Price Premiums for Private Labelled Milk in German Retail: A Hedonic Price Analysis

Thomas Bittmann and Johann Scharnhop

No 317049, 61st Annual Conference, Berlin, Germany, September 22-24, 2021 from German Association of Agricultural Economists (GEWISOLA)

Abstract: Private labels are positioned at different price and quality levels. Premium private labels offer exceptional product benefits. The price premium a consumer is willing to pay over a standard private label depends on the perceived quality of the product. The objective of this paper is to investigate the size of these price premiums. The price premium can be interpreted as a measure of the retailer image and the extent to which each retailer is able to generate consumer loyalty through its own premium private label. To control for other product characteristics, we employ a hedonic price analysis. We find that major German discounters can generate the highest price premium for their premium brands. There is one other hybrid premium label that generates the highest premium, which is a private label sold at multiple retailers. National brands still generate the highest average prices overall, but the introduction of premium labels reduces the gap. Packaging, fat content, and special product labels explain a significant part of the variation in retail prices. These price differences have also important implications for cost-pass through and the frequency of retail price adjustment.

Keywords: Agribusiness; Consumer/Household Economics; Marketing (search for similar items in EconPapers)
Date: 2021-11-18
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Persistent link: https://EconPapers.repec.org/RePEc:ags:gewi21:317049

DOI: 10.22004/ag.econ.317049

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