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Price Premiums for Private Labelled Milk in German Retail: A Hedonic Price Analysis

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  • Bittmann, Thomas
  • Scharnhop, Johann

Abstract

Private labels are positioned at different price and quality levels. Premium private labels offer exceptional product benefits. The price premium a consumer is willing to pay over a standard private label depends on the perceived quality of the product. The objective of this paper is to investigate the size of these price premiums. The price premium can be interpreted as a measure of the retailer image and the extent to which each retailer is able to generate consumer loyalty through its own premium private label. To control for other product characteristics, we employ a hedonic price analysis. We find that major German discounters can generate the highest price premium for their premium brands. There is one other hybrid premium label that generates the highest premium, which is a private label sold at multiple retailers. National brands still generate the highest average prices overall, but the introduction of premium labels reduces the gap. Packaging, fat content, and special product labels explain a significant part of the variation in retail prices. These price differences have also important implications for cost-pass through and the frequency of retail price adjustment.

Suggested Citation

  • Bittmann, Thomas & Scharnhop, Johann, 2021. "Price Premiums for Private Labelled Milk in German Retail: A Hedonic Price Analysis," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317049, German Association of Agricultural Economists (GEWISOLA).
    • Handle: RePEc:ags:gewi21:317049
    DOI: 10.22004/ag.econ.317049
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    References listed on IDEAS

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    Keywords

    Agribusiness; Consumer/Household Economics; Marketing;
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