Consumer reactions and economic consequences of the BSE crisis

Meat demand has been affected by safety controversies that have struck the European meat chain during the last decade. The major issue was the occurrence of the BSE crisis, with its major impact in mainland Europe from 1996 on. Much research has addressed concern over declining consumer confidence in the meat food category and what can be done to counter the deteriorating image for fresh meat. This contribution focuses on consumer reactions and consequent economic implications of the BSE crisis in Belgium. With respect to consumer reactions, the reported data and analyses result from consumer studies that are on going since 1996 until today. The studies combine econometric demand analyses based on time series data with descriptive analyses of consumer survey data. The findings show shifts of consumer attitude and perception in line with mass media coverage. In the case of beef, a negative press to advertising ratio of five is found, with the total gain attributed to advertising being five times lower in absolute value than the total loss resulting from negative publicity. In terms of economic impact, direct and indirect costs are discussed. Most of those cost items have not yet been quantified comprehensively. Based on all findings from an economic perspective, it is clear that taking away the grounds for negative press, as well as searching for better and more effective ways of communication emerge as major recommendations for the meat industry, and particularly for the beef sector.