Literature provides evidence of a highly price-elastic demand for organic food. However, most of the studies were conducted several years ago. In the meantime the organic market has matured. Consequently, results in literature need to be reviewed. This study specifically addresses own-price elasticity estimates for organic and conventional milk. The analysis is based on a household panel dataset of 20,000 German households. A two-step estimation procedure is applied. First, a probit regression examines which household characteristics affect the probability of buying organic milk. Second, a linear approximated almost ideal demand system provides detailed demand elasticity estimates. By using up-to-date data, distinguishing between different consumer groups, incorporating sociodemographic information and relying on a considerably large sample size this study is both an update and a refinement of previous research. In contrast to previous studies, econometric results suggest that demand for organic milk is absolutely price-inelastic in Germany. However, price responsiveness differs substantially between milk types and consumer groups.Given this background, the objective of this study is to update and to extend the analysis of household demand for organic and conventional milk, and to compare the German with the U.S. organic milk market. Combining actual purchase and demographic data and applying a two-step demand system approach, this study identifies and quantifies the factors determining the demand for organic and conventional fresh milk. It contributes to the body of literature by providing estimates of price and expenditure elasticities in a maturing organic food market. Additionally, econometric analyses are conducted not only for the whole population, but also for several consumer groups.The article is organized as follows: Section 2 surveys in detail the literature currently available on the demand for organic milk. In Section 3, the conceptual model is presented. Section 4 introduces the data, the GfK Homescan Panel. Section 5 covers the econometric evidence and provides interpretations of the results. Finally, conclusions are given in Section 6. LITERATURE REVIEWMost studies focusing on organic food consumption analyzed attitudes regarding organic food rather than actual purchase decisions. Using survey data or experimental methods, these studies typically determined the willingness to pay (see e.g.has provided evidence of a considerable discrepancy between consumer attitudes towards organic food and their actual purchasing behavior (e.g., Frykblom, 1997; Roddy, Cowan, & Hutchinson, 1999). This divergence suggests the use of real purchase data rather than survey data to characterize organic consumer behavior.There are two strands of organic food research using real purchase data. The first one examines the organic consumer profile with respect to sociodemographic characteristics, attitudes, and cultural norms. The second one analyzes consumer purchasing behavior-especially their responsiveness to changes in...

Purpose – The purpose of this paper is to identify and quantify the factors determining the prices of organic and conventional cheese. For a market with a high degree of product differentiation, i.e. the German cheese market, price premiums of various cheese attributes are examined. Thereby, special attention is paid to country of origin (CO) effects, geographical indications (GIs) and organic claims. Design/methodology/approach – The analysis is based on homescan panel data of 13,000 representative German households provided by the GfK consumer research association. The data set combines actual purchase and demographic data for a five-year sample period from 2004 to 2008. Applying the hedonic technique, the cheese price is modelled as a function of a wide range of consumer, store and product characteristics. Effects are analysed in detail by distinguishing between supply- and demand-side effects and by estimating price regressions not only for the whole sample but also for different shop types. Findings – The estimated organic price premiums range between 18 per cent in discount shops and 26 per cent in hypermarkets. The impacts of the CO and GIs are considerably smaller in magnitude and limited to special shopping venues like super- and hypermarkets. Originality/value – The German cheese market is currently evolving from a staple product market to a highly differentiated market where increasing attention is paid to quality indicators such as organic claims or GIs. The data are remarkable, both in sample size and information content. Furthermore, the estimation of shop type-specific price premiums offers new and detailed insights in consumer valuation and producer costs of a wide range of cheese attributes.

The Russian food system has undergone substantial changes. However, knowledge on how economic transition has affected the structural parameters of food demand is lacking. Based on a two-stage LES-LA/AIDS model and annual panel data from the Russia Longitudinal Monitoring Survey (1995-2010), we provide a comprehensive set of food demand elasticities for Russia along two dimensions. First, we estimate demand parameters for three characteristic time periods in order to trace changes during transition. Second, to account for the Russian population's diversity, we derive elasticities for five different consumer segments. These groups are established by a cluster analysis based on households' food purchases. Our findings suggest that demand for food is far from satiated in Russia. We find generally high unconditional expenditure and own-price elasticities for food. Both expenditure and own-price elasticities show slight decreases in absolute terms over time. Low expenditure elasticities for staple foods like bread or cereals and high values for luxury goods such as meat, alcohol and tobacco suggest considerable changes in the composition of food baskets with further income growth. Results indicate that food production at home loses in importance while more affluent households in particular increase their demand for food consumption away from home.

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