Market valuation of processed fruit juice attributes in Uganda: what do market prices of processed fruit juice reflect?

Abstract

The demand for processed fruit juice is rising in Uganda due to growth in urbanization, incomes and middle class. Though locally-processed fruit juice is available, much of the domestic demand is being satisfied through imports mainly from South Africa and Kenya, leading to a variety of products in the market. Since processed fruit juice is a heterogenous product, this study assessed the implicit market values of its quality attributes for enhancement of nutrition security in Uganda. By fitting market data to the hedonic price model, size of package was slightly discounted in processed fruit juice per 100 ml serving. For a unit (ml) increase in size of package of fruit juice, the price per serving decreased by Ush0.11 (< US$0.01). Further, fruit juices in transparent packages were significantly cheaper per serving than those in non-transparent packages by Ush23 (US$0.01). Besides packaging, the influence of important quality attributes on its market price was weak. Only fruit juices with added sugar and preservatives were discounted on the market. Fruit juice concentration and flavour did not have any effect on the market price of processed fruit juice, probably because market prices of fruit juices were relatively uniform per serving irrespective of the fruit juice concentration and flavour. Informal interview with one of the local fruit juice processors revealed that the price of fruit juice reflected the cost of packaging material that constituted about 70% of total production costs. Results from this study have far reaching implications for agribusinesses and policy makers for promotion of nutrition security in Uganda. Local fruit juice processors and distributors could opt for the market-oriented pricing and segmentation strategies to offer a wide range of products including premium fruit juice products for high-end, nutrition and health conscious consumers. Moreover, any government efforts to lower the cost of fruit juice packaging material will promote local fruit juice production and consumption in Uganda.

Keywords: processed fruit juice, hedonic price model, attributes, convenience, nutrition