Adding value through health claims: an empirical analysis of the Italian yogurt market

In recent years policymakers have aimed to increase the general awareness regarding the link between diet and health, providing food companies with an opportunity to add health-enhancing features in order to differentiate their products. The European market of these products, referred to here as functional foods, is regulated according to the European regulation 1924/2006 on nutrition and health claims on foods. Even though the European functional foods’ market has grown steadily over the last 20 years, more than 3 out of 4 new functional products are withdrawn from the market within two years from launch. Indeed, firms have to overcome three main obstacles to market health-enhancing products successfully. First, consumer-related factors, such as the heterogeneity of consumer acceptance of, and preferences for, new functional products; second, firms' difficulties in selecting the optimal attribute profiles to meet consumer demand for health features and; third, firms' difficulties to target consumers with a high enough willingness to pay to ensure the profitability of those investments needed to develop and market functional products. The general objective of this thesis is to assess quantitatively the implicit price of health claims as well as to generate new knowledge that will inform firms on how to target consumers with higher WTP for functional products. This thesis uses the Italian yogurt market as a case study for three reasons. First, yogurt is considered intrinsically healthy and it is one of the most credible carriers of functional ingredients: the category of fermented functional dairy accounts for nearly 43 per cent of the total functional products’ market. Second, among European countries, Italy saw the launch of the highest number (592) of new healthy products in the period 2005-2009; the majority of the new products introduced were functional yogurts benefiting digestive health (336), the immune system (99) and cardiovascular health (65). Third, the I