The determinants of the price mark‐up for organic fruit and vegetable products in the European Union

Abstract

This paper investigates the marketing and pricing policies for traditional and organic fruit and vegetable products of large food retailers in four European countries by means of a survey of 47 stores, including all major food retail chains. Data have been analysed to investigate what determines the presence of organic products, the extent to which the price mark‐up between traditional and organic products depends on the inherent quality of organic products rather than on the amount of extra service and information often associated with these products, and the importance of country location within the single European market in determining the characteristics of the retail outlets. The results of the econometric analysis indicate that the size, location and overall quality of the outlet, and the degree of product information and customer service are the variables which best predict the choice to sell organic products. Also, the results indicate that almost half of the price mark‐up between traditional and organic products is explained by store characteristics and the amount of extra service and information provided with these products.