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Market stealing and market expansion: an examination of product introductions in the organic coffee market

Author

Listed:
  • Richard Friberg

    (Stockholm School of Economics)

  • Mark Sanctuary

    (CEPR)

Abstract

Market shares for organic products remain modest despite broad professed consumer interest in purchasing organic products. We use counterfactual product introductions in an estimated demand model to systematically explore the links between product assortment and the market share for organic products. The demand estimates on which we base the counterfactuals use 3 years of household panel data on retail coffee purchases in Sweden, combining household’s stated and revealed behavior in a discrete choice model. The predicted market shares of new organic products are highly dependent on which brand that the organic label partners with. Introduction of a new organic product is predicted to increase in-sample organic market share from around 5% up to a maximum of around 8%. The market expansion effect dominates the market stealing effect for almost all entrants. The largest market share gains for organic products are not to be had amongst the keenest organic households, but rather amongst the moderately keen organic households.

Suggested Citation

  • Richard Friberg & Mark Sanctuary, 2018. "Market stealing and market expansion: an examination of product introductions in the organic coffee market," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 287-303, April.
    • Handle: RePEc:spr:envpol:v:20:y:2018:i:2:d:10.1007_s10018-017-0194-5
    DOI: 10.1007/s10018-017-0194-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Co-branding; Organic; Coffee; Market stealing; Market expansion;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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