Explaining the sweetener substitution in the US food processing industry
Food processing firms are facing increased pressures related to the health concerns of consumers' to whom they sell products. These consumers' health concerns are largely driven by a growing awareness of the link between food and beverages that one eats and one's health status. As changes in consumers' food habits reflect this phenomenon, food processing firms have increasingly reformulated their ingredients to sustain market shares. More often, this decision to change the input-mix formulation in response to health concerns conflicts with least cost of food good production. As such, the decision to change the input mix, based on consumer's health concerns, reflects higher cost of production and vice-versa. This study attempts to explain the role of relative prices and health information in the sweetener substitution across US Food processing firms. Results suggest an influence of health information in explaining sweetener substitution. Implication of these results may be significant to many economic agents.