Assam Dairy Development Project Consumer Survey

1. Assam Dairy Development ProjectConsumer Survey Assam Institute of Management International Livestock Research Institute Guwahati, Assam, India 7 December 2006

2. Background of the Project • Comprehensive study of Assam dairy sector • Limited knowledge about consumption patterns and purchasing behavior of Assamese consumers of milk and dairy products • Need good understanding of other economic, demographic and cultural factors that influence dairy products consumption • Appropriately contextualize proposed changes in government policies for dairy development • Effectively responding to emerging changes in food retailing industry

3. Objectives of the Study • Improve knowledge on consumer preferences, trends in consumption, impact on dairy production and marketing opportunities • Work out potentialities from current and projected demand for milk/dairy products in urban, peri-urban, and rural production areas • Investigate reasons for relatively low demand for milk and identify appropriate recommendations for increasing demand

4. Nature of demand and hypotheses • Urban and rural consumers have the same preferences for certain quality attributes of milk and dairy products. • Urban and rural consumers have the same perceptions about certain quality attributes of milk and dairy products. • Urban and rural consumers consume the same quantities of milk and dairy products per capita. • Urban and rural consumers have the same set of milk and dairy products available to them and from which they can choose. • Urban and rural consumers face the same prices of milk and dairy products. • Differences in income levels, availability of differentiated products, marketing channels, ethnicity, and differences in tastes will likely affect the levels of consumption of milk and dairy products across households in Assam.

5. Methodology • Structured survey in 9 districts pre-selected by DDD • 1500 consumers in urban (70%) and rural (30%) areas, of which 1140 households, 60 institutional users • Questionnaires developed and used in households and institutional users • Descriptive statistical analysis of survey data • Econometric analysis to investigate consumer WTP and choice of outlets for milk/dairy products

7. Sample distribution in survey sites

8. Demographic characteristics and implications on dairy consumption • Younger urban consumers than rural consumers • More educated urban consumers than rural consumers • Higher income among urban than rural households • Higher proportion of tribal and ethnic minorities in rural areas. • Larger household size in rural than urban areas • Large majority of non-vegetarians and lactose tolerant consumers in both urban and rural

9. Key findings on preferences for dairy products by use • Boiled milk most preferred for drinking and mixing with tea/coffee by both urban and rural consumers • Raw fresh milk less preferred for drinking by both urban and rural consumers • Flavored milk second best preferred for drinking by both urban and rural consumers • Skimmed and pasteurized milk and lassi more preferred for drinking by urban than rural consumers • Pasteurized and powdered milk more preferred for mixing with tea/coffee by urban than rural consumers • Boiled milk highly preferred overall by urban and rural consumers

10. Preference rating for drinking

11. Preference rating for mixing with tea/coffee

12. Overall preference rating

13. Key findings on preferences for dairy product attributes • Boiled milk most preferred for taste, nutritive value, health risk by urban and rural consumers; also in overall rating. • Powdered milk more preferred for hygiene, shelf life, availability, packaging by urban than rural consumers. • Generally low preference ratings for price by both urban and rural consumers.

14. Preference rating for taste

15. Preference rating for nutritive value

16. Preference rating for health risk

17. Preference rating for hygiene

18. Preference rating for shelf life

19. Preference rating for availability

20. Preference rating for packaging

21. Preference rating for price

22. Overall preference rating

23. Key findings on preferences for dairy product attributes • Cow milk more preferred than buffalo milk in overall rating. • Local breed, grass fed, no antibiotic use are preferred attributes of dairy animals. • High fat, yellowish, thick, nice flavor are preferred attributes of milk. • Direct purchase from producer, home delivery, and milk coops are top three most preferred purchase modes.

24. Preference rating for cow vs buffalo milk

25. Preference rating for attributes of cow vs buffalo milk

26. Preference rating for purchase mode (cow milk)

27. Key findings on consumer attitude • The majority always take milk/milk products as part of diet and are generally aware of health benefits from milk consumption. • More urban consumers prefer to purchase milk from milk vendors than rural consumers. • Majority of rural consumers do not prefer to purchase from milk vendors. • Dairy farm outlet is preferred outlet by more urban and rural consumers. • Close to half of urban and rural consumers are satisfied with milk quality and hygiene. • But a significant share of (42% urban and 36% rural) are not satisfied.

28. Key findings on consumer attitude • Majority of urban and 44% of rural consumers are not satisfied with purity of raw milk sold by milk vendors. • Majority of urban and 43% of rural consumers are not happy with cost of milk at given level of quality. • Majority of urban and rural consumers are satisfied with availability of milk when they need it. • But more urban (29%) than rural (19%) consumers do not find it convenient to find milk when they need it.

29. Key findings on consumer attitude • Majority of urban and rural consumers prefer to drink boiled milk, do not like to consume raw milk. • Majority of urban and rural consumers prefer to consume milk with tea/coffee or as sweets, buy milk/milk products during festivals, religious ceremonies, etc. • Majority of urban and rural consumers agree that milk from milk vendors is not safe. • More rural than urban consumers agree there is no acute deficiency of milk in the market. • One third of urban and one-fourth of rural consumers believe there is acute deficiency of milk in the market.

30. Key findings on consumer attitude • More urban than rural consumers do not prefer unsealed/loosely packed milk. • Majority of urban and rural consumers are not happy with current unregulated market for dairy. • More urban than rural consumers are willing to pay more for better milk quality and hygiene. • Majority of urban and rural consumers do not find unboiled milk safe to drink. • Majority of urban and rural consumers believe that raw milk sold by milk vendors is not pure and is adulterated.

31. Key findings on milk and dairy product consumption • Per capita consumption almost the same in rural and urban areas; higher than state average. • Urban consumers purchase more milk than rural consumers. • Urban consumers pay more per liter of milk than rural consumers. • Urban consumer consume more variety of dairy products than rural consumers. • Urban consumers have higher consumption expenditure for dairy products than rural consumers (182 rupees urban, 120 rupees rural)

32. Per capita milk consumption: a comparison

33. Own produced and purchased milk based on last one week

34. Purchased dairy products in the last one week

35. Ave. purchase price of raw milk by outlet

36. Major reasons for choice of outlet • Raw milk: trust in seller • Powdered milk: proximity to home • Curd, paneer: trust in seller • Fresh cream: trust in seller • Sweets: trust in seller

37. How milk quality is ascertained • Boiling (ex post) • Trust in the supplier (ex ante) • Examination by sight and smell (ex ante)

38. Implications for dairy development in Assam • Fresh milk still the most preferred form of dairy consumption by Assamese consumers. • Other dairy products increasing in consumption are powdered milk and sweets, also processed dairy products like curd, cream, paneer. • Consumption levels still way below national average, but can be jumpstarted through milk promotion campaigns targeted to younger, urban market.

39. Implications for dairy development in Assam • Consumers have indicated concern about milk quality and safety in available milk supply. • Issue of adulteration is widely recognized and perceived to be more prevalent in informal market. • Trust in seller is a major criteria for choice of outlet, particularly in informal market; also preference for shorter supply chain.

40. Implications for dairy development in Assam • Need to enhance reputation for quality/safety of informal traders/milk vendors if they are to remain viable suppliers of milk in urban informal markets; i.e., training in milk handling. • Urban consumers more willing to pay for quality/safety guaranteed milk, increasingly shifting to formal outlets like supermarkets. • Rural consumers are less willing to pay more for quality/safety hence informal market will still be viable source, next to local producers.

41. Acknowledgments • Department of Dairy Development • World Bank – AACP • Others??