ECONOMICS OF ORGANIC AND SUSTAINABLE PRODUCTS

Megan Waldrop

This dissertation explores how organic and sustainable claims affect prices and consumer willingness to pay (WTP) for food and beverage products in three separate papers. The first paper examines how organic, sustainable, and biodynamic wine making practice claims affect wine prices. Wineries and vineyards can self-claim these practices or receive third-party certification. Using a hedonic price model, I estimate that many claims command price premiums in the market. In some instances, certified claims command a lower premium than their non-certified counterparts. However, there are diminishing returns to adding additional certifications. The second paper investigates the effects of information about organic status on consumer WTP and sensory liking of organic beer. In a choice experiment with sensory components, consumer panelists tasted three organic beers and received information about the beer’s organic status. Demographic information, beer consumption and preferences, in addition to attitudes towards the environment, health, and food are including as factors that can affect the WTP for organic beer. Organic and certified organic information treatments did not affect consumer acceptance of the beers. Overall, consumers were not willing to pay more for organic and certified organic beers; although, those that purchase craft beers habitually and/or are more open to new foods have a higher WTP. In the third paper, organic snack food price premiums are estimated using scanner data from 2008 to 2014. Organic premium trends are estimated for bars, rice/popcorn cakes, fruit-flavored snacks, and tortilla chips. Attributes specific to each product, store type, purchase month, and market area are included in the model. Organic market shares for bars and rice/popcorn cakes have increased over time while fruit-flavored snacks and tortilla chips remain stagnant. The organic price premium for bars has decreased overtime, whereas the premiums for fruit-flavored snacks and tortilla chips generally have stayed constant. Rice/popcorn cakes premiums have fluctuated, but have increased from 2009 to 2012. Fruit-flavored snacks command the highest premiums and rice/popcorn cakes the lowest premiums. These papers provide new insights on how environmentally friendly practices affect less studied product categories in the sustainable and organic market: wine, beer, and snack foods.

ECONOMICS OF ORGANIC AND SUSTAINABLE PRODUCTS

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