The effect of direct and indirect information on the consumption of organic fruits and vegetables

Summary

Based on a unique panel dataset covering consumption of organically and conventionally produced fruits and vegetables in the years 2005 - 2007, we examine whether positive information that link health and consumption of organic fruits and vegetables and negative information about pesticides in conventional fruits and vegetables can change demand for organic foods to such an extent, that it can be used in marketing strategies of organic fruit and vegetables to different types of consumers. Using the double hurdle model we estimate price elasticities and partial effects of these two types of information for six organic segments of Danish households, where three are positively minded towards organic foods and three are either indifferent or negative. Furthermore due to detailed registration of the media habits of the panel members we have the possibility to analyze the effects of directly obtained information and compare it with indirectly obtained information, measured through an aggregate index. The results suggest, that the market for organic fruits is immature while the market for organic vegetables is considerable larger and more mature since also negative segments purchase organic vegetables with considerable frequency. Directly obtained negative information has a rather large effect of the probability of being an organic purchaser while indirectly obtained positive information increase the expected quantity share for those already being an organic purchaser. Both positive and negative segments are influenced by both types of information.