifies as “natural,” but beef that carries a “natural” label cannot contain any artificial flaors or flavorings, coloring ingredients, chemical preservatives or other artificial or synthetic ingredients. Additionally, natural products must not be more than “minimally processed.” Hamburger falls under the minimally processed umbrella, so it can be labeled natural.

Consumers in the Arizona State study who were unfamiliar with the definition of natural were willing to pay even more when that label was coupled with other attributes, as much as $2.43 per pound more for natural and no growth hormones.

Those provided the USDA definition were not willing to pay a premium for the natural label alone, but were willing to pay $3.07 per pound more for steak labeled natural and no growth hormones.

The abstract of the study was published in Applied Economic Perspectives and Policy.