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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 and Dalarna University)

  • Rudholm, Niklas

    (The Swedish Retail Institute (HUI) and Dalarna University)

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.

Suggested Citation

  • Daunfeldt, Sven-Olov & Rudholm, Niklas, 2010. "Does Shelf-Labeling of Organic Foods Increase Sales? Results from a Natural Experiment," Ratio Working Papers 152, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0152
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    References listed on IDEAS

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    1. 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.
    2. Bauer, Hans H. & Heinrich, Daniel & Schäfer, Daniela B., 2013. "The effects of organic labels on global, local, and private brands," Journal of Business Research, Elsevier, vol. 66(8), pages 1035-1043.
    3. 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(1), pages 1-6, March.
    4. 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.
    5. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
    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. 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), pages 1-13, July.
    8. 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.
    9. 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.
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    Cited by:

    1. Magdalena Śmiglak-Krajewska & Julia Wojciechowska-Solis, 2021. "Consumer versus Organic Products in the COVID-19 Pandemic: Opportunities and Barriers to Market Development," Energies, MDPI, vol. 14(17), pages 1-22, September.
    2. Jessica Aschemann-Witzel & Stephan Zielke, 2017. "Can't Buy Me Green? A Review of Consumer Perceptions of and Behavior Toward the Price of Organic Food," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(1), pages 211-251, March.
    3. Lindgren, Charlie, 2021. "Discontinuities: What is the value of having the lowest price or highest consumer rating on a price comparison website?," HFI Working Papers 19, Institute of Retail Economics (Handelns Forskningsinstitut).
    4. Yadav, Rambalak, 2016. "Altruistic or egoistic: Which value promotes organic food consumption among young consumers? A study in the context of a developing nation," Journal of Retailing and Consumer Services, Elsevier, vol. 33(C), pages 92-97.
    5. Cerdá Suárez, Luis Manuel & Robina Ramírez, Rafael & Palos Sánchez, Pedro Ramiro, 2018. "The influence of health and environment-focused values on restaurateur satisfaction in organic restaurants: a descriptive analysis in Spain," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).

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    More about this item

    Keywords

    Product labeling; random coefficient models; ecological products; experimental economics;
    All these keywords.

    JEL classification:

    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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