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Does Shelf-Labeling of Organic Foods Increase Sales? Results from a Natural Experiment

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  • Daunfeldt, Sven-Olov

    (The Ratio Institute (RATIO))

  • Rudholm, Niklas

    (The Swedish Retail Institute (HUI))

Abstract

Can a simple point-of-purchase (POP) shelf-label increase sales of organic foods? We use a random-effects, random-coefficients model, including a time adjustment variable, to test data from a natural experiment in a hypermarket in Gävle, Sweden. Our model incorporates both product specific heterogeneity in the effects of labeling and consumer adjustment to the labels over time. The introduction of POP displays was found to lead to an increase in sales of organic coffee and olive oil, but a reduction in sales of organic flour. All targeted products became less price-sensitive. The results reveal that product specific heterogeneity has to be accounted for, and in some cases consumers adjusted to labeling over time.

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Bibliographic Info

Paper provided by HUI Research in its series HUI Working Papers with number 36.

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Length: 24 pages
Date of creation: 01 Feb 2010
Date of revision:
Handle: RePEc:hhs:huiwps:0036

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Related research

Keywords: Product labeling; random coefficient models; ecological products; experimental economics;

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  1. I. Vermeir & W. Verbeke, 2004. "Sustainable Food Consumption: Exploring The Consumer Attitude – Behaviour Gap," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/268, Ghent University, Faculty of Economics and Business Administration.
  2. Caswell, Julie A. & Mojduszka, Eliza M., 1996. "Using Informational Labeling To Influence The Market For Quality In Food Products," Working Papers 25989, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  3. Monier Sylvette & Hassan Daniel & Nichèle Véronique & Simioni Michel, 2009. "Organic Food Consumption Patterns," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-25, December.
  4. Beretti Antoine & Grolleau Gilles & Mzoughi Naoufel, 2009. "How Cognitive Biases Can Affect the Performance of Eco-Labeling Schemes," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-13, December.
  5. Conner, David S., 2004. "Beyond Organic: Information Provision For Sustainable Agriculture In A Changing Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(01), March.
  6. Bellows Anne C. & Onyango Benjamin & Diamond Adam & Hallman William K, 2008. "Understanding Consumer Interest in Organics: Production Values vs. Purchasing Behavior," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(1), pages 1-31, May.
  7. Hassan, Daniel & Monier-Dilhan, Sylvette & Nichele, Veronique & Simioni, Michel, 2009. "Organic Food Consumption Patterns in France," 2009 Pre-Conference Workshop, August 16, 2009, Diet and Obesity: Role of Prices and Policies 53342, International Association of Agricultural Economists.
  8. Reicks, Marla & Splett, Patricia & Fishman, Amy, 1999. "Shelf Labeling Of Organic Foods: Customer Response In Minnesota Grocery Stores," Journal of Food Distribution Research, Food Distribution Research Society, vol. 30(2), July.
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