The Pennsylvania State University The Graduate School ASSESSING THE VIABILITY OF MEAT ALTERNATIVES TO MITIGATE THE SOCIETAL CONCERNS ASSOCIATED WITH ANIMAL AGRICULTURE IN INDIA A Thesis in Energy, Environmental, and Food Economics by Rashmit Arora 2019 Rashmit Arora Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Science August 2019 ii The thesis of Rashmit Arora was reviewed and approved* by the following: Edward Jaenicke Professor of Agricultural Economics Graduate Program Director: Energy, Environmental, and Food Economics Thesis Co-Advisor Daniel Brent Assistant Professor of Environmental Economics Thesis Co-Advisor Amit Sharma Professor of Hospitality Management/Finance Director, Food Decisions Research Laboratory Robert Chiles Assistant Professor of Rural Sociology *Signatures are on file in the Graduate School iii Abstract Meat alternatives such as plant-based and cell-based meat offer a demand-side solution to the environmental, nutritional, and other societal concerns associated with animal-intensive agriculture. However, little is known about the consumer preferences of meat alternatives, which will ultimately dictate their effectiveness in shifting demand away from conventional animal-based meat products. This thesis attempts to address this gap by assessing consumer preferences for four sources of protein – conventional meat, plant-based meat, cell-based meat, and chickpeas – in India, a rapidly developing country that has been consistently witnessing an increase in demand for animal-based protein. The sheer size of India’s population makes its existing and future consumption trends of global import. Using a discrete choice experiment (n = 394) that was conducted via a face-to-face survey in the city of Mumbai and analyzed by a latent class model, four heterogeneous segments in the market are identified. On average, respondents are willing to pay a premium of ₹138 ($1.97) per kg for plant-based meat and ₹57 ($0.81) per kg for cell-based meat over the price of conventional meat, with estimates ranging from -₹65 (-$0.93) to ₹261 ($3.73) for plant-based meat and -₹68 (-$0.97) to ₹320 ($4.57) for cell-based meat between segments. Participants consistently rated plant-based meats higher than cell-based and conventional meat across several metrics, indicating that plant-forward substitutes have a higher potential for substitutability than cell-based alternatives. Furthermore, we conclude that vegetarians in India are not the target market for meat alternatives. The findings suggest that public policy and business strategy will be most effective when tailored to specific market segments based on their respective preferences and demographic makeups. iv Table of Contents List of Tables ........................................................................................................................... vi List of Figures .......................................................................................................................... vii Acknowledgments.................................................................................................................... viii CHAPTER 1 ............................................................................................................................ 1 Introduction ...................................................................................................................... 1 CHAPTER 2 ............................................................................................................................ 2 Background Information and Literature Review ............................................................. 2 2.1. India and Meat ................................................................................................... 2 2.2. The Current State of the Food System .............................................................. 4 2.3. How Meat Alternatives Factor into the Equation .............................................. 7 2.4. Simulated Meat Preference ............................................................................... 10 CHAPTER 3 ............................................................................................................................ 15 Survey Methodology ........................................................................................................ 15 3.1. Overview ........................................................................................................... 15 3.2. Pre-Testing ........................................................................................................ 17 3.3. Missing Data ..................................................................................................... 18 CHAPTER 4 ............................................................................................................................ 19 Analytical Methodology .................................................................................................. 19 4.1. The Choice Experiment ..................................................................................... 19 4.2. Model Selection................................................................................................. 23 4.3. Methodology ..................................................................................................... 25 CHAPTER 5 ............................................................................................................................ 31 Results .............................................................................................................................. 31 5.1. Descriptive Statistics ......................................................................................... 31 5.2. The Latent Class Model .................................................................................... 37 5.3. Willingness-to-Pay ............................................................................................ 40 5.4. Class-Membership Model ................................................................................. 43 5.5. Even Price Scenario .......................................................................................... 48 5.6. Model Fit ........................................................................................................... 48 5.7. Robustness Checks ............................................................................................ 50 5.8. Peripheral Results .............................................................................................. 51 CHAPTER 6 ............................................................................................................................ 57 Discussion ........................................................................................................................ 57 v 6.1. Discussion of Results ........................................................................................ 57 6.2. Policy Simulation & Implementation ................................................................ 64 6.3. Shortcomings of the Survey .............................................................................. 68 6.4. Potential for Future Research ............................................................................ 69 CHAPTER 7 ............................................................................................................................ 71 Conclusion ....................................................................................................................... 71 Appendix A .............................................................................................................................. 77 Appendix B .............................................................................................................................. 78 References ................................................................................................................................ 79 vi List of Tables Table 1: Price attribute levels in INR (₹). ............................................................................... 22 Table 2: BIC, CAIC, and AIC results with different numbers of classes. .............................. 26 Table 3: Sample descriptive statistics and relevant 2011 Census statistics. ........................... 32 Table 4: Latent class model and class-membership model results. ......................................... 39 Table 5: Willingness-to-Pay estimates and confidence intervals with chana as the reference category. ........................................................................................................... 40 Table 6: WTP estimates with respect to conventional meat in INR and USD. ....................... 41 Table 7: Logit regression of unaided awareness of plant-based and clean meat on demographic factors. ........................................................................................................ 52 Table 8: Logit regression of willingness-to-buy plant-based and clean meat on demographic factors. ........................................................................................................ 54 Table 9: Average consumer favorability ratings for conventional, plant-based, and clean meat .................................................................................................................................. 56 Table 10: D-optimal fractional factorial design of attribute levels. ........................................ 77 Table