Market price differentials for food packaging characteristics

Consumers’ experimentally measured food preferences are strongly influenced by extrinsic product characteristics such as labelling and packaging. So far it is unknown if and to what degree these preferences for food packaging are also reflected in market price differences. Using a scanner data set for red wine market transactions in two US markets, this study estimated price premiums and discounts related to a range of packaging characteristics employing a hedonic pricing model. Models partitioning market prices into attribute related price components were first estimated, giving each product the same weight. Additionally, products were weighted by unit sales, whereby higher demanded products were more strongly reflected in marginal price estimates. Separate models were estimated for domestic and imported products to assess the generalisability of implicit packaging prices. Overall, the largest price differences were found to relate to region of origin followed by label design type, grape variety, label colour and label information. The packaging elements bottle closure and bottle form could only explain low price variance shares. The importance of packaging elements in explaining market price differences increased when taking into account unit sales as an indicator of consumer acceptance. Packaging variables were more important for imported rather than for domestic products, where grape variety and label information accounted for larger market price differences. Congruent price premiums for a number of packaging elements across domestic and imported products suggest a generalisable packaging based market price differentiation, which was also found to largely agree with previous experimental findings. Implications for food consumer research and food product marketing are discussed.