Mandatory Labelling: Evidence from the French Fromage Blanc and Yogurt Market

Abstract

A number of public health advocates and consumer associations urge policy makers to strengthen nutrient labelling rules, in order to help people to make healthier and better informed food choices. Yet, little is known about the e¤ectiveness of mandatory labelling. This research evaluates the impact of a mandatory fat label policy on consumer choices in the fromages blanc and dessert yogurt market. While fat labels are mandatory since 1988 for fromages blancs, this is not the case for yogurts. This is a natural source of variation to identify separately consumer preferences for labels and for fat. We use a mixed logit discrete choice model and household scanner data collected in 2007 to estimate the distribution of the Willingness-To-Pay (WTP) for fat labels and simulate various counterfactual policy scenarios in a sample of casual fromages blancs and dessert yogurts consumers. The WTP is negative for about one third of this population, especially for consumers of full-fat dessert yogurts. The rst simulation results suggest that a mandatory labelling policy would make these individuals switch to full-fat fromages blancs or to the outside option, and mandatory labelling would have more impact than a fat tax on the consumption of full-fat products. Hence, variations in labelling rules have been exploited by producers to develop dessert yogurts and increase market segmentation. We plan to re ne these results, by taking into consideration manufacturersand retailersstrategic reactions to these policies.