Consumer valuation of lactose-reduced ice cream products

An estimated 36% of people in the United States have some degree of lactose intolerance, which may decrease their consumption of some dairy foods. Although many lactose-free products have been introduced to the market, there is limited information about consumer valuation, which can affect their market success. We implemented an experimental auction to assess consumer willingness to pay for 3 ice cream products (no lactose reduction, lactose-reduced, and lactose-free). The auction comprised 2 rounds of participants (n = 135) bidding on each of the 3 products with an information treatment, describing detailed product characteristics (i.e., fat content, added sugar content, and ingredients), provided before the second round. Random-effects censored regression models estimated the impact of product and its interaction with additional information on bid value. The regression models also controlled for participants' reported lactose tolerance status, interactions between product and lactose tolerance, and other demographic variables, including age, gender, education, and ethnicity. Product, Asian ethnicity, the frequency of ice cream consumption, and the interactions between product and reported lactose tolerance were determinants of valuation. Bid values for lactose-free ice cream were higher among individuals reporting very limited, limited, or moderate lactose tolerance, with price premiums of $2.17, $0.82, and $0.55 per half gallon, respectively, increases of 10% to 40% over the mean bid value of $5.43. The higher consumer valuation of lactose-reduced and lactose-free ice cream products by lactose-intolerant consumers may indicate opportunities for new value-added product lines, but requires additional information about changes to production costs and pricing strategies for lactose-reduced and lactose-free products.