Competitive Effects of Front-of-Package Nutrition Labeling Adoption on Nutritional Quality: Evidence from Facts Up Front–Style Labels

Abstract

“Facts Up Front” nutrition labels are a front-of-package (FOP) nutritional labeling system that presents key nutrient information on the front of packaged food and beverage products in an easy-to-read format. The authors conduct a large-scale empirical study to examine the effect of adoption of FOP labeling on products’ nutritional quality. The authors assemble a unique data set on packaged food products in the United States across 44 categories over 16 years. By using a difference-in-differences estimator, the authors find that FOP adoption in a product category leads to an improvement in the nutritional quality of other products in that category. This competitive response is stronger for premium brands and brands with narrower product line breadth as well as for categories involving unhealthy products and those that are more competitive in nature. The authors offer evidence regarding the role of nutrition information salience as the underlying mechanism; they also perform supplementary analyses to rule out potential self-selection issues and conduct a battery of robustness checks and falsification tests. The authors discuss the implications of the findings for public policy makers, consumers, manufacturers, and food retailers.

Experimental study of front-of-package nutrition labels’ efficacy on perceived healthfulness of sugar-sweetened beverages among youth in six countries

“…Fourth, the study did not examine potential impacts of other label features, including cartoons or marketing tactics, nor how participants’ nutrition knowledge and attitudes towards SSBs impacted perceived healthfulness, which should be evaluated in future research. As the effect of FOP labels may also differ based on product category and brand ( Lim et al, 2020 ), future research should include a variety of food and drink products to further strengthen the overall understanding of FOP labels and generalizability of findings.…”

The Minimum Wage and Consumer Nutrition

“…Such interventions need not be limited to retailers. For example, Lim et al (2020) find that front-of-product labeling by manufacturers encourages competitors to improve the actual healthiness of their foods (not only tweak claims made on labels). Some of these strategies may be even more effective when minimum wage households are becoming more receptive to trying new foods.…”

Basing a claim on “negatives free”: when does it serve as a quality cue?

“…As a result, FOP claims and labels, presumed to require less effort and time to process, have gained popularity in practice (Newman et al, 2016). Further, FOP adoption in a product category increases the salience of product information and subsequently incentivizes firms to compete on quality attributes (Lim et al, 2020).…”