Abstract
This paper investigates the effect of milk-poisoning, caused by a big milk company we will call "Company A", on demand for milk. For the empirical analysis, the AI Demand System with two-stage budgeting of four groups, i.e., Processed Milk Group, Company A's Brand Milk Group, Local Brand Milk Group and National Brand Milk Group (excluding Company's A Brand Milk Group) was estimated by weekly home scan data set over a 15-month (Jan. 2000-Mar. 2001) period. A change in the effect of milk-poisoning was observed, and a relation between the effect and consumers' loyalty to Company A's brand was examined.
It was found that the milk-poisoning by the company decreased the total expenditure on milk. This finding suggests that the milk-poisoning worsened attitudes toward milk as a whole. As for the findings from the estimation of expenditure shares, the share for milk was decreased by the milk-poisoning in Processed Milk Group over the period observed. The expenditure share of Local Brand Milk Group was increased; however, quantity demand for this group was lowered by the decrease in total milk expenditure. The share of the National Brand Milk Group was decreased. This result suggests that the milk-poisoning caused widespread damage to the national brand's advantage. In Company A's Brand Milk Group, its share was decreased just after the milk-poisoning, but was increased in the latter half of the period observed. However, the expenditure share by those loyal to the company kept decreasing throughout that period. It is implied that loyalty to the company's brand was weakened due to the milk-poisoning. The contribution of this paper is to succeed in depicting empirically the impact of the milk-poisoning on consumption of milk and categorized groups.
