Eco-Premium or Eco-Penalty? Eco-Labels and Quality in the Organic Wine Market. (February 2017)

• Record Type: Journal Article
• Authors: Delmas, Magali A.; Lessem, Neil
• Other Names: Hahn Tobias guest-editor.; Figge Frank guest-editor.; Aragón-Correa J. Alberto guest-editor.; Sharma Sanjay guest-editor.
• Is Part Of: Business and society. Volume 56:Number 2(2017)
• Page Start: 318
• Page End: 356
• Publication Date: 2017-02
• Subjects: green marketing -- organic wine -- eco-label -- eco-premium -- differentiation strategy; Industries -- Social aspects -- Periodicals; Industrial sociology -- Periodicals; Business ethics -- Periodicals; 306.3
• DOI: 10.1177/0007650315576119
• Languages: English
• ISSNs: 0007-6503

Abstract

Eco-labels emphasize information disclosure as a tool to induce environmentally friendly behaviors by both firms and consumers. The goal of eco-labels is to reduce information asymmetry between producers and consumers over the environmental attributes of a product or service. However, by focusing on this information asymmetry, rather than on how the label meets consumer needs, eco-labels may send irrelevant, confusing, or even detrimental messages to consumers. In this article, the authors investigate how the environmental signal of eco-labels interacts with product characteristics such as brand, quality, and price. In a discrete choice experiment, the authors examine consumer response to two similar eco-labels for wine, one associated with a quality reduction and the other not. The results show that respondents preferred both eco-labeled wines over otherwise identical conventional counterparts when the price was lower and the wine was from a lower quality region. However, they preferred conventional, more expensive wine from a high-quality region. This preference indicates that respondents not only obtain some warm glow value from eco-labeled wine but also possibly interpret eco-labeling as a signal of lower quality. This relationship held across both types of eco-labels, meaning that consumers did not understand the difference between them. This research contributes to the literature on information disclosure policies by highlighting important elements for effective eco-labels. These elements include consumer awareness and understanding of the eco-label, and consumer willingness to pay for an eco-labeled product. The results emphasize the need to create eco-labels that communicate clearly both the environmental attributes and the private benefits associated with them.