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Market stealing and market expansion: an examination of product introductions in the organic coffee market

Richard Friberg and Mark Sanctuary ()
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Richard Friberg: Stockholm School of Economics

Environmental Economics and Policy Studies, 2018, vol. 20, issue 2, 287-303

Abstract: Abstract Market shares for organic products remain modest despite broad professed consumer interest in purchasing organic products. We use counterfactual product introductions in an estimated demand model to systematically explore the links between product assortment and the market share for organic products. The demand estimates on which we base the counterfactuals use 3 years of household panel data on retail coffee purchases in Sweden, combining household’s stated and revealed behavior in a discrete choice model. The predicted market shares of new organic products are highly dependent on which brand that the organic label partners with. Introduction of a new organic product is predicted to increase in-sample organic market share from around 5% up to a maximum of around 8%. The market expansion effect dominates the market stealing effect for almost all entrants. The largest market share gains for organic products are not to be had amongst the keenest organic households, but rather amongst the moderately keen organic households.

Keywords: Co-branding; Organic; Coffee; Market stealing; Market expansion (search for similar items in EconPapers)
JEL-codes: D12 D40 Q13 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:spr:envpol:v:20:y:2018:i:2:d:10.1007_s10018-017-0194-5