The role of retail market power and state regulations in the heterogeneity of farm‐retail price transmission of private label and branded products

Liu, Yizao; Chen, Xuan; Rabinowitz, Adam

doi:10.1111/agec.12468

Cited by 15 publications

(9 citation statements)

References 42 publications

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“…The raw milk price (Class I milk price) significantly and positively influences marginal cost, which is consistent with most farm-retail price transmission studies of milk (e.g. Li et al, 2018;Li, Lopez, & Yang, 2018;Liu, Chen, Rabinowitz, 2019). As for the number of retail stores, the coefficient is 16 We have 88 products in total and it is hard to show them all given the limited space.…”

Section: Supply Estimation Resultssupporting

confidence: 70%

Demand, challenges, and marketing strategies in the retail promotion of local brand milk

Liu

Chen

Rabinowitz

et al. 2020

Agricultural Economics

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This article addresses the demand and challenges for local brand milk and focuses on the marketing strategies for retail promotion. While federal and state government make efforts to promote local food purchases and consumption at the farm level, local foods face significant distribution challenges in grocers, especially in larger retail stores. Limited shelf space and high pricing by retailers impedes consumers’ purchases and results in weak competitiveness for local brands. Therefore, it is essential for local producers and “buy local” programs to understand what types of promotion and marketing strategies might be more effective in stimulating demand in retail outlets. Using 2010‐2011 Nielsen Retail Scanner data in the Northeast region, we estimate a random‐coefficient discrete choice model of demand to determine the effects of nutritional characteristics, price, packaging, and distribution strategies on the consumers’ choice to purchase locally branded milk. Results show that local brand milk faces significant demand challenges in addition to high prices and limited outlets in competing with lower‐priced products. Marketing strategies, such as price cut, one‐gallon package offering, and expanded presence in retail stores, can significantly stimulate the demand for locally branded milk, with one‐gallon package offering being the most effective strategy.

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Section: Supply Estimation Resultssupporting

confidence: 70%

Demand, challenges, and marketing strategies in the retail promotion of local brand milk

Liu

Chen

Rabinowitz

et al. 2020

Agricultural Economics

Self Cite

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“…Another important feature of discount stores is that a significant part of their supply is private labelled product [41,44]. Discounters can have a better influence on the retail price of the private labelled products, which contributes to a different pricing strategy for discount stores [45]. Retailers prefer private labelled products because they usually have a higher gross margin on these products and can help them differentiate themselves from competitors, as these brands are not available in other stores [46].…”

Section: Characteristics Of Discountersmentioning

confidence: 99%

Estimating the Market Share and Price Premium of GI Foods—The Case of the Hungarian Food Discounters

Jantyik

Török

2020

Sustainability

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The food security of the European Union heavily relies on the food quality systems where Geographical Indications (GI) play an important role. European food is considered world-wide secure and high quality, therefore European food names and designations represent value that should be protected as intellectual property. Despite the importance of GIs in Europe, the availability of the related economic data is very limited, and the only available comprehensive database (in the case of GI foods, the Database of Origin and Registration (DOOR)) details only some very basic and mainly administrative characteristics of such products. From an economic perspective, market size and price premium of these products are the most important in order to assess the economic sustainability of European GI foods. Empirical datasets describing these characteristics of GI products are scarcely available and can be collected only case by case. Therefore, the purpose of this study is to estimate the market size for food products with geographical indications available in Hungary (excluding wines and spirits) and their price premium compared to their direct substitute products, based on empirical data. We conducted monthly mystery shopping for one year (January–December 2018) at three food discount stores (Lidl, Aldi, and Penny Market) operating in Budapest. We collected data on all the GI products available in the stores and their closest substitutes; then the dataset was subsequently analysed and compared to the main characteristics of the DOOR database. The reason for choosing the discounters is that these stores have expanded spectacularly in recent years and are mostly available to average consumers, both in Hungary and across Europe, and based on the main characteristics of this type of retail (limited product portfolio targeting price-sensitive consumers), the data collected here can be considered to indicate the minimum level of market share and price premium. Our results show that currently, GIs have only limited importance in the Hungarian food market, in terms of both the number of products and their market share, as only a small number of such products appear in the food discounters’ supply. As regards the premium achievable with consumer prices, the average price premium is remarkably high (43% on average), even in the case of discounters. Our empirical results also suggest that in Hungary, there is an opportunity to increase the importance of GI foods, both in terms of availability and market share. For Hungarian GI food producers and processors, the level of price premium achievable in discounters might be attractive enough to stimulate their presence in the market.

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“…Fontos tulajdonsága továbbá a diszkontoknak, hogy a kínálatuk jelentős részét képezik a saját márkás termékek (NEUMEIER, 2015;WILLEMS et al, 2016). A diszkontok jobban befolyásolhatják saját márkájukkal a termékek kiskereskedelmi árait, ami hozzájárul a diszkontok eltérő árazási stratégiájához (LIU et al, 2019). Azért kedveli a kereskedelem a sajátmárkás termékeket, mert általában nagyobb bruttó árrés realizálható ezeken a termékeken, illetve segíthetik a megkülönböztetést a versenytársakkal szemben, hiszen a többi áruházban ezek a márkák nem kaphatóak (LARSON, 2018).…”

Section: Miért a Diszkontok? -unclassified

A földrajzi árujelzős termékek helyzete a magyarországi élelmiszerdiszkontokban

Jantyik

Török

2020

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More than 25 years ago, the European Union (EU) has established a sui generis system of geographical indications (GIs) for identifying the products which quality, reputation or other characteristics are linked to their geographical origin. By the end of 2018 the official register of the European Commission (the DOOR database) included 1448 registered food products with GI label, but their number is continuously increasing. For several reasons, we examined the discounters operating in Hungary in order to estimate the market size and price premium of GI foods in Hungary. Firstly, discounters' share in the Hungarian food retail sector is continuously growing and reaching the majority of the average Hungarian consumers. Secondly, their typical feature is that their supplies are almost constant and limited, discounters target the price sensitive consumers, so the minimum level of price premium can be defined here. In this study, we would like to estimate from below both the market size of Hungarian GI products and the price premium of GI products compared to their direct substitute products. To gather real life data, we have gone mystery shopping for a year every month (January-December 2018) to an Aldi, Lidl and Penny Market retail shop located in Budapest. We collected data of available GI products and their closest substitute products which were available in the shop and then we analysed the dataset consist of several hundreds of observations. Our results show that the number of GI products available in the Hungarian discounters is very limited, however, their supply is quite permanent. The majority of GI foods available in Hungarian discounters are Italian and the average price premium was around 43% with remarkable differences. Our results show that currently GI food products have limited importance in the Hungarian food market as they are rarely available. On the other hand, a real price premium for GI products exists in the Hungarian market and an even higher price premium might be expected in less low-price oriented food retailers.

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The role of retail market power and state regulations in the heterogeneity of farm‐retail price transmission of private label and branded products

Cited by 15 publications

References 42 publications

Demand, challenges, and marketing strategies in the retail promotion of local brand milk

Demand, challenges, and marketing strategies in the retail promotion of local brand milk

Estimating the Market Share and Price Premium of GI Foods—The Case of the Hungarian Food Discounters

A földrajzi árujelzős termékek helyzete a magyarországi élelmiszerdiszkontokban

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