Valuing Attributes of Fluid Milk in Laos: A Comparison of Real and Hypothetical Products

Abstract

Lao' dairy market is small and under developed due to low level of per capital income with around 7 million population. Most milk products are imported from Thailand and Vietnam. The Lao government had tried to develop its national brand, for example, Nabong milk, however it failed in 2008 because of lack of competitiveness compared to other importing milk products. The Lao government still has a plan to develop its dairy industry by making its own national brand. The Lao government's development plan continuously hope to develop the dairy industry. With that in mind, this study this study estimates random utility function of fluid milk using 1,165 survey data in Laos. It finds out both products attributes and individual characteristics affecting consumers preference on the milk and compares four real milk products and hypothetical one with the brand of Laos-Korea that has never been traded assuming a potential influence of Korea caused by the bilateral cooperation between two countries. Lao national brand, Nabong is also included for understanding peoples awareness although it is not available at current market. Results show that the calories has a positive relationship with consumers preference while the price and fat have negative one. The decision for choosing each brand is significantly affected by individual characteristics such as gender, age, whether or not to live with kids, the level of education, income, the frequency of purchasing a milk per week, and the region where they are living. The preference for five brands appears in the order of the Foremost, Nabong, Thai-Danish, Meiji, and Lao-Korea, and probabilities of purchasing each brand at the mean level are 30.9%, 17.48%, 21.48%, 15.0% and 10.39%, respectively. In addition, policy of promoting livestock and milk industry in Laos would be more effective if it focuses more on having a good national brand, female consumers, family with kids, high quality of milk products, the young generation, and Vientiane capital areas.