The Relationship Between Sustainability Attributes and Brand Equity in the Dutch Plant-Based Food Market.

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11567988

University of Amsterdam

BSc Business Administration

Bachelor’s Thesis: Entrepreneurship, Innovation, and Creativity

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The Relationship Between Sustainability Attributes and Brand Equity in

the Dutch Plant-Based Food Market.

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Supervisor: Dr. Nazlihan Ugur Word Count: 7773

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This document is written by Frederico Rosa who declares to take full responsibility

for the contents of this document.

I declare that the text and the work presented in this document are original and that

no sources other than those mentioned in the text and its references have been used

in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of

completion of the work, not for the contents.

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Abstract

The Dutch market for plant-based food has been growing at a steady rate for over a decade. One of the forces propelling this growth is an increase in demand for more

environmentally sustainable food products, as more and more consumers are becoming mindful of the relationship between certain food products and environmental issues. Brands in this industry may capitalize from this sustainable-consumption trend by actively trying to reduce the impact they have on the environment, thereby increasing brand equity. While it is generally accepted that the sustainability of a brand positively affects consumer attitudes and perceptions, little is known regarding the differences between sustainable attributes and their effect on brand equity.

The purpose of this paper is to analyze which sustainable attribute a brand should improve on as a means to increase their brand equity score. By understanding how different sustainable attributes affect brand equity in the Dutch plant-based food market, managers can gain valuable insight regarding how consumers are influenced by different sustainable aspects. The research question this paper sets out to answer is: which sustainable attributes most

positively affect brand equity in the Dutch plant-based food market?

This research question was answered through an online data collection process whereby 94 participants were presented with differing scenarios. In these scenarios, the fictitious Dutch plant-based food brand AlmondLife was said to have reduced their environmental impact on one of three attributes by 20%. The participants were asked to rate four different aspects of brand equity based on the scenario given.

The results showed no significant difference in effect between the three different sustainable attributes. Nonetheless, there remains strong reason to believe that brands can successfully increase their brand equity by making an active effort to engage in sustainable practices. It is further recommended that managers take into consideration the demographics of their consumers and how different social groups may be influenced by sustainability.

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1) Abstract

2) Introduction……….………1

3) Literature Review………2

a) Sustainability………2

i.

Urgency of Sustainability Practices………2

ii.

Trends in Consumption of Plant-Based Foods……….…..2

iii.

Environmental Sustainability and the Food Industry………….3

b) Product selection – Almonds & Plant-Based Cheese………..4

c) Brand Equity………4

i.

The Significance of Brand Equity…………..………5

ii.

Customer-Based Brand Equity……...………5

iii.

Brand Loyalty and Perceived Quality...……….6

4) Conceptual Framework…

…

….………...………8

5) Methodology …………

.….

………12

a) Data Collection………...………12

b) Data Analysis………...………...………13

6) Results……

….

………...15

7) Discussion………

…

………....………..17

a) Limitations of Study…………...……….19

8) Conclusion………21

Appendix………

.…

……….22

A. Questionnaires……….22

i.

GHG Emissions………23

ii.

Water Use………...………..27

iii.

Land Use………..…………32

B. Summary Statistics………..37

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Introduction

Given shifting environmental conditions and a growing worldwide population, the global food industry is becoming increasingly vulnerable to issues of sustainability and food security (Reisch et al., 2013). Consumers are becoming increasingly drawn to reducing their consumption of animal-based products and replacing these with more environmentally friendly plant-based alternatives (Medawar et al., 2019). Based on data from Statista, the Dutch market for meat alternatives grew by 41% between 2015 and 2020, a market that is now worth €118.1 million (Statista, 2020). Moreover, the Dutch Center for Nutrition has recently declared that they will be supporting a shift towards a more plant-based diet as a means to reduce health and environmental risks (Van Dooren & Seves, 2018)

Increasing demand for plant-based alternatives has created a new market in which consumers are often rigorous in their demand for transparency and sustainable practices on behalf of brands (Whelan & Kronthal-Sacco, 2019). As this market develops, brands can benefit from these trends by strategically and actively engaging in sustainable practices that are most demanded by consumers (Borin et al., 2013). Given that consumption of food products is becoming more and more driven by the sustainable practices behind their production, it is important for brands to understand which sustainability practices consumers are most concerned with.

Although there are studies that have focused on which environmentally friendly practices are most demanded in the food industry in general (von Meyer-Höfer & Spiller 2014, Sidali et al. 2016), there has not been an investigation on how these may differ within the plant-based food sector. Naturally, managers of plant-based food brands can draw more valuable conclusions from results specific to their sector as opposed to the trends observed in the food industry as a whole.

In order to assess the potential benefits that may come to a brand as the result of a reducing their impact on the environment, it is necessary to understand how different

sustainability practices are perceived and prioritized by consumers. Keller (1993) suggested that one such way brands can gain insight into how they are evaluated in the minds of consumers is by measuring a set of constructs known as brand equity. Often described as “the value added by the brand to the product” (Farquhar, 1989), strong brand equity has been shown to be linked with higher financial returns, higher market share, and the ability to charge premium prices. (Aydin 2015, Shimp 2007).

This paper will draw a comparison between three different sustainable attributes – greenhouse gas emissions, water use, and land use - and contrast the different effects that an improvement in each will have on brand equity and its four subcomponents. The purpose here is to understand whether consumers form different perceptions towards a brand depending on which sustainability improvement is portrayed by the brand. Therefore, the research question this paper aims to answer is the following: which sustainability attributes most positively affect brand equity in the Dutch plant-based food market?

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Literature Review

Sustainability

Urgency of Sustainability Practices

Due to an increasing sense of urgency regarding ecological and social issues, brands are becoming increasingly urged to broaden their focus from the sheer creation of wealth to a more holistic perspective, one that accounts for the consequences that their operations have on the environment (Bergquist, 2017). The food industry is one such industry that is under increasing pressure as climate conditions worsen. As it stands, the estimation that the global population will surpass 9 billion by 2050 leaves the current industry practices inappropriate for future demand, given the need for a more stringent use of resources such as water, energy, and land (EUFIC, 2015).

Trends in Consumption of Plant-Based Foods

Due to concerns regarding the urgency of sustainability practices, Steadily more consumers and investors are encouraging companies to reduce or their overall impact on the environment. A 2015 study found that 66% of consumers (from various income classes and regions of the world) stated they were more likely to pay higher for a product that was

manufactured sustainably. Notably, almost three out of every four consumers under the age of 35 were found to be also willing to pay more for sustainable products (Nielsen, 2015)

One way in which consumers are choosing to reduce their environmental footprint is by adopting a plant-based diet. A plant-based diet is characterized by “a regimen that encourages whole, plant-based foods and discourages meats, dairy products, and eggs” (Tuso, 2013). Eating a diet that is rich or exclusive in plants is considered to be one of the most effective ways to reduce one’s impact on the environment (Poore 2018, Jalava et al. 2014, Sabaté 2014). Consistent with the growth in sustainable consumption, the market for plant-based foods has been growing at unprecedented rates. In the Netherlands alone, the market for plant-based meat-substitute products has grown at an average annual rate of 7.9% for the last thirteen years (Statista, 2020).

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Given that environmental concern is one of the main reasons why consumers opt to reduce their consumption of animal products (Hopwood, 2020), it is important for brands selling plant-based food to understand which environmental attributes consumers are most concerned about. The next section will introduce the most prominent environmental issues related to the food industry.

Environmental Sustainability and the Food Industry

Prior to understanding the relationship between the environment and the food industry, it is important to clarify one particular point. There are three main pillars of sustainability –

environmental, economic, and social (Hansmann, 2012). These pillars are interdependent and often times two or more of such pillars go together in a given situation. Having said that, due to how remarkably important it currently is in the context of the food industry, only the

environmental pillar of sustainability will be addressed in this paper.

There are a variety of reasons that emphasize the urgency regarding environmental problems pertaining to the food industry. First, food production alone accounted for 26% of global greenhouse gas emissions in 2017 – meat and dairy having the highest carbon footprint, raw materials, and water consumption of any food products (Poore, 2018). Secondly, the food industry is simultaneously a sector with one of the highest environmental impacts but also one that will be dramatically affected by the changing climate conditions it contributes to, as increasing temperatures and changing weather conditions will make it increasingly harder to keep up with global demand (EEA, 2015). Third, consumers tend to perceive environmentally friendly products as better in quality, safety, freshness, and even taste (Vermeir and Verbeke, 2006). Finally, environmentally sustainable practices consistently lead to financial benefits for firms, especially in more competitive industries such as the food industry (Banerjee et al., 2019).

Within the sphere of environmental concerns, there are three sustainability attributes that stand out as having a compelling negative effects .In addition to the previously mentioned statistic that food production accounts for around a quarter of global GHG emissions, it is estimated that half of the world’s habitable land and 70% of all global available freshwater is used for agriculture (FAO, 2011). Land used for livestock and animal feed take up 77% of global agricultural land, which is partly why plant-sources are more environmentally sustainable.

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Finally, 78% of eutrophication and pollution in all oceans and rivers are caused from agriculture alone (Poore, 2018). Given that plant-foods always score lower in each of these impacts (greenhouse gases, land use, water use), it is valuable to understand whether consumers in this market prioritize certain sustainability attributes. Note that land use includes issues such as the degradation of soil and loss of biodiversity (Tsegaye, 2019), while water use also includes run-off waste and ocean pollution. This is because a large amount of ocean waste is run-off from farms (Mateo-Sagasta et al., 2017).

As a result of poor sustainable management in the food industry, significant problems are arising in relation to greenhouse gas emissions, land use, and water use. Due to their critical effect on the environment, these are the three sustainability attributes analyzed in this paper.

Product Selection: Almonds & Plant-Based Cheese

Having introduced the current issues in sustainability, the purpose of this section is to explain why a specific plant-based food product was chosen as the item for the study. When measuring consumer perception towards the sustainability component of a product, it is important that its production is known to have a has a similar degree of impact on each of the different sustainability attributes being tested.

Since this study will focus on GHG emissions, water use, and land use, the fictitious product given is plant-based cheese made from almonds. Almond farms are well-known to be highly demanding and inefficient in terms of both land and water use (Geological Society of America, 2016, Fulton et al, 2019, Wilson et al., 2017). No study has been conducted regarding consumer perception towards the environmental impact of almonds, but it is nonetheless possible that participants who are knowledgeable in food sustainability will be aware of these two

particular issues.

The “cheese” factor for this product was chosen for two reasons, one of them being that the process of turning almonds into cheese is one that participants may associate with the emission of GHGs since it involves processing and manufacturing a raw material. The other reason is that plant-based cheese is a popular example of plant-based alternatives to otherwise animal-based products, in this case dairy (Sethi et al., 2016).

Thus, the decision behind the product used in this study being almond-made plant-based cheese is that it is a product that affects the three sustainable attributes to a similar degree.

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Brand Equity

The Significance of Brand Equity

This paper aims to understand how consumers perceive companies who act sustainable. Customer perception is to be measured through Brand Equity, which Keller (2003) defines as “the differential effect that brand knowledge has on consumer response to the marketing of that brand”. There is extensive research regarding Brand Equity and it is generally agreed that high Brand Equity correlates with positive connotations in the consumers’ minds (Lökken, 2012). Further, positive Brand Equity had direct implications with a company’s ability to charge higher prices, successfully implement new distribution channels, and increase the effectiveness of marketing strategies. This tends to result in higher revenues, lower costs, and greater profits (Atilgan et al., 2005). Moreover, in certain industries there tends to be a positive relationship between the sustainability of a brand and its overall Brand Equity value. (Zein et al., 2019). There are different models of measuring Brand Equity, but the most cited one is the original model created by Aaker (1991). This original model conceives of 5 different aspects of brand equity: brand loyalty, brand awareness, perceived quality, brand associations, and other

proprietary brand assets (Aakr, 1991). However, Brand Equity is a large topic and there are many ways in which it can be measured.

Customer-Based Brand Equity

One such way by which Brand Equity can be measured is through the Customer-Based Brand Equity Model (CBBE) (Chieng & Lee, 2011). This model was initially developed by Keller (Keller, 1993), and places more focus on the relationship between customers’ attitudes and the different pillars of brand equity. According to Keller, CBBE is high when “the consumer is familiar with the brand and holds some favorable, strong, and unique brand associations in memory (Keller, 1993). Because the CBBE is one way to measure a perception-oriented

perspective of Brand Equity, these two terms will be used interchangeably throughout this thesis. By perception-oriented, it is meant that it is primarily preoccupied with consumers attitudes, opinions, and emotions (Chieng & Lee, 2011)

Due to a number of reasons, this thesis will only focus on two out of the five pillars described in the original model designed by Aaker. These pillars are Brand Loyalty and

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customer attitudes, thus they are of most relevance within the customer-based model of Brand Equity. This will be explained in more detail in the next section of this literature review. Second, due to the fictional nature of the brand used in the questionnaire, some of these pillars from the original model are either impossible to measure or irrelevant. For example, brand awareness relates to degree of familiarity that consumers have with a brand (Aaker, 1991), and is typically tested with well-known and popular companies. It would be inappropriate to test for the brand awareness of a brand that does not exist. The third reason is that by focusing just on two pillars of Brand Equity, it is possible to focus more extensively in each pillar instead of engaging in a potentially superficial overview of the entire Brand Equity model. The two pillars chosen for this paper are outlined below.

Brand Loyalty & Perceived Quality

Brand Loyalty has long been considered a particularly important pillar of Brand Equity (Alhaddad, 2015), and it is “generally associated with a positive perception by customers towards the brand” (Ishak & Ghani, 2013). It was referred by Aaker as the “core of Brand Equity” due to how intrinsically tied it is to a consumer’s decision to purchase a product (Aaker, 1991). Similarly, Perceived Quality is tied to the expectations that consumers have about a brand, and such expectations are based on their subjective evaluations of that brand (Nath Sanyal, 2011).

Both of these pillars of Brand Equity are highly interrelated because a high level of Brand Loyalty is often directly related to whether or not the brand fulfills the consumer’s expectations, and both these pillars involve an emotional relationship between the consumer and the brand (Chaves, 2017). There are various items that can be used to measure each of these pillars.

Brand Loyalty is often evaluated by the consumer’s Willingness-to-Pay and by

Likelihood of Recommendation (Falahat et al., 2018). Willingness-To-Pay can be measured as the maximum price that a consumer is willing to pay for a product (Wertenbroch and Skiera, 2002). In this paper, it will be measured by how much more a participant is willing to pay for a product from AlmondLife than compared to the average product on the market. Likelihood of Recommendation refers to how likely a consumer is to recommend a brand’s product to

somebody, and is often related to the extent that the consumer perceives its relationship with the brand to be mutually beneficial (Chatzipanagiotou et al., 2019).

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On the other hand, Perceived Quality involves the Opinion and the Trust that a consumer feels towards a brand. These two elements in particular highlight the close relationship between Perceived Quality and Brand Loyalty. Although trustworthiness is typically treated as separate from Perceived Quality (Chieng, 2011), this paper will consider it as a sub-category instead. Typical considerations of Brand Equity tend to conceive Perceived Quality by the reference of monetary cost (Lassar et al., 1995), but sustainable consumers are often motivated by a broader paradigm of “planet over profit” (Böcker & Meelen, 2017). One common issue that sustainable consumers are increasingly wary of is when brands make deceptive or false claims regarding their own sustainability, a phenomenon otherwise known as greenwashing (Khandelwal et al., 2019). Khandelwal also found that a consumer’s perception of greenwashing leads to a decrease in brand trust, which in turn affects Perceived Quality. Due to this close relationship, Trust will be considered a component of Perceived Quality. The other component is Opinion - the attitude or perception that a consumer holds towards a specific brand – and brands can often improve consumers’ opinions of them by improving their sustainability (Cherian & Jacob, 2012). Of course, this is context dependent and may not work depending on consumers’ perception of greenwashing.

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Conceptual Framework

The main prediction for the research question is that a reduction in GHG emissions will have the most positive effect on Brand Equity, as opposed to land or water use. The reasoning behind this hypothesis lies in that this is arguably one of the most well-known issues within the topic of climate change (Ferguson et al. 2017, Leiserowitz 2010), such that participants who are not so well-versed in contemporary environmental problems may not be aware of other current issues such as poor/excessive use of land and water. Moreover, another good reason to believe that plant-based food consumers will be more sensitive to GHG emissions improvement is that animal agriculture is notorious for its high amount of emissions, despite it also using a high amount of land and water (Poore, 2018). Thus, it is likely that a good share of plant-based consumers are aware of this specific issue surrounding animal-based food products.

Brand Equity is divided in two categories (Brand Loyalty and Perceived Quality), each category consisting of two components. It is difficult and arguably unsuitable to predict how each of the two categories will be affected by the sustainability attributes. Components that belong to the same category (Willingness-to-Pay and Likelihood of Recommendation, Opinion and Trust) may nonetheless be affected quite differently from each other. Thus, it may be more fitting to predict the results on every one of the four components rather than developing a hypothesis on the two categories alone.

Brand Loyalty is made up of both the willingness to pay for a product from compared to the average product on the market (Willingness-to-Pay), and the likelihood that a participant will recommend the brand to a friend (Likelihood of Recommendation). It is reasonable to predict that both of these should score high, given that AlmondLife is described as an environmental-friendly brand (Panda, 2019). However, the majority of the participants in this study are university students, thus they may face higher-than-average financial restrictions that could reduce their Willingness-to-Pay an additional cost for any product, whatever that may be. Due to this financial limitation, they are likely to be less rigid in differentiating between the

sustainability attributes of a brand. In other words, their Willingness-to-Pay for a plant-based food product is likely to be more heavily influenced by the degree of sustainability rather than the type. Hence, it is reasonable to hypothesize that there will be no significant difference between the different sustainability attributes and the willingness-to-pay component. On the other hand, Likelihood of Recommendation is likely positively correlated with the perceived

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importance the participant feels towards whichever sustainability attribute is presented in the scenario. Naturally, then, a reduction in GHG emissions is the most likely attribute to have a higher effect on this dimension of Brand Loyalty. This is based off the assumption that GHG emissions is the sustainability attribute perceived as most important across the population.

The second category - Perceived Quality - is comprised of Opinion and Trust. It is once again probable that both dimensions score quite high, due to the way in which AlmondLife is presented in the scenario as an environmentally-conscious brand. Akin to the Likelihood of Recommendation component, Opinion is likely to be positively correlated with the participant’s perception regarding the importance of the sustainability attribute presented in the scenario. Therefore, it is again probable that GHG emissions has the most positive effect out of the three different possible attributes.

The Trust component is uniquely affected by the potential that a participant will perceive AlmondLife as “greenwashing”. However, the brand is positively described in the scenario and thus there is little reason for participants to suspect that AlmondLife’s efforts are a case of “greenwashing”. Still, it is expectable that the average response to the Trust component is to be a smaller numeric value than Opinion. This is because participants and consumers in this market may be especially cautious towards a brand’s efforts to be more sustainable. Accordingly, Trust may not be so directly correlated to the perceived importance of a sustainability attribute. Rather, much like Willingness-To-Pay, Trust may be more connected to the degree of sustainability rather than the attribute itself. The reasoning behind this hypothesis is that a brand’s effort to be sustainable is in itself a signal that a consumer can trust a brand, regardless of which attribute is improved.

Here is an overview of the hypotheses for the main research question.

H1: A reduction in Greenhouse Gas Emissions will have the most positive effect on overall Brand Equity.

H2: There will be no significant difference between the sustainability attributes’ effect on the Willingness-to-Pay component.

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H3: A reduction in Greenhouse Gas Emissions will have the most positive effect on Likelihood of Recommendation.

H4: A reduction in Greenhouse Gas Emissions will have the most positive effect on Opinion.

H5: There will be no significant difference between the sustainability attributes’ effect on the Trust component.

In the event that no significant differences are observed between the sustainability attributes, this paper will also consider how different demographics (age, gender, level of education) and attitudes (regularity of purchasing plant-based foods, influence of taste/pricing-sustainability) differ between the components of Brand Equity.Regarding gender, it is plausible that Brand Equity in general will be higher in female participants since it has been suggested that females generally tend to be more environmentally concerned than males (McCright, 2010). Additionally, a 2018 study surveyed a random sample of 1,000 American consumers, and found that females tend to engage in Word-of-Mouth marketing 22% more than males. This survey also found that females are 49% more likely to recommend or discuss a product that they perceive as unique or different from the norm (Talk Triggers, 2018). Although this survey was not conducted on the Dutch or plant-based food markets, it remains an interesting point of reference with which to compare how gender interacts with sustainability and brand equity. Since AlmondLife’s products are in fact different from the average product (in that they are sustainably produced), it may be that that females score higher than men in overall Brand Equity, but especially in

Likelihood to Recommend. As for age, there is reason to believe that Brand Equity will be higher among the younger groups, as sustainability is a topic of particular interest within the millennial generation (Naderi & Van Steenburg, 2018). But still, older participants may be significantly less financially restricted – which may result in a higher overall Willigness-To-Pay.

On the other hand, the highest level of education completed may also play an interesting role such that the further along the spectrum of education a participant may fall in, the higher the chance of a higher Brand Equity. There are two reasons for this. First, those further along the academic spectrum may be more aware of contemporary environmental issues than those with

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less education. Even if their specialization is not related to environmental sciences, climate change is an interdisciplinary topic (environmental sciences, agricultural sciences, economics, etc.) and it is likely that by being in an academic environment, they are at least aware that there is a growing concern regarding changing climate conditions.

The last three questions of the survey asks consumers about the degree of influence that taste, pricing, and sustainability has on their decision when buying a plant-based food product. It is expectable that a high rating of Sustainability Influence will be correlated with higher brand-equity, although there is probably no significant effect regarding Taste Influence and Pricing Influence.

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Methodology

Data Collection

The data for this paper was collected through an online questionnaire that was split into three sections and contained a total of 12 questions, which can be found in the appendix. The survey begins with an introduction which is followed by demographic-related questions. AlmondLife is then introduced and participants are given a short description of the brand, followed by one of three possible sustainability scenarios.

Since Brand Equity is so intricately tied to the consumer’s perception, AlmondLife was described with the purpose of creating a realistic brand perception in the participant’s mind. This short description was followed by a paragraph which outlined AlmondLife’s intention to reduce their impact on the environment by investing in a certain process that reduces their negative impact by 20%. All surveys are equal up to this point except that the “investment” and the “impact” differ according to the sustainability attributes.

Participants were then asked to answer four questions (one for each component of Brand Equity) based on the information given about AlmondLife. The third and final section was no longer related to AlmondLife, and participants were asked to answer three questions regarding the degree of influence that taste, pricing, and sustainability have on their decision to purchase plant-based food.

The questionnaire was hosted on Qualtrics, a well-known survey website to which UvA students are granted free access. The subjects for this study were screened exclusively by their location of residency, such that participants were kindly asked not to proceed with the survey unless they currently lived in the Netherlands. The participants were personally contacted through informal means such as WhatsApp, Facebook, E-Mail, and LinkedIn. Ninety-seven individuals were initially asked to complete the three surveys, around thirty-two for each sustainability attribute. It was difficult to keep track of which individuals were actually

participating. Six days after the initial distribution period, 74 out of 90 surveys were completed. Based on the number of participants necessary to reach an n=30 for each survey, the survey was once again sent out. The second data collection attempt involved an indirect distribution of the questionnaires, i.e. through social media groups and acquaintances, which resulted in a total of 94 participants but limited the capacity to ensure homogeneity.

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Data Analysis

Because each category of Brand Equity consisted of two items, it was necessary to group together the variables that belonged together. In order to do this, a factor analysis/PCA was conducted. The following steps were taken to ensure that a PCA was suitable and appropriate on this data.

1. Quantitative variables. The data gathered was fully qualitative.

2. Strong correlation between variables. All correlations were above 0.30 and statistically significant.

3. Kaiser-Meyer Olkin (KMO), which indicates the proportion of variance that might be caused by underlying factors. If a large value (0.5 < KMO < 1.0), a PCA is appropriate to conduct. The KMO value for this data was 0.747.

4. Bartlett’s Test of Sphericity, which tests whether the correlation is an identity matrix (which would suggest the variables are unrelated). The p-value was significant, which confirmed that a factor analysis was indeed suitable.

5. Cronbach’s alpha, to measure internal reliability. The value for this data was .718, which is an appropriate value.

The output to these tests can be found in Appendix B. The PCA resulted in three additional variables being created – Brand Loyalty, Perceived Quality, and Brand Equity (consisting of the former two).

The predictor variable Sustainability Attribute (which differentiates the surveys) is of categorical scale, and categorical values need to be modified in order to not be considered as quantitative by SPSS. Thus, the following step involved dummy coding the sustainability

attributes as separate predictor variables. Although it is recommended that the number of dummy variables created remains one less than the original number of items within the categorical variable, all three variables were to dummy coded so as to allow for more flexibility and comparison within the data.

With the dummy variables created, 7 linear regressions were ran using GHG emissions as the reference group. These linear regressions allowed to measure the mean effect for each

sustainable attribute on each component of Brand-Equity, as well as the difference between groups.

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Given the possibility of no significant differences between the attributes, it was valuable to also consider how certain demographics would differ in their Brand Equity score. In order to gain some insight into this, a linear regression was ran for each of the demographic variables (after being dummy coded). A Levene’s Test was also conducted in order to confirm that the variances were indeed homogenous and that the results from the linear regression would be valid. Tv

In order to better understand the effect that consumer attitudes have on the relationship between sustainability and Brand Equity, linear regressions were again conducted using the factors of influence (taste, pricing, and sustainability) as the predictor variables. These variables were already continuous, so there was no need to transform them in order to run the regression.

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Results

The regression showed that GHG emissions (B=61.133) had no significant difference in effect on Brand Equity compared to water use (B=-1.361, p=0.537) and land use (B=-1.262, p=0.572). For Brand Loyalty, there was also no significant difference between GHG emissions (B=42.4), water use (B=-2.097, p=0.3) and land use (B=-1.110, p=0.588). The same was the case for Perceived Quality, as there was no significant difference between GHG emissions

(B=79.867), water use (B=-0.624, p=0.828), and land use (B=-1.415, p=0.628). Naturally, the Sustainability Attribute (the original variable from which the attributes were dummy coded) was insignificant, with a p-value of 0.573.

Brand Loyalty consisted of both Willingness-to-Pay and Likelihood of Recommendation. Regarding Willingness-to-Pay, GHG emissions (B=1.967) showed no significant difference in effect when compared with water use (B=.276, p=0.206) and land use (B=.291, p=0.188). The same was true for Likelihood of Recommendation - GHG emissions (B=82.833) showed once again no significant difference when compared to water use (B=-4.470, p=0.259) and land use (B=-2.511).

Perceived Quality consisted of both Opinion and Trust. GHG emissions (B=80.2) showed no significant difference in effect on Opinion when compared to water use (B=-.958, p=0.740), and land use (B=0.671, p=0.819). As for Trust, there was again no significant effect between GHG emissions (B=79.533), water use (B=-0.291, p=0.932) and land use (B=-3.501, p=0.312).

Comparing the means of the four introductory questions regarding Brand Equity, there were also some interesting results. All 94 respondents fit either in the 18-24 or the 25-32 age category. There appeared to be no significant difference in Brand Equity between those in the 18-24 category (B=59.747) and those in the 25-32 category (B=2.573, p=0.257). As expected, those in the younger category (B=2.013) score significantly lower than those in the older category (B=0.765, p=0.00) regarding Willingness-to-Pay.

Between genders, male participants (B=57.926) scored significantly lower than female participants (B=5.056, p=0.004) regarding Brand Equity. Naturally, then, female participants scored on average higher than males in both Perceived Quality (B=5.668, p=0.014) and Brand Loyalty (B=4.445, p=0.006). Contrary to what these findings would suggest, there was actually no significant difference between males (B=68.882) and females (b=5.443, p=0.09) regarding their rating on how much influence sustainability has on their consumption choices. In order to

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understand this better, a regression was run to test which of the components of Brand Equity was most affected by Gender. Although females scored significantly higher than males in each of the four components, the one with the most difference was Likelihood of Recommendation. Males scored an average of 76.5 (B=76.529) and females scored an average of 85 (B=8.540, p=0.07).

The results for the effect of the Regularity of Purchase of Plant-Based Food are also of interest. Participants who claim to always buy plant-based food (similar to a vegan diet) scored significantly higher (B=62.350) than those who never (B=-27.100, p=0.01) or rarely (B=-6.571, p=0.19) do. However, there was no significant difference between participants who always buy plant-based food, those who only do it sometimes. (B=-3.336, p=0.167), and those who do so most of the time (B=2.198, p=0.384). There was no significant difference in the effect between participants' different levels of education on Brand Equity – all participants having completed either high school (B=59.556), a bachelor’s degree (B=1.010, p=0.686), or a master’s degree (B=2.885, p=0.226).

Finally, the linear regression focused on the effect that the different factors of influence showed that the only positive significant effect on Brand Equity is by that of sustainability (B=0.281, p=0.00). The other two attributes, taste (B=-0.045, p=0.263) and pricing (B=-0.038, p=0.402) showed no significant effect. .

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Discussion

The results for the main research question suggest that there is no significant difference in Brand Equity between reducing a brand’s impact on land use, water use, or greenhouse gas emissions. Thus, H1 is not supported, which suggests that consumers typically do not

differentiate between different sustainable attributes when buying plant-based food products. However, the results do confirm the literature insofar that participants on average, using GHG reduction as the reference point, a) were willing to pay almost 25% more for a product from AlmondLife than the average product, b) 82.8% likely to recommend the product to a friend, c) rated their opinion of AlmondLife at 80.2 out of 100 and d) rated their trust of the brand at 79.5 out of 100. These results suggest that consumers in this market tend to have high brand loyalty and high perceived quality for brands that act sustainably, regardless of which environmental attribute they improve on. Although it was beyond the scope of this research to prove this phenomenon (although there is strong evidence for it in the literature), the results yield at least one interesting finding.

Using the degree of importance that sustainability has on a participant’s decision to buy plant-based food as the independent variable, the regression showed that there is indeed a significant positive effect on Brand Equity. This is not a surprising finding and was discussed in the conceptual framework. However, it does indeed suggest that plant-based food brands in the Dutch market may increase their Brand Equity by being more sustainable. This is for two reasons. First, an increasing number of consumers are becoming more sustainably-oriented, as described in the literature review. Second, consumers tend to have a higher perceived Brand Equity when a brand is in fact acting sustainably. Thus, the current trend of consumption and consumer attitude suggest that a brand looking to improve Brand Equity may benefit by actively trying to be more sustainable. These results suggest that a brand should do research on their target audience and find out the extent to which their customers are interested in sustainability, so as to better understand how being more sustainable may affect their own Brand Equity.

Beyond H1, the results also did not support H3 and H4. Both of these suggested that a reduction in GHG emissions would have the highest positive effect on Likelihood of

Recommendation and Opinion, respectively. The fact that the hypotheses were not supported could be explained in a few different ways. First, the rejection of these hypotheses challenges the assumption that the emissions of GHGs from animal agriculture is generally the topic of greatest

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concern and popularity within the plant-based market. In order to truly test this effect, participants would need to be surveyed regarding which of these attributes they find most important, and the degree of importance for each one. If there were to be significant differences amongst the perceived importance of each attribute, then it would be reasonable to expect differences regarding Brand Equity.

On the other hand, the results do support H2 and H5, that there is no significant differences between sustainability attributes regarding their effect on Willingness-to-Pay and Trust, respectively. However, it is difficult to prove that the reasoning behind these hypotheses was the correct one – namely, that these two components are more influenced by the

degree/amount of sustainability than the attributes themselves. In order to test this, a future study should also aim to understand whether there is in fact a significant difference in these two Brand Equity components between a sustainable brand and an average brand.

The results regarding the demographics yielded valuable results as well. First, all 94 respondents were aged between 18 and 32. Despite there being no significant difference between the effect the age groups have on Brand Equity, there is a significant difference between the groups on the Willingness-To-Pay component. This is in line with what was discussed in the conceptual framework – specifically, that those in a younger age group are more financially constricted and thus were likely to score lower in this regard.

Another finding was that females scored on average higher in Brand Equity than males. Given that there was a relative homogeneity of sample size between the genders (51 males and 43 females), these findings would suggest that females do indeed tend to be more influenced by the sustainability of a product. On the other hand, there was no significant difference between the genders regarding a participant’s perceived importance of sustainability when buying a plant-based product. These results suggest that females in the Dutch plant-plant-based food market are not necessarily more influenced by sustainability than men. Indeed, the results showed that females scored higher both in Brand Loyalty and Perceived Quality. However, out of all 4 components of Brand Equity, the most significant difference between genders was found at Likelihood of Recommendation. This finding is in line with the Talk Triggers (2018) study, that females are more likely to engage in Word-of-Mouth than males. Although Word-of-Mouth is a separate topic from Likelihood of Recommendation, it remains nonetheless a common way in which consumers recommend products to other individuals (Samson, 2006).

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The results also confirm that Regularity of Purchase of Plant-Based Food has a positive effect on Brand Equity, such that those who always, most of the time, or sometimes buy plant-based food tend to score higher on Brand Equity than those who rarely or never do so. This finding suggests that consumers of plant-based food are in general more influenced by the sustainability of a product than those who are less likely to consume it. It is interesting to note that there was no significant difference in Brand Equity between participants who responded with “always”, “most of the time”, and “sometimes” in respect to how often they try to buy plant-based food. One may argue that those who “always” eat plant-based food are often also motivated by ethical reasons than environmental ones, which makes them more likely to adhere to a fully plant-based regimen. A study conducted on 329 German vegan consumers showed that 89% of participants listed ethics as a motive, compared to 47% who listed the environmental benefits (Jansenn et al., 2016). On the other hand, the results may simply suggest that those who “always” choose plant-based food products are not necessarily more motivated by environmental factors than those who only consume such products “most of the time” or “sometimes”.

Finally, the importance of taste and pricing did not have a significant effect on Brand Equity, but sustainability did. This was an expectable result, as those consumers who rate

sustainability higher in their decision-making are evidently more likely to score higher on Brand Equity.

Limitations of Study

There were a few limiting factors in this paper that a further study could benefit from by addressing. First, a general constraint was the time limit of this research and by the state of quarantine during the completion process. The combination of these two restrictions affected the data collection process in that it was difficult to obtain a sample size that was truly representative of the Dutch plant-based food market. Evidently, not every consumer in this market is aged between 18 and 32, thus it may well be inappropriate to generalize these findings to the general market. Two things can be done to address this. The first option is to physically visit plant-based establishments and interview people engaging with plant-based food brands, but this was not possible given that the Netherlands was in quarantine due to the COVID-19 pandemic. The second option is to have a much larger sample size, as it would help make the results more generalizable to the overall population. One of the effects these constrains resulted in is that the

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participants could only be contacted through the internet rather than in-person, which resulted in the fact that most participants were acquaintances and friends. Naturally, most participants also happened to be fellow university students.

Another limiting factor in this study that could have been addressed from the beginning is that participants were not asked in which region of the Netherlands they live in. However, it was made clear in the beginning of the questionnaire that the survey is only to be answered by those who live in the country. Further information on the exact region that participants are located in would allow for an interesting comparison between different locations within the Dutch market.

One more limitation of this study is that it only tested two out of the five pillars of Brand Equity, as presented by Aaker (1991). The reason for this was discussed in the literature review, but one cannot safely generalize findings from just two components of Brand Equity to the full 5-pillar model.

The scenario model itself has one particular limiting factor that is worth mentioning. It is possible that the way that the scenarios are worded may affect the results. For example,

regarding land use, the scenario described AlmondLife’s reduction amounting to “20% less land being used to grow almonds, and this space was allowed to be naturally reforested”. While this is one of the possibilities of a sustainable improvement regarding land use, there are other possible productive ways of tackling this issue, such as holistic grazing or polyculture (sustainable agricultural practices that make productive use of land). The same can be said of water use, and to a lesser extent, GHG emissions. Hence, this study focused on particular sustainable practices within the attributes, but it would also important to investigate the effect of the difference between practices on Brand Equity, in addition to the attributes.

There is an additional limiting factor relating to the scenarios. This study only used one particular product as the basis for the brand, which was almond-made plant-based cheese. An interesting avenue to explore would have been to understand whether the same study would yield different results if another product was used as an example. Moreover, because AlmondLife was positively described in the scenario even before the sustainability improvement was introduced, it would be important for a future study to measure Brand Equity just from the simple

introduction of the brand, before any sustainability efforts were brought up. Then, a comparison can be made to analyze the degree to which sustainability improvements affect Brand Equity.

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Overall, these limitations could have been appropriately dealt with in a larger research project that would need more time and regular circumstances, which were constrained due to the COVID-19 pandemic. This would allow for the opportunity to further understand what really affects Brand Equity in the Dutch plant-based food market – if not the difference between sustainable attributes, then what is it? An interesting follow-up study would aim to answer this question.

Conclusion

This research aimed to identify whether there are significant differences between the effects that different sustainability attributes have on brand equity in the Dutch plant-based food market. Although there is a well-established relationship between sustainability and brand equity, brands could tremendously benefit from more specific results on which attributes most positively affect brand equity.

Although the results cannot aid managers in choosing which sustainability attribute to prioritize, valuable information may still be extracted from this study. First, plant-based food brands in the Dutch market who have a high number of female customers are more likely to have a higher Brand Equity by investing in sustainability than brands with predominantly male

customers. The same is the case for plant-based food brands that have predominantly vegan (“always”), vegetarian (“most of the time”, due to dairy consumption), and flexitarians

(“sometimes”) customers, such that they may more successfully improve their brand-equity by investing in sustainability than a plant-based food brand aimed at consumers whose diet is made up primarily of animal products (“rarely”, “never”). This makes the case for an ad hoc sort of consideration regarding a brand’s intention to be more sustainable. By understanding their particular customer demographics, brands can gain valuable information regarding sustainable consumption trends among different social groups.

Moreover, this research confirmed that there is indeed a tendency for higher customer-based brand equity in brands that are more sustainable, as shown by the notably high average response rate for all 4 components of Brand Equity.

Further research is needed to determine how different sustainability attributes affect brand equity. To better understand this relationship, a future study should include a wider variety

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of sustainability attributes as well as a more complete model of Brand Equity that includes all five pillars. The results of this study should incentivize plant-based food brand managers in the Dutch market to consider dedicating more time and resources to reducing their impact on the environment. Addressing a brand’s negative environmental impact will not only benefit the planet, but can even be a meaningful way to increase a brand’s strength.

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Appendix A: Questionnaires

GHG Emissions Questionnaire

Start of Block: Introduction

Bachelor Thesis - Entrepreneurship, Creativity, and Innovation

Thank you for participating in this survey. It has a total of 12 questions and should take about 2-3 minutes.

This research is part of a bachelor's thesis about sustainable practices and brand equity in the plant-based food industry. Your decision to participate in this survey is voluntary, and you are free to withdraw your participation at any point. Your answers will be completely anonymised and this information will only be used for academic purposes.

If you have any questions, please send an email to fredrosaa99@gmail.com

Attention, please only complete this questionnaire if you currently live in the Netherlands. By continuing, you are confirming that this is the case.

Q1 What is your age?

o

<18 (1)

o

18-24 (2)

o

25-34 (3)

o

35-44 (4)

o

45+ (5)

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Q2 What is your gender?

o

Male (1)

o

Female (2)

o

Other (3)

Q4 What is the highest level of education you have completed?

o

High School (1)

o

Bachelors Degree (2)

o

Masters Degree (3)

o

Doctoral Degree (4)

Q16 How often do you try to purchase plant-based food products as an alternative to animal-based foods?

o

Never (1)

o

Rarely (2)

o

Sometimes (3)

o

Most of the time (4)

o

Always (5)

End of Block: Demographics Start of Block: Scenario

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AlmondLife is a Dutch brand that produces plant-based cheese made out of almonds. They are known for their quality products, which are available in all major retailers. The brand was founded in 2015 and they have spent the past 5 years perfecting their cheese recipes, which are used by a variety of restaurants across Amsterdam and Rotterdam. The core value of their brand is to make tasty products with sustainably-sourced ingredients.

Concerned with their impact on the environment, in 2018, AlmondLife decided to invest in a new processing plant for making cheese, which runs on renewable energy and caused their net GHG emissions to drop by 20%.

Q5 How much more would you be willing to pay for a product from AlmondLife in comparison to the average product on the market?

o

The same price (1)

o

25% more (2)

o

50% more (3)

o

75% more (4)

o

Double the average price (5)

Q6 Based on the information above, how likely are you to recommend AlmondLife to a friend who wants to buy plant-based cheese?

Not at all likely Certainly

0 10 20 30 40 50 60 70 80 90 100

Likelihood ()

Q7 Based on the information above, how would you rate your overall opinion of AlmondLife? Extremely Negative Extremely Positive

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Opinion ()

Q8 Based on the information above, how likely are you to trust AlmondLife's products? Not at all likely Certainly

0 10 20 30 40 50 60 70 80 90 100

Trust ()

End of Block: Scenario

Start of Block: Consumer Attitudes

Q15 These final questions will ask you to rate how important each attribute is when you purchase plant-based food.

Q9 When buying plant-based food, how much does taste affect your decision to purchase? Not at all Completely

0 10 20 30 40 50 60 70 80 90 100

- ()

Q10 When buying plant-based food, how much does pricing affect your decision to purchase? Not at all Completely

0 10 20 30 40 50 60 70 80 90 100

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Q11 When buying plant-based food, how much does the sustainability of the product affect your decision to purchase?

Not at all Completely

0 10 20 30 40 50 60 70 80 90 100

- ()

End of Block: Consumer Attitudes

Water Use Questionnaire

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o

<18 (1)

o

18-24 (2)

o

25-34 (3)

o

35-44 (4)

o

45+ (5)

o

Male (1)

o

Female (2)

o

Other (3)

o

High School (1)

o

Masters Degree (3)

o

Doctoral Degree (4)

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o

Never (1)

o

Rarely (2)

o

Sometimes (3)

o

Always (5)

Q14 AlmondLife Plant-Based Cheese

Concerned with their impact on the environment, in 2018, AlmondLife decided to invest in a water management system in their almond farms that resulted in 20% less water being used and running off into the ocean as waste.

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o

The same price (1)

o

25% more (2)

o

50% more (3)

o

75% more (4)

o

0 10 20 30 40 50 60 70 80 90 100

Likelihood ()

0 10 20 30 40 50 60 70 80 90 100

Opinion ()

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Trust ()

0 10 20 30 40 50 60 70 80 90 100

- ()

0 10 20 30 40 50 60 70 80 90 100

- ()

0 10 20 30 40 50 60 70 80 90 100

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End of Block: Consumer Attitudes

Land Use Questionnaire

o

<18 (1)

o

18-24 (2)

o

25-34 (3)

o

35-44 (4)

o

45+ (5)

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o

Male (1)

o

Female (2)

o

Other (3)

o

High School (1)

o

Masters Degree (3)

o

Doctoral Degree (4)

o

Never (1)

o

Rarely (2)

o

Sometimes (3)

o

Always (5)

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Concerned with their impact on the environment, in 2018, AlmondLife decided to invest in making their almond farms more sustainable by aiming for higher yields by using less land. This resulted in 20% less land being used to grow almonds, and they allowed this previous land to be naturally reforested.

o

The same price (1)

o

25% more (2)

o

50% more (3)

o

75% more (4)

o

0 10 20 30 40 50 60 70 80 90 100

Likelihood ()

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0 10 20 30 40 50 60 70 80 90 100

Opinion ()

0 10 20 30 40 50 60 70 80 90 100

Trust ()

0 10 20 30 40 50 60 70 80 90 100

- ()

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- ()

0 10 20 30 40 50 60 70 80 90 100

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Appendix B: Summary Statistics

Descriptive Statistics

N Minimum Maximum Mean

Std. Deviation Willingness to pay in comparison to average product 94 1 5 2.16 .859 Likelihood to reccomend AlmondLife to a friend 94 40.00 100.00 80.4362 15.53322 Overall opinion of AlmondLife 94 50.00 100.00 80.0851 11.30958 Trust on AlmondLife's products 94 37.00 100.00 78.2766 13.39909 Importance of taste when buying plant-based food

94 9.00 100.00 67.6489 20.56812

Importance of price when buying plant-based food 94 30.00 100.00 69.0745 18.14532 Importance of sustainability when buying plant-based food 94 27.00 100.00 71.3723 15.52451 Sustainability_Attribut e 94 1 3 2.01 .810 BrandEquity 94 35 76 60.24 8.624 BrandLoyalty 94 21 53 41.30 7.936 PerceivedQuality 94 50 100 79.18 11.259 GHG 94 0 1 .32 .469 Water 94 0 1 .35 .480 Land 94 0 1 .33 .473 Male 98 0 1 .44 .499 Female 98 0 1 .44 .499 Never 98 .00 1.00 .0102 .10102 Rarely 98 .00 1.00 .1735 .38060 Sometimes 98 .00 1.00 .3571 .48162

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MostOfTheTime 98 .00 1.00 .2653 .44377 t18_24 98 .00 1.00 .7755 .41939 t25_32 98 .00 1.00 .1837 .38921 HS 98 .00 1.00 .6224 .48727 Bachelor 98 .00 1.00 .1531 .36190 Master 98 .00 1.00 .1735 .38060 Valid N (listwise) 94

Correlation Matrix between Brand Equity Items

Correlations Willingness to pay in comparison to average product Likelihood to reccomend AlmondLife to a friend Overall opinion of AlmondLife Trust on AlmondLife' s products Willingness to pay in comparison to average product Pearson Correlation 1 .370** _.390** _.304** Sig. (2-tailed) .000 .000 .003 N 94 94 94 94 Likelihood to reccomend AlmondLife to a friend Pearson Correlation .370** ₁ _.542** _.543** Sig. (2-tailed) .000 .000 .000 N 94 94 94 94 Overall opinion of AlmondLife Pearson Correlation .390** _.542** ₁ _.659** Sig. (2-tailed) .000 .000 .000 N 94 94 94 94 Trust on AlmondLife's products Pearson Correlation .304** _.543** _.659** ₁ Sig. (2-tailed) .003 .000 .000 N 94 94 94 94

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KMO and Bartlett’s Test

Cronbach’s Alpha

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .747 Bartlett's Test of Sphericity Approx. Chi-Square 110.370 df 6 Sig. .000 Reliability Statistics Cronbach's Alpha N of Items .718 4

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The Relationship Between Sustainability Attributes and Brand Equity in the Dutch Plant-Based Food Market.

11567988

University of Amsterdam

Bachelor’s Thesis: Entrepreneurship, Innovation, and Creativity

The Relationship Between Sustainability Attributes and Brand Equity in

the Dutch Plant-Based Food Market.

This document is written by Frederico Rosa who declares to take full responsibility

for the contents of this document.

I declare that the text and the work presented in this document are original and that

no sources other than those mentioned in the text and its references have been used

in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of

completion of the work, not for the contents.

Abstract

Table of Contents

1) Abstract

2) Introduction……….………1

3) Literature Review………2

a) Sustainability………2

i.

Urgency of Sustainability Practices………2

ii.

Trends in Consumption of Plant-Based Foods……….…..2

iii.

Environmental Sustainability and the Food Industry………….3

b) Product selection – Almonds & Plant-Based Cheese………..4

c) Brand Equity………4

i.

The Significance of Brand Equity…………..………5

ii.

Customer-Based Brand Equity……...………5

iii.

Brand Loyalty and Perceived Quality...……….6

4) Conceptual Framework…

….………...………8

5) Methodology …………

………12

a) Data Collection………...………12

b) Data Analysis………...………...………13

6) Results……

………...15

7) Discussion………

………....………..17

a) Limitations of Study…………...……….19

8) Conclusion………21

Appendix………

……….22

A. Questionnaires……….22

i.

GHG Emissions………23

ii.

Water Use………...………..27

iii.

Land Use………..…………32

B. Summary Statistics………..37

Introduction

Literature Review

Sustainability

Brand Equity

Conceptual Framework

Methodology

Data Collection

Data Analysis

Results

Discussion

Limitations of Study

Conclusion

Appendix A: Questionnaires

GHG Emissions Questionnaire

o

o

o

o

o

o

o

o

o

o

o