Abstract
Absence labels promote the absence of a particular ingredient or production practice. Consumers usually perceive organic labels as an umbrella absence label for a variety of ingredients and production practices. Such organic labels often use similar language but are based on different certification requirements. For example, both organic wine and wine made with organic grapes are available to U.S. consumers, but little is known about consumer preferences for such labeled products when information about the certification standards is available. Moreover, while absence labels, which advertise the absence of certain attributes or practices, are prevalent on the market, little is known about how information on conventional production practices impacts consumer behavior. Using an artefactual experiment with 128 adult non-student participants, we investigate consumer demand for conventional wine, organic wine, and wine made with organic grapes when information about production standards is provided to participants with and without details regarding conventional winemaking practices. We find that while both organic labels carry a significant and very similar willingness-to-pay (WTP) premium, information about certification standards and conventional wine making practices can reduce WTP for all wines. Providing information about the two organic certification standards reduces consumer WTP for both absence labeled and conventional wine categories. This effect largely disappears for organic wine, but not wine made with organic grapes, when information about conventional wine-making practices is also provided.
Highlights
Consumers increasingly demand more information about how their food and beverages are produced, which is evident by the rapidly growing availability of voluntary labels on food products [1, 2, 3]
With wine as a focal category, we find that both organic wines and wines made with organic grapes are associated with significant and similar willingness to pay (WTP) premiums compared with conventional wines
The graphs suggest that any additional information reduces, to varying degrees, WTP for conventional wines and wine made with organic grapes, but not for organic wine
Summary
Consumers increasingly demand more information about how their food and beverages are produced, which is evident by the rapidly growing availability of voluntary labels on food products [1, 2, 3]. On the other hand, when a label identifies a set of practices that are absent from the Demand impacts of absence labels production process and a consumer is unfamiliar with the details of that process, the relationship between the label and consumer preferences becomes more complex due to information asymmetry. This necessarily suggests that demand for food and beverages with such “umbrella” process labels cannot be evaluated independently of consumer knowledge about standard practices in conventional product alternatives. Labels that verify organic and nonGMO status seem to be substitutes for one another [8], as is the case with how other singleprocess and umbrella labels are perceived by consumers [3]
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