Should Manufacturers Use Food Labels? The Case of Chocolate
(A2019-8396)

AUTHORS

Verena Berger, ZHAW Zurich University of Applied Sciences; Steffen Müller, ZHAW School of Management and Law; Roger Seiler, Zurich University of Applied Sciences (ZHAW)

KEYWORDS

Food Labels; Conjoint Analysis; Willingness-to-Pay

ABSTRACT

Food labels, such as organic labels or fair-trade labels, have proliferated in recent years. Although consumers know such food labels, they often do not know the underlying criteria. Prior research has shown that showing food labels on the packaging increases willingness-to-pay. But it has not investigated whether communicating the underlying criteria would be even better. We use chocolate as an example and show, based on an experiment and a Conjoint Analysis conducted in Switzerland (n=293) that willingness-to-pay is significantly lower for a chocolate that shows food labels than for a chocolate that shows the underlying criteria. We identify “no forced or child labor” and “no pesticides” as the most important underlying criteria. Willingness-to-pay for “no forced or child labor” can be as high as 2.25 CHF. Furthermore, we show that manufacturers can mainly attract two segments with that practice that make up 65 percent of the market.