Consumer Preference Heterogeneity and Preference Segmentation: The Case of Ecolabeled Salmon in Danish Retail Sales

Abstract

The popularity of sustainably produced food products has grown rapidly in recent years. Ecolabels are used to indicate the environmental sustainability of products and have been implemented in the seafood market, with the leading ecolabel being that of the Marine Stewardship Council (MSC) for wild fish. However, the effect of ecolabels on consumer decision-making remains unclear regarding actual purchasing behavior. This study analyzes scanner data from a household panel in Denmark, accounting for consumer heterogeneity using random parameters and latent class logit models to identify the effect of ecolabels. The results indicate substantial consumer preference heterogeneity concerning important salmon attributes. Salmon attributes that confer convenience to household fish consumption appear to be very important in consumer choices. Ecolabeling has a significant effect on household decision-making, but the majority of consumers are more likely to choose non-labeled products, which may be due to the low availability of eco-labeled products. Five consumer segments are identified, revealing one consumer segment with a preference for organic labeled salmon, comprising 15% of households. However, a consumer segment for MSC-labeled salmon is not identified. The implication is that management can rely on a segment of consumers to implement organic principles in salmon farming, but the preference for sustainable salmon fishing is inconclusive due to uncertain confounding effects.