Some Like It Healthy: Demand for Functional and Conventional Yogurts in the Italian Market

Although the research investigating the market of functional foods proliferates, little empirical analysis has so far used actual market data. This study analyzes the demand for both conventional and functional alternatives sold in the Italian yogurt market using a scanner database of yogurt sales and a discrete choice (nested-logit) demand model, assessing also the role of health-related demographic characteristics as potential contributors to the market success of functional yogurts. The results show that, in the category analyzed, high prices deter the market success of some functional alternatives; this does not apply to drinkable ones, whose demand shows lower own-price and larger cross-price elasticities compared to the other functional alternatives. In addition, health-related consumer characteristics play an important role in shaping the demand for both conventional and functional yogurts in Italy. In particular, an aging, increasingly health-conscious population is likely to provide fertile ground for the success of functional yogurts in this market.