Abstract
Product labelling with organic certification logos is a tool for signalling consumers that a product is a certified organic product. In many European countries, several different organic labelling schemes exist in the market. The aim of this paper is to elicit whether consumers prefer certain organic labelling schemes over others, to give recommendations for market actors in the organic sector. By means of choice experiments and structured interviews with 2441 consumers of organic food in six European countries, consumer preferences and willingness-to-pay (WTP) for different organic logos were analysed. The results of the random parameter logit models showed that the WTP differed considerably between the tested logos. Consumer perceptions of organic labelling schemes turned out to be of subjective nature and in many cases not based on objective knowledge. We conclude that it is advisable to label organic products with well-known organic certification logos that consumers trust. Organisations owning an organic labelling scheme should put effort into measures for increasing consumer awareness of the logo and forming consumer perceptions and attitudes regarding the underlying scheme in terms of standards and control regime. © 2012 Elsevier Ltd. All rights reserved.
Generated Summary
This research paper investigates consumer preferences and willingness-to-pay (WTP) for different organic certification logos in the market for organic food. The study employed a mixed-methods approach, combining choice experiments and structured interviews to gather data from 2441 consumers of organic food across six European countries: Czech Republic, Denmark, Germany, Italy, Switzerland, and the United Kingdom. The choice experiments involved participants making buying decisions for organic apples and eggs, with each choice set presenting different organic labels and price levels. The study also incorporated structured interviews to explore consumer perceptions, attitudes toward the logos, and their buying frequency of organic food. The econometric analysis utilized random parameter logit (RPL) models to determine consumer preferences and WTP for the different organic logos. The findings aim to provide recommendations for market actors in the organic sector, focusing on the effectiveness of various organic certification logos in influencing consumer choices.
Key Findings & Statistics
- Sample Demographics: The study included approximately 400 participants per country, with the total sample size being 2441 consumers of organic food. The quotas for age and gender reflected the total population. The quota for the share of the younger age group ranged from 43% in Italy to 60% in the Czech Republic. Regarding gender, the quotas reflected the buying behaviour of households in each country. The quota for the share of women ranged from 60% in the UK to 70% in Italy. The study used real organic apples and eggs instead of images or descriptions.
- Product Prices: The relative price levels were the same in all countries: 0.8, 1.0, 1.2, and 1.4. The absolute prices used in the experiments were based on the average market price of organic apples/eggs in the respective survey regions one month before the experiments were conducted.
- RPL Model Results: The final RPL model estimates are shown in Table 6. All models are statistically significant at the 99.99% confidence level (Chi-square statistics). The model fits vary across the countries with the highest model fits observed in Denmark and the lowest in Italy. In all sets of models, the egg model has a Log Likelihood function value closer to zero compared to the apple model, suggesting the egg models have a better fit.
- WTP for Organic Logos: Table 7 shows the additional WTP for products with a certain organic logo compared to similar products labelled with the prefix ‘organic’ without a logo. A significant positive additional mean WTP was observed for almost all logos, even for the fake logo tested in Switzerland. The price premium that consumers were willing to pay differed considerably between the tested logos. In Switzerland, the Czech Republic, Denmark and Italy there was one logo with a considerably higher WTP compared to the other logos. Those were the Bio Suisse logo in Switzerland, the Czech and Danish governmental logos and the EU logo in Italy. In Germany and the UK, there were two logos with a relatively high WTP, namely the logo of the farmers’ association Demeter and the governmental logo in Germany and the logos of the Soil Association and the certification body ‘Organic Farmers & Growers’ in the UK.
- Governmental Logos: In the Czech Republic and Denmark, the governmental logo featured the highest WTP of all tested logos. In Germany, the WTP for the governmental logo and the Demeter logo were both equally high for apples; for eggs the WTP for the governmental logo was slightly lower than for the Demeter logo.
- Private Logos: In Switzerland and the UK, the highest WTP was observed for a private logo.
- Consumer Attitudes: The RPL model estimates (Table 6, Model 2) show that the logo attitude scale has a significant coefficient with a positive sign in all models. Thus, a higher rating of an organic logo in terms of awareness, trust, credibility, standards and control system increased the probability that this logo was chosen.
- Organic Budget Share: In each country, significant interaction terms of the logo coefficients (ASCs) with the covariate ‘organic budget share’ were found (Table 6, Model 3). Except for two logos, all interaction terms are positive indicating a higher WTP among frequent buyers of organic food compared to less frequent buyers.
- Buying Frequency: The share of participants who estimated their organic budget share (i.e. the share of organic products in their total expenditure for food and beverages) to be above 50% was the highest in Denmark and Germany (with around half of the participants ascribing themselves to that group) and the lowest in the Czech Republic (15%).
Other Important Findings
- The study found that consumer preferences and WTP for organic certification logos varied significantly across the six European countries.
- Consumer perceptions and attitudes towards organic certification schemes were found to be of a subjective nature, and in many cases, not based on objective knowledge. This suggests that consumer trust is a crucial factor in driving preferences.
- The WTP for organic products was significantly influenced by the specific organic logo used, indicating that not all logos are equally effective in conveying consumer trust and willingness to pay.
- A significant positive additional mean WTP was observed for almost all logos, even for the fake logo tested in Switzerland, demonstrating a general preference for products with organic labels over those without.
- The study highlights the importance of consumer awareness, trust, credibility, and perceptions of standards and control systems associated with organic logos in influencing consumer choices.
- The findings suggest that the visibility of a logo in the marketplace, including the number of products carrying the logo and its presence in various distribution channels, is closely related to consumer familiarity and trust.
- Consumers with a higher organic budget share tended to have a higher preference for products associated with the Demeter logo in several countries, indicating a potential relationship between organic food consumption frequency and logo preference.
Limitations Noted in the Document
- The study’s reliance on face-to-face interviews and the use of real products, while enhancing realism, introduced logistical complexities and potential for slight variations in product appearance.
- The number of choice tasks per participant was limited, which is common in studies using real products.
- The results regarding the old EU logo cannot be directly transferred to the new EU logo, as the new logo is mandatory and its consumer awareness may differ.
- The study did not investigate other potential sources of consumer trust, such as manufacturer brands or private brands, which could impact the results.
- The transformation of the attitude rating data into dichotomous variables may have simplified the data and could have impacted the results.
- The WTP measures are based on Model 1 with relative price levels.
Conclusion
The study’s findings underscore the significance of organic certification logos in influencing consumer preferences and WTP in the organic food market. The research highlights the fact that not all logos are perceived equally, and the effectiveness of a logo is closely tied to consumer trust, awareness, and perceptions of the underlying certification scheme. The results suggest that organizations owning organic labeling schemes should prioritize efforts to increase consumer awareness of their logo and establish positive consumer perceptions. The subjective nature of consumer perceptions regarding organic standards and control emphasizes the need for clear and transparent communication strategies. The study’s conclusions provide actionable insights for market actors in the organic sector. The study recommends that additionally labeling organic products with a logo that consumers know and trust, especially during a transition period. The study highlights the value of voluntary organic certification logos that consumers perceive as exceptional will maintain a position in the market. The research emphasizes that the success of an organic certification scheme hinges on building consumer trust through transparent practices, effective communication, and a commitment to maintaining high standards. Consumer familiarity and trust in an organic logo are closely related to the visibility of that logo in the marketplace. It can be concluded that consumers were willing to pay the highest price premiums for those organic logos which were most frequently found on products in the marketplace. The results also demonstrate that consumers’ buying frequency of organic food influences the market. The study highlights that consumer’s perceptions of what stands behind an organic certification logo are of subjective nature and in many cases not based on objective facts. This study demonstrates that consumer trust in the organic product market is dependent upon more than just the presence of a logo but also the attributes linked to it in the consumer’s eye.