Analysis of Economic Effects of Converting Echinacea Ingredients to Health Functional Foods

Abstract

The ingredients extracted from genus Echinacea are classified as drug in Korea but as functional health food in many countries including USA and European countries. In Korea, the classification of the ingredients of this plant has recently become an important issue due to a surge in consumer demand for the ingredients during the coronavirus disease 2019 pandemic. The Echinacea, particularly Echinacea purpurea has been shown to be immuno-stimulatory and anti-inflammatory with alleviating effect on cold symptoms. In the present study, the effects of the reclassification of the ingredients from drug to functional health food were evaluated by surveying one thousand consumers for their willingness to pay (WTP) for the ingredients. We also estimated the economic benefits using the contingent valuation method based on the WTP and other data obtained from the consumer survey such as preference to and awareness of the ingredients of this plant. We found the average WTP to be from 20,651 to 25,455 won (USD 18.23 to 22.47) per person, and the economic value gained by reclassification to range from about 167 to 308.7 billion won (USD 147.4 to 272.5 million). These results suggest that change of the category of Echinacea ingredients from drug to functional health food could promote public health by inducing more consumption of these formulations and generate economic benefits by expanding the market of these products. Our results could be useful to authorities and policymakers responsible for functional foods in Korea and other countries.