Does removal of value added tax on fruit and vegetables increase sale – case of a Danish retailer

Abstract

ABSTRACT Pricing strategies are considered to be one of the important options in changing consumer food behaviour. As a result, there is a growing interest in studying the effects of interventions that promotes the healthy choice through price interventions. This paper aims to examine the effect of a pricing intervention on fruit & vegetables (F&V) in supermarkets. The intervention consisted of a removal of the 20% VAT Data on F&V sale and retailer – revenue was collected pre- and post-intervention in all chain-supermarkets. Users of ecological and conventional fruit and vegetables constituting our intervention group and the control group is users of ecological and conventional dairy products. We found a beneficial impact of the intervention on the sale and revenue related to fruit and vegetable products. The revenue and sale of fruit and vegetables increased by 354 952.60 DKK (24.92%) and 65 065.16 units (32.92%) respectively. Results suggest a beneficial impact on the sale and revenue related to fruit and vegetable products. Results show that the subsidy also had unintended impacts on the sale and revenue related to non-intervention products. That included adverse impact of the subsidy on unsubsidized healthy complementary products.