Bernard, John C.

Gifford, Katie

English

Research Papers in Economics

Packaging  of  Organic  and  Conventional  Products–A 
Comparison
Katie Gifford and John C. Bernard
Methods
The pilot study was conducted at three grocery 
stores in the Newark, Delaware area. Price and 
product-label information were examined for or-
ganic and conventional counterparts of milk, pasta, 
and soup. Only products where exact counterparts 
were available were used. For instance, only certain 
types of pasta (spinach fettucine, tubetti, whole-
wheat spaghetti, whole-wheat penne) were included 
because organic and conventional varieties were 
available to determine the exact price premium. 
Choosing food categories was difficult because the 
organic products often included added functional in-
gredients such as grains, soy, flax-seed, etc. A form 
was developed and refined during the pilot study in 
order to capture the various categories of message 
claims in use on the packages observed. 
Data
A total of 37 packages were examined in the three 
categories of milk, pasta, and soup (see Table 1). 
The highest price premium was for organic milk, 
which cost on average 92% more than the conven-
tional 2% milk (see Table 2 for all price premiums). 
All four brands of milk specifically mentioned that 
they were produced without using hormones and an-
tibiotics, so the marketers are not assuming that the 
consumer knows this is a requirement for organic 
labeling. Pasta had a slightly lower price premium, 
and only one of the four organic brands offered any 
information on the package about organic methods. 
An interesting tactic in this category was the smaller 
package size of organic pasta, possibly in an attempt 
to disguise the price premium. Soup had the lowest 
price premium, and only positive framing was used. 
These statements tended to be upbeat but unspecific: 
“Organic ingredients make for better tasting, better-
for-you foods that are better for the environment.” 
Among the organic-food packages observed, there 
were only two examples of negative framing, such 
as the statement, “. . . no dangerous pesticides or 
Organic food is a niche market that is growing at 
a significantly faster rate than food sales overall. 
Consumers have various motives for choosing or-
ganic products, with most buyers seeking either to 
avoid perceived risks from conventional agriculture 
or to gain perceived benefits from organic methods. 
Marketers can provide information such as research 
on organic foods or the USDA standards to make 
risks and benefits salient to the consumers in order 
to increase purchase likelihood and capture the 
higher price for this credence good. In theory, if 
consumers have a certain willingness to pay for each 
individual benefit or reduced risk characteristic of 
organic food, then a product which presents a larger 
number of claims about its production will inspire a 
higher WTP and will therefore have a higher price. 
Marketers can also choose whether to use positive 
or negative framing of the organic methods. Positive 
framing presents benefits from organic food, and 
negative framing presents risks from conventional 
food. Both types of messages attempt to lead con-
sumers to the same conclusion: that organic food 
is better. However, research suggests that positive 
and negative framing provoke different responses 
from consumers. 
Objectives
The overall objective of this project is to model the 
price premium of organic food as a function of the 
message components and information provided on 
the product packaging.
The sub-components of this goal are to develop 
a method of recording and quantifying label claims 
and messages; to determine if positive or negative 
framing is more prevalent on package information; 
and to determine the price premium for individual 
products and categories of organic foods. 
Katie Gifford and John C. Bernard are graduate student and 
assistant professor, respectively, in the Food and Resource 
Economics Department at the University of Delaware.108   March 2004 Journal of Food Distribution Research 35(1)
chemicals are ever used,” on Horizon Organic milk. 
A similar statement was made on DeBoles organic 
pasta. Otherwise, packages had positively framed 
messages or no additional information at all beyond 
the label “organic.” 
Conclusions and Limitations
The USDA seal appears to be coming into more 
widespread use, with one brand of milk switching 
over to the use of the USDA seal during the observa-
tion period for the pilot study. Organic food carried 
a higher price premium than expected (Dimitri and 
Greene 2002). Most package text stressed positive 
framing instead of negative framing. One limitation 
Table 1. Pilot Study Data.
2% Milk Pasta Soup
Organic Conven-
tional
Organic Conven-
tional
Organic Conven-
tional
No. packages 4 3 7 4 11 8
Package size 1⁄2 gallon 1⁄2 gallon 11.9 oz 13.6 oz 15 oz 15 oz
Average price $3.91 $2.03 $0.19/oz $0.10/oz $2.04 $1.28
Std. dev. price $0.29 $0.29 $0.08 $0.03 $0.29 $0.52
No. brands 4 3 4 2 6 6
 
Table 2. Organic Price Premiums and USDA Seal Usage.
2% Milk Pasta Soup
Price Premium 92% 84% 59%
Brands with USDA seal 75% 0% 17%
of this project as we proceed is that the relationship 
between product information and price premiums 
may be difficult to model, since a low standard 
deviation of organic price premiums compared to 
the average price was observed, especially for milk 
and soup. This suggests that the product price may 
depend more on the type of product than on the 
marketing information provided. 
References
Dimitri, C. and C. Greene. 2002. Recent Growth 
Patterns in the U.S. Organic Foods Market. 
Economic Research Service/USDA, Washing-
ton, D.C.

PACKAGING OF ORGANIC AND CONVENTIONAL PRODUCTS - A COMPARISON

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