Sustainability labels in the Spanish coffee market: A hedonic price approach
Abstract
Aim of study: Focused on the coffee sector, the purpose of this paper was to determine the implicit price paid for the main sustainability certifications (Fairtrade, Organic, Rainforest Alliance and UTZ certifications) using the hedonic price approach.
Area of study: Spain.
Material and methods: The total sample included 645 coffees. The characteristics were collected between the months of September and October 2021 from coffee packs sold in the main five supermarkets of retail chains in Spain. A log-log price/attribute function was used to estimate the hedonic price function.
Main results: The attributes UTZ certification, origin, and coffee intensity received significant positive effects leading to higher premium prices of 28.51%, 25.50% and 26.50%, respectively. In contrast, Fairtrade certifications had a negative impact on the average price of coffee.
Research highlights: The proposed model could be considered as a first approximation of a hedonic pricing model estimation for sustainable coffee in Spain. The results provide useful information for the coffee sector in developing effective marketing strategies that support the sustainability of food.
Downloads
References
Angulo MA, Gil JM, Gracia A, Sánchez M, 2000. Hedonic prices for Spanish red quality wine. Brit Food J 102(7): 481-493. https://doi.org/10.1108/00070700010336445
Ballco P, De-Magistris T, 2018. Valuation of nutritional and health claims for yoghurts in Spain: A hedonic price approach. Span J Agric Res 16(2): e0108. https://doi.org/10.5424/sjar/2018162-12130
Ballco P, Gracia A, 2020. Do market prices correspond with consumer demands? Combining market valuation and consumer utility for extra virgin olive oil quality attributes in a traditional producing country. J Retail Consum Serv 53: 101999. https://doi.org/10.1016/j.jretconser.2019.101999
Bernabéu R; Díaz M, 2017. Preference for olive oil consumption in the Spanish local market. Span J Agric Res 14: e0108. https://doi.org/10.5424/sjar/2016144-10200
Bissinger K, Leufkens D, 2017. Ethical food labels in consumer preferences. Brit Food J 119(8): 1801-1814. https://doi.org/10.1108/BFJ-10-2016-0515
Bosbach M, Maietta OW, 2019. The implicit price for fair trade coffee: Does social capital matter? Ecol Econ 158: 34-41. https://doi.org/10.1016/j.ecolecon.2018.12.010
Bozzola M, Charles S, Ferretti T, Gerakari E, Manson H, Rosse N, Von der Goltz P, 2021. The Coffee Guide. International Trade Centre, 327 pp. http://www.intracen.org.
Carlucci D, 2013. Explaining price variability in the Italian yogurt market: A hedonic analysis. Agribusiness 00 (0): 1-13.
Cavallo C, Caracciolo F, Cicia G, Del Giudice T, 2018. Extra-virgin olive oil: are consumers provided with the sensory quality they want? A hedonic price model with sensory attributes. J Soc Chem Ind 98(4):1591-1598. https://doi.org/10.1002/jsfa.8633
CBI, 2021a. The European market potential for certified coffee. Agency of the Ministry of Foreign Affairs of the Netherlands. https://www.cbi.eu/market-information/coffee/certified-coffee/market-potential
CBI, 2021b. What is the demand for coffee on the European market. Agency of the Ministry of Foreign Affairs of the Netherlands. https://www.cbi.eu/market-information/coffee/trade-statistics
Cole NL, Brown K, 2014. The problem with fair trade coffee. Contexts 13(1): 50-55. https://doi.org/10.1177/1536504214522009
Consumers International, 2005. From bean to cup: how consumer choice impacts upon coffee producers and the environment. https://www.consumersinternational.org
Ecocert, 2021. Organic agriculture certification and label in the European Union | Ecocert. https://www.ecocert.com/en/certification-detail/organic-farming-europe--ce--n-834-2007
Erraach Y, Sayadi S, Parra-López S, 2017. Measuring preferences and willingness to pay for sustainability labels in olive oil: Evidence from Spanish consumers. XV EAAE Congress, Towards Sustainable Agri-Food Systems: Balancing Between Markets and Society, (Parma) Italy, Aug 29- Sept 1. pp: 1-14.
Fairtrade Ibérica, 2021. Memoria Fairtrade Ibérica 2020-2021. https://www.fairtrade.es/wp-content/uploads/2022/04/2020-21_Memoria_Fairtrade_Iberica.pdf.
Galati A, Crescimanno M, Tinervia S, 2017. Italian red wine in the Japanese market: A hedonic price analysis. Glob Bus Econ Rev 19(6): 760-770. https://doi.org/10.1504/GBER.2017.087288
Goicoechea A, 2022. ¿Cómo sería un mundo en el que lo justo fuera lo normal? ARAL. https://www.revistaaral.com/texto-diario/mostrar/3365393/como-seria-mundo-justo-fuera-normal.
Gracia Royo A, Pérez y Pérez L, 2004. Factores determinantes del precio de la carne de ternera: Un análisis hedónico. Econ Agrar Recur Nat 4(8): 87-104. https://doi.org/10.7201/earn.2004.08.05
Halvorsen R, Palmquist R, 1980. The interpretation of dummy variables in semilogarithmic equations. Am Econ Rev 70(3):474-475.
ICO, 2020. The value of coffee: Sustainability, inclusiveness and resilience of the coffee global value chain. International Coffee Organization. https://www.internationalcoffeecouncil.com/_files/ugd/38d76b_4fc7b54a15f14a548b2f4a208c2eae6d.pdf.
Janßen D, Langen N, 2017. The bunch of sustainability labels - Do consumers differentiate? J Clean Prod 143:1233-1245. https://doi.org/10.1016/j.jclepro.2016.11.171
Kantar, 2021. Cuotas de mercado de la distribución. https://www.foodretail.es/retailers/cuota-mercado-mercadona-carrefour-lidl-kantar_0_1583541661.html.
Karipidis P, Tsakiridou E, Tabakis N, 2005. Hedonic analysis of retail egg prices. J Food Distrib Res 36(3): 68-73. http://europepmc.org/abstract/AGR/IND43887366.
Kharel KR, Adhikari DB, 2021. A competitive perspective of sustainable coffee production practices. Quest J Manage Social Sci 3(1):101-111. https://doi.org/10.3126/qjmss.v3i1.37600
Kolk A, 2013. Mainstreaming sustainable coffee. Sustain Dev 21(5): 324-337. https://doi.org/10.1002/sd.507
Lancaster KJ, 1966. A new approach to consumer theory. J Polit Econ 74(2): 132-157. https://doi.org/10.1086/259131
Lentijo GM, Hostetler M, 2011, Evaluating certified coffee programs. The Institute of Food and Agricultural Sciences, University of Florida.
Lingnau V, Fuchs F, Beham F, 2019. The impact of sustainability in coffee production on consumers' willingness to pay-new evidence from the field of ethical consumption. J Manag Control 30(1): 65-93. https://doi.org/10.1007/s00187-019-00276-x
Maietta OW, 2005. The hedonic price of fair trade coffee for the Italian consumer. Int Conf Agricultural policy reform and the WTO: Where are we heading?, Capri (Italy). June 23-26, pp:45-55.
Martinez-Carrasco L, Brugarola M, García V, Martinez-Poveda A, 2007. La aceptacóin de alimentos de Comercio Justo. Un estudio exploratorio en el sureste de España. Rev Esp Estud Agrosoc Pesqu 213:155-178.
Panhuysen S, Pierrot J, 2014. Coffee Barometer 2014 report. 1-15. https://www.oxfamnovib.nl/Redactie/Downloads/Rapporten/Coffee%20Barometer%20(1).pdf.
Panhuysen S, Pierrot J, 2020. Coffee Barometer 2020. Coffee Barometer Collective, 1-56. https://coffeebarometer.org/
Parcell JL, Schroeder TC, 2007. Hedonic retail beef and pork product prices. J Agric Appl Econ 39(1): 29-46. https://doi.org/10.1017/S1074070800022732
Pierrot J, Giovannucci D, Kasterine A, 2011. Trends in the trade of certified coffees. International Trade Centre, 17 pp. http://www.intracen.org.
Potts J, Lynch M, Wilkings A, Huppe G, Cunningham M, Voora V, 2017. The state of sustainability initiatives review 2014: Standards and the green economy. Int Inst for Sustainable Development Int Inst for Environment and Development. https://policycommons.net/
Rainforest Alliance, 2020. Rainforest Alliance Sustainable Agriculture Standard. https://www.rainforest-alliance.org/resource-item/2020-sustainable-agriculture-standard-farm-requirements/
Rainforest Alliance, 2021a. Coffee Certification Data Report 2020 (Issue May). https://www.rainforest-alliance.org/business/wp-content/uploads/2020/05/Cocoa-Certification-Data-Report-2020.pdf
Rainforest Alliance, 2021b. UTZ Certification (now part of the Rainforest Alliance). https://www.rainforest-alliance.org/utz/
Rainforest Alliance, 2022. Find the Frog. https://www.rainforest-alliance.org/find-certified/?fwp_by_consumer_location=spain&fwp_by_product=coffee&fwp_by_commodity=coffee
Ramsey JB,1969. Tests for specification errors in classical linear least-squares regression analysis. J R Stat Soc, B: Stat Methodol 31(2): 350-371. https://doi.org/10.1111/j.2517-6161.1969.tb00796.x
Reinecke J, Manning S, Von Hagen O, 2012. The emergence of a standards market: multiplicity of sustainability standards in the global coffee industry. Organ Stud 33(5-6): 791-814. https://doi.org/10.1177/0170840612443629
Rosen S, 1974. Hedonic prices and implicit markets: product differentiation in pure competition. J Polit Econ 82(1):34-55. https://doi.org/10.1086/260169
Rotaris L,Danielis R, 2011. Willingness to pay for fair trade coffee: A conjoint analysis experiment with Italian consumers. J Agric Food Ind Organ 9(1):1-20. https://doi.org/10.2202/1542-0485.1305
Rousseau S, Vranken L, 2013. Green market expansion by reducing information asymmetries: Evidence for labeled organic food products. Food Policy 40:31-43. https://doi.org/10.1016/j.foodpol.2013.01.006
Sanjuán-López A, Resano-Ezcaray H, Camarena-Gómez D, 2009. Developing marketing strategies for jiloca saffron: A price hedonic model. Span J Agric Res 7:305-314. https://doi.org/10.5424/sjar/2009072-421
Schamel G, Anderson K, 2003. Wine quality and varietal, regional, and winery reputations: Hedonic prices for Australia and New Zealand. Econ Rec 6: 33-58. https://doi.org/10.1142/9789813232754_0002
Schamel G, Anderson K, 2019. Wine quality and varietal, regional and winery reputations: Hedonic prices for Australia and New Zealand. World Sci Stud Int Econ 73(246):225-253. https://doi.org/10.1142/9789811202094_0010
Thadewald T, Büning H, 2004. Jarque-Bera test and its competitors for testing normality - A power comparison. Inst Statistics and Econometrics, Free University Berlin, 1, 22.
UTZ, 2017. Statistics Report 2017 - UTZ Coffee. 1-19. https://docslib.org/doc/13051834/utz-coffee-statistics-report-2017
Van Loo EJ, Caputo V, Nayga RM, Seo HS, Zhang B, Verbeke W, 2015. Sustainability labels on coffee: Consumer preferences, willingness-to-pay and visual attention to attributes. Ecol Econ 118:215-225. https://doi.org/10.1016/j.ecolecon.2015.07.011
Vigar V, Myers S, Oliver C, Arellano J, Robinson S, Leifert C, 2020. A systematic review of organic versus conventional. Nutrients 12(7): 1-32. https://doi.org/10.3390/nu12010007
Wang X, 2016. Is fair trade fair for consumers? A hedonic analysis of U.S. retail fair trade coffee prices. Annual Meeting (No. 236344), Boston, MA, USA, Jul 31-Aug 2; Agricultural and Applied Economics Association.
Ward CE, Lusk JL, Dutton JM, 2008. Implicit value of retail beef product attributes. Aust J Agric Resour Econ 33(3):364-381.
Copyright (c) 2023 CSIC
This work is licensed under a Creative Commons Attribution 4.0 International License.
© CSIC. Manuscripts published in both the print and online versions of this journal are the property of the Consejo Superior de Investigaciones Científicas, and quoting this source is a requirement for any partial or full reproduction.
All contents of this electronic edition, except where otherwise noted, are distributed under a Creative Commons Attribution 4.0 International (CC BY 4.0) licence. You may read the basic information and the legal text of the licence. The indication of the CC BY 4.0 licence must be expressly stated in this way when necessary.
Self-archiving in repositories, personal webpages or similar, of any version other than the final version of the work produced by the publisher, is not allowed.
