BSE and Generic Promotion of Beef: An Analysis for 'Quality from Bavaria'

Abstract

Quantitative analyses on the economic impacts of generic promotion have mainly concentrated on the U. S., Canada and Australia. Similar European case studies are rare, although EU efforts to increase food demand by generic promotion are strong given increasing consumer concerns on food safety. This holds particularly for beef in the context of BSE. Therefore, it was the objective of this analysis to evaluate an imported EU generic promotion program, "Quality from Bavaria". Based on econometric estimates, we evaluated the demand expansion nature generic promotion relative to the demand contraction of BSE. Welfare implications of "Quality from Bavaria" were additionally investigated. Major results of the analysis are as follows:

The advertising expenditures under "Quality from Bavaria" increased consumer demand for Bavarian beef and the cost-benefit ratio of the program turned out to be well above unity. Despite this success of the program, the demand effects of food-safety concerns as measured by BSE information were stronger. Hence, generic promotion could only compensate partly the inward shift in per-capita beef demand induced by BSE information and preferential changes. Although the EU market for beef has been affected much more by the BSE Crisis than the U. S. market, it is striking that the advertising elasticities of demand are similar for Bavarian consumers to U. S. consumers in earlier studies. The elasticity coefficient in this study is 0.04, and statistically different from zero.

The findings of this study cannot be generalized for Europe. The program "Quality from Bavaria" stresses, like similar programs in other states, regional orientation. The image of Bavaria as a food-producing region is very positive and it might well be that other regions will have different experiences in promoting food demand of a regional origin.