Sustainability labels: are price premia relevant in online food retailing?

in: Journal of International Food & Agribusiness Marketing 31 (3), 255-272

DOI: https://doi.org/10.1080/08974438.2018.1520177
Information

Consumers are willing to pay a higher price for products certified as sustainable. By implication, such certification is in the interest of producers, too. A general claim that sustainability characteristics automatically imply a price margin may not, however, be justified. Rather, several price premia might be necessary. This analysis based on 882 product prices of the German online retail, is concerned with the price premia attached to various labels and products. It estimates individual price premia for products, like coffee, tea, sweets, spices, etc., showing that sustainable food labeling is not always an indicator for a price markup. In fact, for some products (e.g. spices, chocolate) and labels (e.g. UTZ) a negative price effect is even estimated. Such markdowns may be due to a differing emphasis on sustainability issues along the supply chain for some products or the label’s certification policies.