The purpose of this paper is to identify and quantify the factors determining the prices of organic and conventional cheese. For a market with a high degree of product differentiation, i.e. the German cheese market, price premiums of various cheese attributes are examined. Thereby, special attention is paid to country of origin (CO) effects, geographical indications (GIs) and organic claims.
The analysis is based on homescan panel data of 13,000 representative German households provided by the GfK consumer research association. The data set combines actual purchase and demographic data for a five-year sample period from 2004 to 2008. Applying the hedonic technique, the cheese price is modelled as a function of a wide range of consumer, store and product characteristics. Effects are analysed in detail by distinguishing between supply- and demand-side effects and by estimating price regressions not only for the whole sample but also for different shop types.
The estimated organic price premiums range between 18 per cent in discount shops and 26 per cent in hypermarkets. The impacts of the CO and GIs are considerably smaller in magnitude and limited to special shopping venues like super- and hypermarkets.
The German cheese market is currently evolving from a staple product market to a highly differentiated market where increasing attention is paid to quality indicators such as organic claims or GIs. The data are remarkable, both in sample size and information content. Furthermore, the estimation of shop type-specific price premiums offers new and detailed insights in consumer valuation and producer costs of a wide range of cheese attributes.
The author would like to thank two anonymous referees for very helpful comments, which have improved considerably the quality of this paper. Special thanks go to the staff members of the Department of Agricultural and Food Marketing at the University of Kassel under the direction of Professor Dr Ulrich Hamm. They provided the underlying GfK dataset to the Institute of Agricultural Policies and Market Research at the University of Giessen for further research. The paper was written in the framework of a research project which is funded by the German Federal Ministry of Nutrition, Agriculture and Consumer Protection (BMELV). The project funding reference number is 2808OE148. The author takes full responsibility for the contents of this paper.
Schröck, R. (2014), "Valuing country of origin and organic claim: A hedonic analysis of cheese purchases of German households", British Food Journal, Vol. 116 No. 7, pp. 1070-1091. https://doi.org/10.1108/BFJ-12-2012-0308Download as .RIS
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