Multiple Certifications and Consumer Purchase Decisions: A Case Study of Willingness to Pay for Coffee in Germany.

Arnab K. Basu, Ulrike Grote, Robert Hicks, and Till Stellmacher (2016): Multiple Certifications and Consumer Purchase Decisions: A Case Study of Willingness to Pay for Coffee in Germany. The Cornell Working Paper Series 16-17. Charles H. Dyson School of Applied Economics and Management. Cornell University, Ithaca, New York.

Find article here: http://publications.dyson.cornell.edu/research/researchpdf/wp/2016/Cornell-Dyson-wp1617.pdf

Abstract
This study contributes to the literature on consumers’ willingness to pay (WTP) for certified coffee with the main objective of trying to understand consumer choices in the presence of (i) multiple labels and (ii) multiple certifications within each label type. The multiple labels we consider are Fair Trade, Wild Grown and Organic coffee while multiple certifications within each of these three main labels include permutations such as Fair Trade + Organic and Organic + Wild Grown. We find that consumers’ WTP for the Organic label has the highest mean value but also the highest dispersion of any of the WTP distributions.
The distribution of WTP for the Fair Trade labe l, while somewhat lower than Organic, has a much tighter distribution about around its mean. Comparing the shape of the distributed WTP for Organic versus Fair Trade may provide some evidence for the degree of consumer confidence or knowledge about what the respective labels purport to deliver. Consistent with the above results, we find that consumers are unlikely to choose Wild Grown coffee and are not willing to pay a price premium for this label.

Keywords: Certificate; Certification; Fair Trade; Organic; Wild Grown Coffee; Choice Experiment; Germany