Ethical food labels in consumer preferences

in: British Food Journal 119 (8), 1801-1814

Information

Purpose: Since fairtrade labels are upcoming market instruments, the purpose of this paper is to identify and quantify consumers’ willingness to pay for fairtrade coffee products and tea. Thereby, this paper contributes to the discussion in favour of a non-private regulation of ethical     food labels (FLs). Moreover, the paper provides information about the consumer behaviour of the German buying public.                                                                                                                                                                                                                                                  Design/methodology/approach: The empirical analysis is based on homescan panel data of 13,000 representative German households, which includes actual purchase data of ground coffee, single-serve coffee, espresso, and tea for a five-year sample period from 2004 to 2008. As a methodological approach, the hedonic technique is used to model coffee and tea prices as a function of time, store, and product characteristics
Findings: Regarding the variables of interest branding a product leads to an average price premium of 22.1 per cent, while the organic FL achieves an average price premium of 34.3%. The highest average price premium of 43.1% is ceteris paribus paid for fairtrade     labels. In the case of fairtrade labels, tea products earn the highest implicit prices with 74.0%, followed by ground coffee (54.9%), espresso (24.7%), and single-serve coffee (18.9%).
Originality/value: The present analysis supplements the discussions around the willingness to pay for fairtrade certified products by the German buying public, a product differentiation between coffee products and the introduction of labelled tea. As the data set includes daily purchases, it allows analysis of consumer behaviour on a disaggregated level, given detailed information on prices, stores, origins, FLs, and so on.