The bunch of sustainability labels – Do consumers differentiate?

Accepted Manuscript The bunch of sustainability labels – do consumers differentiate? Dilani Janßen, Nina Langen PII:

S0959-6526(16)32033-9

DOI:

10.1016/j.jclepro.2016.11.171

Reference:

JCLP 8560

To appear in:

Journal of Cleaner Production

Received Date: 21 March 2016 Revised Date:

24 November 2016

Accepted Date: 28 November 2016

Please cite this article as: Janßen D, Langen N, The bunch of sustainability labels – do consumers differentiate?, Journal of Cleaner Production (2016), doi: 10.1016/j.jclepro.2016.11.171. This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.

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The bunch of sustainability labels – do consumers differentiate?

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Abstract:

A huge number of sustainable labels addressing the different pillars of sustainability emerged over the last years. Some labels promote factors, which already imply other sustainability issues (e.g. organic incl. animal friendliness to a certain extent). Hence, the question arises how consumers react towards the redundancies of different sustainability

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labels. To add to the literature this study applies a latent class model for discrete choices first to test whether consumers take different sustainable labels into account when

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making their decision and second to test how consumers deal with different sustainable labels that are (partly) claiming the same aspect.

Results indicate that three consumer segments with well-distinguished preferences and willingness to pay measures for the respective attributes can be identified. One group being the 'price-sensitives', exclusively deciding on the product with the lowest price,

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regardless of any sustainable attribute of the product. Another group opts for products with a sustainable label, without any clear preference for a specific sustainable attribute but expressing a clear willingness to pay more for all presented sustainable labels. A third group can be named 'price-conscious label discriminators'. For them, some sustainable aspects provide negative utility when labelled exclusively (e.g. organic or free of

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genetically modified organisms) but labelled together (e.g. organic together with free of genetically modified organisms or animal welfare) it provides them significantly positive

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utility, even though being redundant by definition. Based on our findings there is no general statement to be made regarding the question whether different sustainable aspects complement or substitute each other. The research rather emphasizes that a differentiated look at different consumer types and different labels symbolizing sustainability is needed. The research adds to the existing literature by examining not only the relevance and acceptance of different sustainable labels to different consumer segments but also the interrelationship of different sustainable labels. The study clearly shows that with regard to different sustainable labels the more the merrier does not always apply. However, almost 85 % of the market could be satisfied with a universal sustainability label.  

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The bunch of sustainability labels – do consumers differentiate?

Department of Agricultural and Food Market Research Institute for Food and Resource Economics University of Bonn Nussallee 21 53115 Bonn Germany Institute of Vocational Education and Work Studies Technische Universität Berlin Marchstraße 23 10587 Berlin Germany

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Dilani Janßen1* and Prof. Dr. Nina Langen2

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*Corresponding Author Phone: +49 (0) 228 73-3538 E-mail: [email protected]

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The bunch of sustainability labels – do consumers differentiate? Introduction

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The importance of sustainable consumption and production (SCP) is well acknowledged1 (United Nations, 2015). A growing share of individuals not only agree with the concept of sustainable production and consumption, according to which "(…) the use of services and related products, [should] respond to basic needs and bring a better quality of life (…)

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(United Nations, 2016) but increasingly want to contribute actively to a more sustainable world (Banytė et al., 2010; Schlegelmilch et al., 2013; Young et al., 2009). Since its prominent consideration in the Agenda 21 at the Rio Conference in 1992 SCP has attracted the

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attention of politicians, experts and scholars worldwide.

At the beginning the focus laid more on the relevance of private consumption for sustainable development in general and the assessment of sustainable consumption as a new concept (e.g. Hansen and Schrader, 1997; Heiskanen and Pantzar, 1997; Spaargaren, 2003; Spangenberg and Lorek, 2002). With the start of the new millennium, however, it is commonly accepted that private consumption contributes substantially to environmental degradation,

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resource depletion as well as social problems (e.g. Gandenberger et al., 2011; Gardner et al., 2004). This acknowledgement has led to a greater focus of the topic on the concrete political agenda as well as the establishment of different research calls initiating even more and different research as well as research structures. In this respect, different networks such as

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Sustainable Consumption Research Exchanges2 as well as the evolution of the global SCP policy and the UNEP supporting activities3 (Clark, 2007) can be observed. Several special issues on SCP that have been published ever since4 illustrate that science has also taken

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over the topic. Furthermore, overviews of the research trends and outcomes as well as gaps within policy instruments related to sustainable consumption (such as Mont and Plepys, 2008) are available. Nevertheless, according to Lorek and Spangenberg (2014) in the 25 years since its framing the Sustainable Development concept5 was often weakened and mis1

See the sustainable development goals target 12, named ‘ensure sustainable consumption and production patterns’ (United Nations, 2015). 2 SCORE! - Funded by the EC between 2005-2008 (SCORE Network, 2008) 3 See e.g. the foundation of the Collaborating Center on Sustainable Consumption and Production (CSCP) in Wuppertal, Germany as result of a collaboration between UNEP and Wuppertal Institute for Climate, Environment and Energy. 4 E.g. special issue of the Journal of Consumer Behaviour on “Sustainability Through AntiConsumption”, special issue of the Journal of Macromarketing on “Facing the Challenge of Sustainability in a Changing World”, special issues of the Journal of Industrial Ecology and Natural Resources Forum on “Sustainable Consumption and Production. 5 For a history of the concept see Grober (2012) and Spangenberg (2008).

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interpreted. A reason might be that different approaches have been chosen in order to assess the complex topic of SCP. While Seyfang (2004) for example analyses the UK strategy for SCP with a focus on consuming values and contested cultures, Fuchs and Lorek (2005) look on the history of promises and failures of sustainable consumption governance. The latter aims at getting insights into the implications of the current international political, and economic settings for consumer policy regarding sustainable consumption. Nash (2009) in

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contrast, reviews the European Commission's Communication on SCP and sustainable industrial policy action plan, introduced in 2008. She examines the priority areas identified for action, the means adopted to improve energy and environmental performance of products as well as uptake by consumers. In this regard, it is important that over the last years sustaina-

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ble products and especially labels that mark such goods emerged (little by little) on the markets. The plethora of labels thereby addresses different aspects of sustainability (i.e. ecological, economic and social). The labels differ in the underlying basis (i.e. law, regulatory, volun-

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tary), the target groups addressed (i.e. stakeholder of the supply chain, consumers), aspects covered, informative value, certifying and monitoring systems and thus systems’ credibility (Castka and Corbett, 2016). However, this comprehensive understanding is most likely only perceived by either scientists or experts with a thorough knowledge about the content and regulatory system of the label or standard. So far, research has only sparely addressed the question whether consumers are able to grasp the holistic concept of sustainability and dif-

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ferentiate between the vast number of labels. Hence, we focus on the question whether the average consumer wants to keep an overview on and distinguishes between the different certifications and the underlying governance practices and the plurality of labels claiming sustainability-related issues. Or does the vast number of food labels in general and sustaina-

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bility labels in particular lead to the so-called label confusion on consumers’ side since consumers do not understand labels claiming sustainability-related issues in their complexity?

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We can conclude: all actors active on the agenda agree that consumer behaviour is the key to sustainable consumption. Our goal is to investigate whether the broad and differentiated concept of SCP has reached consumers’ every-day life and shopping behaviour by analysing the relevance of different sustainable labels (partly) claiming the same aspect in consumers’ purchase and consumption decision. Therefore, the study described in this paper firstly aims to access whether consumers take different sustainable labels into account when making their decision and then to test how consumers deal with different sustainable labels that are (partly) addressing the same aspect. For the latter, the (inter-)relationship of the different sustainable labels are examined by answering the question whether different sustainable labels either complement or substitute each other. The paper is structured as follows: Based on a brief summary on sustainability and its rele3

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vance in consumers’ purchase decision and the identification of shortcomings in recent studies in this context, the research objectives of the present study are specified. The following method section explains the appropriateness of the methods used as well the characteristics of the study. Consequently, the data is analysed and discussed together with the limitations. The paper finally closes with a conclusion.

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Background Sustainable production refers to the process quality of the production and is hence a credence attribute. To signal credence attributes to consumers and enable sustainable consumption cues, defined as external stimuli (e.g. colour, size, price, brand name and country

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of origin), are often used. Cues can be encoded by consumers and thus be used to assist consumers inferring product quality and forming quality expectations of a product (Brunsø et

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al., 2002; Grunert, 2005; Schellinck, 1983). Research has proven that consumers are able to use different cues in their decision making process in order to compare and weigh them against other (product) characteristics in their decision making process (Verbeke and Ward, 2006). Especially for the case of so-called low involvement products (as e.g. food items) consumers tend to use labels in their decision heuristics or apply rules of thumbs that help them to easily and quickly arrive at decisions (Chen and Chaiken 1999). Predominantly, if there is a perceived difficulty in evaluating a product’s quality or uncertainty occurs (e.g. after

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food scandals) extrinsic quality cues such as brands or labels gain importance (Bredahl, 2004; Verbeke, 2005; Zeithaml, 1988). Over the last three decades a lot of product standards certifying sustainable production and labels communicating sustainability-related information about food have been introduced. The triple bottom line approach, according to which the

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multidimensional concept of sustainability consists of the three pillars, ecology/environment, society and economy, is not only generally accepted but has served as a common basis for

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numerous voluntary sustainability standards and certification schemes (e.g. UTZ-certified, Rainforest Alliances or Fair Trade) especially in the food industry (Manning et al., 2012; Reinecke et al., 2012). The number of different sustainability related standards that emerged up to now allows talking about a proper market for sustainability standards (Reinecke et al., 2012). So tracks the Ecolabel Index currently 465 ecolabels in 199 countries of which 148 include standards for food/beverage (Ecolabel Index, 2016). Whether the standards’ market evolution is only recognized by specialists such as NGOs and marketers or also by consumers is an open question. Without question, however, sustainability is understood as a holistic concept, in which the three pillars not only interrelate but also reinforce each other and are hence regarded as three equitable dimensions. Though most often a social and/or environmental commitment also leads to an economic benefit of the player (e.g. firms’ and/or producers’ sales increase, self-promotion etc.) this is nothing that is communicated and promot4

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ed offensively. Hence, while sustainability is not only according to its definition but also in its implementation in retail represented by three equitable pillars, the communication of sustainable product attributes on package or in store only focuses on the environmental and social dimension of sustainability to gain consumers attention (Klink et al. 2014). This is according to Shao et al. (2016) due to the fact that market and economy related issues are not of direct interest for consumers.

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While organic and Fair Trade labelled goods have for many years been used as synonym for sustainably produced foods (see e.g. the review in Langen, 2013), it has progressively become only a facet of what producers label as indicator for sustainable production. More and more other product features, which can be perceived as elements of sustainable production

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and consumption, found and still find their way into supermarkets’ food and beverage section in western countries (e.g. aspects like ‘locally produced’, ‘animal friendly’ or ‘environmental friendly’). Beside the rising relevance of sustainable aspects in consumers’ purchase deci-

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sion the increasing sales of organic and Fair Trade food products (Fair Trade Deutschland, 2015; Statista, 2015) necessitates a comprehensive and differentiated consideration of consumers’ preferences. So far, organic is still the biggest sub-market in the market for sustainable food. Scientific research investigating consumers’ attitudes and preferences for organic food is therefore huge (see e.g. the reviews in Janssen and Hamm, 2014; Schleenbecker and Hamm, 2013). However, other aspects besides organic are expected to gain importance

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in the future. Consumer surveys hint at a trend, according to which specific sustainable aspects like e.g. animal friendliness or locally produced have overruled the relevance of organic certification (Animal Health Online, 2012) at least in stated relevance. Hence, an assessment of how people evaluate different sustainable aspects and how the different sustainable labels

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stand in relation to each other (i.e. organic compared to other sustainable labels) as well as the acceptance of a combination of labels is needed. An interesting tendency Grunert et al. (2014) hint at is that consumers link sustainability mostly to environmental issues and ex-

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press their concerns rather on the general level than on the product related level. However, the multifacetness of environmental and social labels in the context of sustainable product attributes6 indicates that marketers use these labels for market differentiation and segmentation. Thus, theoretically, it is possible to differentiate not only between the three pillars but also within the pillars. Hence, similar to the inequitable perception of the respective sustainability dimensions, also the relevance of particular environmental or social aspects might differ in their importance to consumers. Although a vast number of studies exist that deal with sustainable food choices, sustainability is mainly operationalized by organic or Fair Trade, while other environmental or social aspects are rather rarely investigated (e.g.

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See e.g. Janssen and Hamm (2014) and Klink et al. (2015) for an overview of the different private and governmental organic certification labels used in the German food market.

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Hughner et al., 2007; Janssen and Hamm, 2012; Langen et al., 2010; Zakowska-Biemans, 2011). Most recently, Shao et al. (2016) investigated the relative importance of different attributes belonging to the social and the environmental dimension of sustainability from an experts’ (academic researchers and practitioners) point of view. As a result, they found that research-

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ers and practitioners did not place consistent importance to the attributes investigated. Shao et al. (2016) did not ask consumers to gain insights into their perception of importance but experts with the argument that consumers “lack corresponding knowledge regarding sustainability assessment” (p. 4).

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Furthermore, sustainable aspects have in the past primarily been regarded in isolation, by either presence or absence of the respective attribute (Brécard et al., 2012). However, since certain product characteristics certainly interrelate with each other, a joint consideration of

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different sustainable aspects seems inevitable. Bernard et al. (2006) for example showed that combining a non-GM characteristic with an organic attribute overruled the value of the product being organic. Tonsor et al. (2005) have further shown that whether people prefer non-GM beef or not depends on whether it is also hormone-free or not. Research has additionally shown that unimportant product attributes tend to get overestimated by respondents

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when evaluated in isolation (e.g. Teichert, 2000).

To take the aforementioned into account an appropriate method has to be applied and interaction-effects have to be included into the model that estimates respondents’ utilities for different sustainable aspects as well as their interdependencies with each other. Especially

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against the background that some labels (e.g. organic) sometimes already imply another aspect (e.g. GMO-free) and thus the question arises whether a simultaneous labelling of redundant labels would rather enhance or reduce the probability of being chosen, this seems

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interesting to consider. If consumers are aware of this fact, then we do not expect an additional benefit in labelling two labels at a time even though being redundant. However, if consumers are not aware of this prerequisite, then a simultaneous labelling might be promising. Another reason for having a closer look at particular interaction effects is, that some consumers might take some aspects for granted (e.g. animal friendly) when advertising another (e.g. locally produced) (Davidson et al., 2003), even though the correlation between both have never been mentioned anywhere. Past research has focussed mainly on two goals namely to check whether consumers with (different) preferences for sustainable products do exist and second to understand the reasons and motivation for the engagement of green consumption (de-Magistris and Gracia, 2016; Diaz Pedregal and Ozcaglar-Toulouse, 2011; Langen, 2011; Lin and Huang, 2012; 6

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Verain et al., 2012). The latter results from the observation that consumers often state a general awareness of environmental concerns but are not consistently including these concerns in their purchase and consumption behaviour (McDonald et al., 2006; Prothero et al., 2010; Szmigin et al., 2009;). For us, the interesting task is to investigate green consumers’ reaction towards multiple sustainable standards that address the same and different pillars of sustainability. Our analysis benefits further by the consideration of the two main research

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streams in the context of sustainable consumption.

This study therefore first aims at investigating how different environmental and social aspects of the production process covered by various sustainable labels are perceived by different segments of consumers. To achieve this goal a segmentation approach has been

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chosen, which allows identifying not only differences between consumer groups but also between label attributes. The main purpose of segmenting consumers of a market is to identify

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and understand the motives that underlie the behaviour of a certain consumer group. In the context of sustainable food choices segmentation studies still have ability to evolve (Verain et al., 2012). While socio-demographic characteristics do not have much power in explaining consumers’ sustainable behaviour (Dagevos, 2005) or for profiling them, attitudes and concerns towards nature and (organic) food as well as behavioural variables proofed as helpful in this regard (Verain et al., 2012). Especially since research has shown that consumers already have different associations and opinions with certain labels7 it might be interesting to

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see whether this association is also reflected in consumers’ behaviour and thus in their choice behaviour. The segmentation is thus based on consumers’ preferences for environmental or socially friendly product attributes when labelled on a concrete food product as well as their attitudes and concerns towards nature and food in general. The second focus of

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this paper lies on the question whether different label combinations that cover the same or similar sustainable aspects are perceived as rather complements or substitutes in consum-

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ers’ purchase decision. Therefore, we test consumers’ response to different labels and label combinations. To put a figure on potential differences in the preferences for sustainable product attributes and to judge on its relevance for the market of sustainable products, willingness to pay estimates for the respective classes are calculated (third aim). This is of relevance for firms (since product packages only have limited space to display labels) as well as for producers (who have to afford the multiple certifications). One product for which many sustainable aspects play an important role and which is thus suitable as object of investigation for the above derived research goals is milk. For dairy agriculture and milk production all three pillars of sustainability are highly relevant. A reduction

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E.g. organic is often automatically associated with high prices, while locally produced is associated with sustainability but not automatically with a higher price (Feldmann and Hamm, 2015).

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of greenhouse gas emissions8 or the decision for or against organic practices in dairy agriculture for example has not only a decisive impact on the environment (i.e. ecology) but also a financial impact for the farmers (i.e. predominantly economy). Farming practices like mass husbandry or fair prices for farmers in contrast target in the first place social aspects but have at the same time also economic impacts. Moreover, since consumers prefer sustainably produced products when it comes to unprocessed rather than processed products and

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milk is a frequently consumed unprocessed product (e.g. in Germany the per capita consumption of milk was 67 kg per year in 2008; Federal Statistical Office, 2015) and is bought by almost everyone, milk has been chosen as object of investigation. Milk qualifies further as product under investigation since high prices of e.g. organic products (compared to their

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conventional alternative) are still the most frequently mentioned reason by consumers for not buying organic (Lea and Worsley, 2005; Marian et al., 2014). Since milk is not only a relatively cheap and unprocessed product but also one for which the price span between the con-

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ventional and sustainable variant is relatively low (compared to e.g. meat or fruit and vegetables) and thus the price excuse does not really apply, milk serves well as research object. Methods

The survey – which focussed on milk for the above-mentioned reasons – was carried out online in January 2014 with a sample representative9 for the German population (with regard

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to age, gender, level of education and income) recruited by a professional market research institute. Only respondents that are either regularly or occasionally responsible for grocery shopping and those who consume milk on a regular basis (i.e. as a drink, with cereals, with coffee, cocoa etc.) qualified for the survey. The overall sample size of qualified respondents

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is n = 787. Two pre-studies were conducted prior to the main study. Table 1 provides an overview of the procedure and purpose of the different research steps.

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Please insert Table 1 here.

The main study consisted of a choice experiment, which was embedded in a questionnaire, consisting of eight choice scenarios per respondent. This allows detecting possible regularities or dependencies in the choice behaviour. The pre-studies revealed organic, GMO-free, locally produced, CO2-reduced as well as animal welfare as the most important sustainable aspects to consumers, when buying milk10. All of these aspects have to a different extent 8

This argument is also taken up by the recent expert opinion of the (German Scientific Advisory Board on Agricultural Policy and Scientific Advisory Board on Forest Policy, 2016). 9 Since the study was conducted online the sample is online representative, meaning representative for the German population that has access to internet. 10 Three aspects that are currently not to be found as (standardised) labels on the market made it into the top five of the most important sustainable aspects when buying milk (locally produced, animal welfare and CO2-reduced).

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effects on the economic, ecologic and social sense of sustainability by definition. Organic production for example guaranties in the first place environmental sustainability by preventing e.g. soil degradation or prohibiting the use of chemical fertilizers. GMO-free on the contrary prevents the use of organisms whose genetic material has been altered by genetic engineering. The aspect locally produced was at the time when the survey was carried out only to be found as advertising slogan on products (not as a standardized label11) indicating that

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the product was locally produced; mostly without specifying the area more precisely or hinting at the intention of this labelling (e.g. supporting local farmers, minimizing transportation). However, since locally produced was stated as being of great relevance to consumers in their purchase decision it has been included into the range of sustainable attributes12. Since

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the pre-studies further revealed that climate friendliness is important to consumers, even though this aspect is currently not labelled on food items yet, CO2-reduced was also selected as a relevant sustainable aspect. Finally, animal welfare was also stated as being of great

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relevance to consumers. As also this is presently not explicitly labelled on milk but a label that assures exactly the same for meat products13 exists, we adapted this label for our purpose.

Due to the explained fact that not all sustainable aspects that seem to be important to consumers in their purchase decision presently exist on the milk market yet, we decided to apply a hypothetical choice experiment to evaluate the importance of the respective attributes and

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the willingness to pay for those. As the pre-studies further revealed that consumers are not willing to compromise with regard to classical product attributes (i.e. fat content, processing degree i.e. fresh or UHT milk etc.) but would be willing to support sustainable aspects if the core product characteristics of the milk comply with the product they usually buy, the classi-

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cal product attributes were pretended to be exactly the same as for the milk respondents usually buy. Thus, only the sustainable aspects and the price varied.

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The choice sets of the final survey consisted of the five sustainable aspects that were identified in the pre-studies as being most important to consumers when buying milk (namely: or11

Meanwhile the German Federal Ministry of Food and Agriculture (BMEL) has launched a label that indicates where the agricultural ingredients of a product have been produced. 12 Even though consumers stated this aspect as being relevant in their purchase decision, there is currently no label on the German food market labeling this aspect. The label of CO2-reduced is, however, to be found on specific garbage bags in a drug store. With the permission of the producer we decided to adopt this label for the study for two reasons: (1) the label is very self-explanatory and (2) the label might already subconsciously be seen by respondents and are hence not completely unknown to them. 13 The Federal Ministry of Food and Agriculture (BMEL) together with the German society for the protection of animals (Deutscher Tierschutzbund e.V.) initiated a campaign on animal welfare by launching a new label which was only to be found on respective meat products. Since the long term-goal of this initiative was to introduce this standard and hence this label for all animal products, and furthermore consumers stated that animal friendliness is important to them when buying milk, we adopted this label for our study (Tierschutzlabel, 2012). Similar to the CO2-reduced label, the label might already somehow be familiar to respondents.

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ganic, GMO-free, animal friendly, locally produced as well as CO2-reduced). All aspects where indicated by the presence or absence of a respective label on the milk package presented in the choice experiment. Additionally, price was included as one attribute. In accordance with the consistent practice when including a price variable in a choice experiment the average market price (see e.g. Innes and Hobbs, 2011; Menapace et al., 2011; Mueller and Umberger, 2010) for milk was used as basic price. In 2013 the price for milk (skimmed,

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whole, organic or conventional) ranged from € 0.65 to € 1.29. Thus, € 0.99 was taken as basic price. To account for the aforementioned fact of multiple certifications (that is presently to be found on product packages) and to measure how consumers deal with this, interaction effects were included into the choice model. We included only interaction effects that are

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either redundant by definition (i.e. organic and GMO-free) or those from which we assumed that consumers might associate the one (e.g. animal friendly) with the other (e.g. locally produced) (Davidson et al., 2003) even though the correlation between both have never been

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mentioned anywhere.

A fractional factorial design was used, with each choice set consisting of four possible products and a no-choice (opt-out) option, resulting in 6296 choice decisions. A cheap talk script was also included prior to the choice experiment as it is not only said to influence the level of willingness to pay estimated for the sample, but to also produce more reliable estimates (Tonsor and Shupp, 2011). The choice experiment was embedded into a questionnaire that

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aimed at eliciting consumers’ behaviour, attitudes and concerns as well as their sociodemographics. The final survey was structured in five parts: Part one consisted of two screening questions on whether the participant is at least occasionally responsible for grocery shopping and whether he or she consumes milk on a regular basis. Questions about

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consumption and purchase habits completed the first part. The second part constituted of a discrete choice experiment. The experiment was followed by questions, which aimed at elicit-

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ing consumers stated attribute importance when buying milk as well as their attitudes regarding different sustainable related statements with regard to milk (part three). The fourth block aimed at mapping consumers’ knowledge with regard to sustainability. Finally, respondents’ socio-demographics were requested (part five).

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As mentioned initially socio-demographics have lost much of its power in explaining the complex purchase decisions of today and are hence not sufficient for profiling and segmenting consumers (Dagevos, 2005). Beside socio-demographic and socio-economic data, respondents’ attitudes as well as their behaviour need to be considered (Vecchio and Annunziata, 2015). While consumers’ behaviour is captured by the choice decisions in the

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choice experiments attitudes are more complex. A principal component analysis is used to condense respondents’ attitudes and concerns regarding different sustainable related statements connected to dairy agriculture as well as respondents’ demands on milk, which was elicited with the help of a five point Likert scale (1 strongly disagree, 5 strongly agree) in part

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three of the questionnaire. As the Bartlett’s Test of Sphericity (0.000) and Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy (0.954) revealed the correlation matrices of the obtained statements are adequate for conducting a factor analysis. The KMO value of 0.954 is

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further referred to as ‘marvellous’ (Backhaus et al. 2011). A principal component analysis revealed three attitudinal factors that explain 68.2% of the variance. Table 2 depicts the statements, the factors and the respective factor loadings.

Please insert Table 2 here.

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Based on the above condensation of the attitudinal statements the first factor that groups respondents’ concerns about several sustainable aspects together can be named as the factor ‘sustainability’. This factor includes different statements that have an impact on the environmental, social as well as economic dimension of sustainability by definition and load high-

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ly positive for this factor. This allows assuming that generally consumers do acknowledge the concept of sustainability. The second factor comprises all statements related to food safety and is therefore named ‘food safety’. The third factor can be denominated as ‘best value for

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money’ as it groups requests for tasty, fresh and nutritious products at a cheap price. Since attitudes and concerns serve well in profiling consumers the factors identified in the principal component analysis are (among other information such as choice data) used to characterize the different consumer segments that show different preferences for sustainable product attributes later on.

In order to analyse whether different consumer types with different demands and preferences on sustainable consumption exist, a latent class analysis was applied. Latent Class analysis, which has proven to work well with regard to consumer segmentation (e.g. Boxall and Adamowicz, 2002; Langen, 2011; Stolz et al., 2011), will allow investigating how many different consumer groups exist. To check how well the solution fits the data and to detect the op11

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timal number of classes in a latent class analysis the consideration of information criteria as the log-likelihood statistic, the Percent Certainty (Pct. Cert), the Akaike Information Criterion (AIC), the Consistent Akaike's Information Criterion (CAIC), the Bayesian Information Criterion (BIC), which is very similar to CAIC, the Akaike's Bayesian Information Criterion (ABIC) as well as the Chi-Square and Relative Chi-Square are used (Sawtooth, 2004). The reason for looking at different information criteria is that they all have different explanatory power. For

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example, while the Pct. Cert helps to get an idea to what extent the solution fits the data, it is not appropriate for deciding how many segments or classes to accept in the model. For the latter e.g. the CAIC, the most widely used measure for deciding on how many classes to accept, is needed. One can therefore say that the different information criteria can be used

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complementary. Unlike the Pct. Cert and Chi-Square statistics, smaller values of AIC, CAIC, BIC and ABIC are preferred. Table 3 provides the estimation for the one to four class model

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for respondents’ choices.

Please insert Table 3 here.

Table 3 shows that AIC, CAIC, BIC and ABIC decrease sharply until class three and then remain rather flat for larger number of classes. Rather than the absolute values of the criteria such an inflection point is sometimes a better indicator of the right number of classes

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(Sawtooth, 2007). As also for Pct. Cert and Chi-square there are considerable increases from one class to two and from two classes to three classes, but beyond that differences remain minimal, it can be argued that three might be the right number of classes. Likewise, AIC, CAIC, BIC, and ABIC drop sharply from the one class to the two class solution and from

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the two class to the three class solution, but remains fairly constant with more classes. However, sometimes it is necessary not only to look at the absolute values of any criteria but to carefully decide on which criterion is maybe more important with regard to the respective

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research task (Sawtooth, 2007). Hence, the three-class solution was selected. Table 4 provides an overview of the different class sizes and the relative importance of the sustainable aspects in the purchase decision of milk. Please insert Table 4 here.

Table 4 shows clearly that the three identified classes differ remarkably in their sizes. While class 3 accounts for almost 50 % of the respondents, the remaining half is dominated by class 1 making 36 % and a smaller share of 16 % (class 2). The relative importance clearly shows that price is the most important attribute for all three classes. However, for class 3 it is almost equally important as almost all sustainable aspects (with the exception of CO212

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reduced). While for class 1 price accounts for almost 80 % of the relative importance, the importance shares for the sustainable aspects are marginal. Class 2, in contrast, shows selected importance scores for certain sustainable aspects (i.e. locally produced and animal welfare). For a closer look at the different utilities that respondents derive from the respective attributes parameter estimates for the 3 - class model are estimated. Table 5 presents the utilities for the sustainable attributes indicated by product labels in two different versions.

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Although the raw utilities are of the correct relative size they may have been stretched or shrunk by different amounts for each group. Hence, it is necessary to rescale them when comparing different groups. The rescaled utilities are so-called ‚zero-centred diffs‘ so that its average range within attributes is 100 (Sawtooth, 2004).

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Please insert Table 5 here.

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As Table 5 reveals, the coefficient for the price variable is negative and increases with an increase in price for all three classes. This indicates that it becomes less likely that respondents choose the products the higher the price, which is not really surprising. However, for class 3 the effects for the price increases are much lower than for class 1 and 2. Since price, moreover, does not seem to play a predominant role (22.8 %) compared to the other two classes (78 % and 60.6 % respectively), as long as the product is equipped with a (sustainable) label, this class is named ‘the label chooser’. Consequently, this class can clearly be

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characterized as the one with a high sensitivity for sustainable aspects, as all sustainable labels are not only of almost similar importance but have also a highly significant impact on the choice decision).

For class 1, on the contrary, price seems to be the only criterion that matters. None of the

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presented sustainable aspects seem to have an appreciable influence on their purchase decision (though being significant, all estimated effects are relatively low14 compared to e.g.

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the estimates for price).

Class 2, however, seems to be a combination of class 1 and 3. Price playing a relatively large role (60.6 % see Table 4) but sustainable aspects, or at least a few of them, are obviously not totally without interest. While organic seems obviously a reason not to choose a product, locally produced as well as animal welfare and also GMO-free are aspects that impact choice (significantly). Hence, class 2 can be labelled the ‘price conscious label discriminators’.

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Significance does not solely depend on the effect size (degree of correlation) but also on the sample size. With a large sample already a tiny effect can be significant. What is important in practice is, however, to have a look on the effect size and the researchers’ personal assessment of it with regard to his analysis (Wiseman, 2012).

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For the interaction effects there are relatively few that have a significant impact on choice. Especially for class 3, the ‘label choosers’, the effect sizes are relatively low and close to zero, so that they seem to be negligible. The negative trend of organic and GMO-free might result from their distinct knowledge that organic already implies GMO-free. Also the combination of organic and locally produced seems to provide this class rather disutility even if quite marginal. The combination of animal welfare and CO2-reduced, however, slightly enhances

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their utility. Class 2, ‘the price conscious label discriminators’, seem to derive significantly high utility from the combined labelling of organic and animal welfare as well as GMO-free and locally produced. Especially the enhanced utility from the first combination is quite surprising as organic as such, provides this group rather disutility. Since organic agriculture al-

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ready guaranties animal welfare up to a certain extend (compared to conventional agriculture), members of class 2 obviously do not seem to be aware of this fact and a combined labelling – even though redundant – might be promising for marketers and helpful for con-

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sumers. GMO-free and locally produced do not have any cut section with one another, however, consumers belonging to class 2 seem to benefit from this joint labelling. In order to have a look on respondents’ characteristics that built the different classes, a multinomial regression (MNL) is applied. Since none of the sustainable aspects have an impact on choice that is worth mentioning (see Table 3 and Table 4) for class 1, this groups suits best as reference (compared to the other two classes, see above).

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The choice behaviour together with respondents’ socio-demographics, their purchase and consumption behaviour, knowledge and other attitudinal statements are in a next step included into the class membership model as explanatory variables to characterize the differ-

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ent classes (see Table 6).

Please insert Table 6 here.

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As the fit statistics of the model indicate the model fits the data quite well15. In conformity with their choice behaviour (according to which the most important attribute in their choice decision is price; see Table 4) the multinomial logit reveals that the group of ‘price conscious label discriminators’ pays measurably less than € 0.70 for one litre of milk, which is much less than the average market price for milk (see above). Moreover, members of this class state not to know the meaning of the word sustainability (p = 0.01) while at the same time factor 1 that comprises all attitudinal statements regarding sustainable aspects (see Table 2) loads significantly negative (p = 0.08) (see Table 6). In this context it is absolutely surprising that respondents belonging to this segment claim to pay attention to sustainability (p = 0.01). This

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McFaddens-R values between 0.2 and 0.4 generally indicate a good model fit (Backhaus et al., 2011).

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allows assuming that this question has been answered socially-desirable. Their social conformal tendency becomes also clear when we contrast their statement that they are presently buying CO2-reduced milk, which is positive and significant (p = 0.01), against their choice behaviour, where they seem to derive disutility from a CO2 reduction label. This outcome is in so far interesting, as there is presently no label on the German food market that explicitly labels CO2 reduction on food, not to mention on milk. Whereas the fact that respondents

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state presently not to buy animal friendly milk (p = 0.03) can be explained by the lack of a label that explicitly labels animal friendliness on milk. To sum up, the members of this class have selective preferences for certain sustainable aspects when labelled on the good but state at the same time not to have any idea of the concept of sustainability. Their attitudes

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(factor 1) moreover clearly speak against a sustainable commitment. Since respondents of this class state to pay attention to sustainable aspects in their purchase decision, which is only partly reflected in their choice behaviour, but are relatively price conscious, it can be

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assumed that they rather pretend than really engage in sustainable consumption. Class 3’s preferences for the aspects organic, GMO-free, locally produced and animal welfare is not only to be found in their choice behaviour (Table 4 and Table 5) but is also emphasized by the outcome of the multinomial logit model (Table 6). While the factors sustainability as well as food safety load highly significant and positive (p = 0.00 respectively, see Table 6) the factor best value for price loads highly significant (p = 0.00) but negative. This confirms the

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secondary role of price for this class and supports the finding that sustainability features seem to be as important as price (except CO2-reduced). Members of this class further state to presently buy organic (p = 0.00) and animal friendly milk (p = 0.03) and to generally pay attention to sustainability in their purchase behaviour, which completes the picture of this

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class. Thus, since class 3 members seem not to clearly differentiate between the different sustainable labels (but rather seem to be satisfied if the product is equipped with any sustainability related information – except CO2) and moreover, since none of the interaction ef-

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fects show any remarkable effect, a substitutional relationship of the sustainable labels for this class can be assumed. Willingness to pay for sustainable attributes Since part-worths for the different sustainable attributes as well as for the price variable have been estimated in the choice experiment (see Table 5), a change in price can be expressed in terms of change in utility and the exchange rate between utility and price can be calculated. Given this exchange rate, which is also referred to as marginal rate of substitution (MRS), the willingness to pay (WTP) for the respective sustainable attributes can be calculated. Using MRS(attribute,€) = -βattribute_i/β€_i it can be calculated how much an individual is ready to give up one good (here: money i.e. price) in exchange for another good (here: the respective sus15

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tainable attribute) while maintaining the same level of utility. Table 7 presents the WTP estimates for the different sustainable aspects for each class16. Please insert Table 7 here. As Table 7 reveals the WTP estimates varies strongly between the three classes. Consum-

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ers belonging to class 2 show negative WTP for the aspects organic and CO2-reduced, which are consistent with their relative attribute importance (see Table 4) and choice behaviour (see Table 5). The consistency of attribute importance, choice decision and WTP holds moreover also true for class 1 and 3. Class 1 shows hardly any WTP more for either of the sustainable aspects whereas class 3 does for all of them. This confirms that for class 1 price

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seems to be the only attribute that matters. Class 3, in contrast, is willing to pay about € 0.14 more for organic and € 0.16 - € 0.18 more for animal welfare, GMO-free and locally pro-

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duced. CO2-reduced can only achieve a surplus of € 0.08 and is hence only of minor interest for this group. Especially the results of class 3’s WTP estimates are quite interesting as it confirms the assumption posted at the beginning that organic might have become more commonplace and aspects like GMO-free, locally produced and animal welfare might attract consumers’ interest presently more. The fact that consumers are willing to pay even more for aspects like GMO-free and animal welfare rather than for organic shows that consumers belonging to class 3 seem not to be aware of the fact that organic certification already implies

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that the use of GMO is forbidden and that animals are already guarantied more space than in conventional agriculture. This underlines that this class is not well informed about the respective labels and what they stand for but are quite sensible in buying products that are equipped with a label. To sum up, we can say that this group is highly sensitive for labels

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Discussion

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regardless of its differentiated meaning.

Since it is possible to differentiate between and within three sustainability dimensions, the current study analyses and compares the relevance of various sustainable aspects to consumers by identifying different consumer segments. It thereby takes not only the sustainable aspects (portrait by respective sustainable labels) as such into account but also consumers’ behaviour, concerns and attitudes with regard to sustainability.

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For calculating the MRS price, which originally consisted of 5 levels (+30 %, + 20 %, +10 %, 0 % and -10 % of the average market price of € 0.99), was re-coded as linear variable in order to estimate one estimate for the price variable.

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ACCEPTED MANUSCRIPT Consumer segments identified

The study revealed that three different types of consumers exist that differ with respect to their preferences for environmental and/or socially friendly product attributes (first aim). While a remarkable share (47.5 %, class 3) of consumers obviously values a labelling of sustainable attributes and expresses clear preferences for all sustainable labels, for another sustain-

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able aspects do not matter at all (36.1 %, class 1). Only a relatively small group of consumers (16.4 %, class 2), however, seems to differentiate between the different sustainable aspects by showing clear preferences and expressing a WTP more for certain sustainable aspects (i.e. local production and animal friendly production) while at the same time declaring clear rejection as well as a negative WTP for other sustainable aspects (i.e. organic and

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CO2-reduced).

While socio-demographics – as expected and mentioned initially – do not have any signifi-

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cant impact on class membership, attitudes and concerns towards sustainability related issues as well as the products’ price significantly influence class membership. This is in line with current research where it is agreed upon that socio-demographic as well as socioeconomic data have lost their power in explaining the complex food choices of today’s consumers (Dagevos, 2005; Diamantopoulos et al., 2003). However, consumers’ behaviour as well as their attitudes and concerns have helped to characterise the three different segments. While for class 1 (‘the price sensitives’) nothing matters but the price and they moreover

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state to presently buy milk that costs less than € 0.70, which is lower than the average market price, for class 3 (‘the label choosers’) price plays a relatively minor role (compared to the other two classes). Moreover, for the latter all sustainable aspects are not only of almost equal importance (except CO2-reduced), but are nearly as important as price, which empha-

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sizes the high relevance of sustainable labels in their purchase decision. The fact that within all of the five tested sustainable labels ‘locally produced’, ‘GMO-free’ as well as ‘animal wel-

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fare‘ gain higher utility scores than organic might be since organic has become more commonplace for consumers. Being available in every supermarket it might have lost much of its importance and uniqueness with regard to sustainability. Whereas aspects like locally produced or animal welfare are new and might therefore attract consumers’ attention more and might be a new hype. In consumers’ minds organic is moreover often still strongly linked to high prices (Lea and Worsley, 2005; Marian et al., 2014). Aspects like e.g. locally produced in contrast are not perceived as being more expensive per se (Brown, 2003; Conner et al., 2010; Sirieix et al., 2008; Weatherell et al., 2003). Thus, locally produced leads to more positive attitudes of consumers compared to e.g. organic food (Feldmann and Hamm, 2015). Similar attitudes and behaviour is also conceivable for other alternatively produced food products. Brown (2003), Mirosa and Lawson (2012) as well as Robinson-O’Brien et al. (2009) showed that positive attitudes towards one alternative food production practice (like 17

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organic, non-genetically modified or locally produced) were more likely also in favour of other production practices, which might be the reason for this group to favour (almost) all sustainable aspects. Class 2 (‘the price conscious label discriminators’) seems something in-between class 1 and 3. While price is of relatively great importance, only selected sustainable aspects (i.e. locally produced and animal welfare) seem to influence their choice. This is insofar plausible as re-

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gional products are not per se more expensive than non-regional products while organic is per se (e.g. because of the certification costs) costlier.

Sustainability labels – complements or substitutes for consumers?

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Because some of our tested labels promote a factor which already implies other sustainability issues (e.g. organic incl. animal friendliness) we expected that consumers aware of this would not value joint and redundant labelling while those people without any detailed

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knowledge would appreciate this or not show any reaction at all. Therefore, we also focussed on interaction effects. We included interaction effects that are either redundant by definition (i.e. organic and GMO-free) or those from which we assumed that consumers might associate the one (e.g. animal friendly) with the other (e.g. locally produced). We found most interestingly, ‘the price conscious label discriminators’, derive disutility from certain aspects (like organic or GMO-free) when labelled exclusively but labelled together (e.g. organic with

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GMO-free or animal welfare) it suddenly provides them significantly positive utility, even though being redundant by definition. This might result from a poor knowledge or understanding of the detailed meaning of the respective labels. This underlines the initially stated assumption that even 25 years since the framing of the Sustainable Development concept

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consumers still do not really know what the term sustainability means and that the plurality of labels claiming sustainability-related issues are not understood in their complexity by consumers. Grunert et al. (2014) moreover showed that consumers are often only able to under-

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stand specific sustainable labels to the extent to which they are self-explanatory. Hence, a deeper understanding of the laws, the rules and the regulations and thus, whether a label already automatically fulfils other sustainable criteria by definition is unknown by them. Consequently, the ‘price conscious label discriminators’ turn out to be quite interesting for producers and marketers to be targeted at with marketing activities and respective labelling schemes as joint labelling – even though being redundant by definition – do in certain cases complement each other and hence might pay off for them. As we said above, for us, an interesting task is to investigate also green consumers’ reaction towards multiple sustainable standards that address the same and different pillars of sustainability. Class 3 consist of respondents who stated an interest in sustainability and regular 18

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purchase of organic products. We found that for ‘sustainable label choosers’ and the ‘price sensitives’ a joint labelling of different sustainable aspects does not show any noticeable effect. One reason for this might be that they have either no interest (since e.g. only price matters anyway) or they might have a distinct knowledge about the respective labels to know that one attribute (e.g. organic) already implies the other (e.g. GMO-free). However, the WTP estimates (aim 3) for the ‘sustainable label choosers’ are quite interesting

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for producers and marketers as it indicates that on average a surplus of about € 0.15 (i.e. about 15 % of the average market price) can be achieved by labelling milk with either of the sustainable labels.

Consequently, it can be stated that with regard to the relationship of different sustainable

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labels to each other there is no general statement to be made. It rather depends on the consumer segment under consideration as well as the respective labels. For the segment of ‘label choosers’, however, a substitutional relationship of the labels can be assumed while a

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complementary relationship holds only for particular cases (i.e. joint labelling of organic and animal welfare as well as GMO-free and locally produced) for class 2 (aim 2).

Limitations and transferability

We consider our results to be robust, but also preliminary due to the limitations inherent in this study. Since the label combinations tested are not available on the market right now the

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study falls back on a hypothetical method (i.e. hypothetical choice experiment). Hence, consumers are not really buying a product in terms of spending money for the chosen good and owning the produce. Furthermore, the study asks consumers to blank out the classical product attributes in the choice decision. However, the results are nonetheless applicable. Other

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studies have proven that the method works well in explaining consumer behaviour though being hypothetical (Lusk and Schroeder, 2004; Telser and Zweifel, 2007), but have also

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shown that consumers are perfectly able to assume certain product characteristics to be constant when facing a choice experiment (Kessels et al., 2012; Kessels et al., 2011). The latter limitation is for the present study negligible as consumers not only explicitly expressed that they are only willing to focus on sustainable aspects when the classical product attribute meets their preferred classical product characteristics (i.e. fat content, processing type etc.) but since especially for milk, there are only producers on the market that offer the whole range of milk (with regard to fat content, processing type etc.) anyway. Since the number of sustainable labels increased not only in Germany but in almost all Western Countries and also globally, this study provides not only valuable insights about German consumers, their attitudes and preferences, but similar results can be expected in comparable countries. As environmental protection has a long tradition in Germany and is to different extends already embedded in people’s everyday-life (e.g. separation of garbage, the 19

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environmental blue angel label, which has already been introduced in 1978) it is only consequent to transfer these behaviours also to food consumption. Especially, since sustainable consumption is perceived as contribution towards a sustainable development, particularly in Western societies (Abeliotis et al., 2010; Fuchs and Lorek, 2005; Lebel and Lorek, 2008). Another characteristic that is very typical for the German market but also to be found elsewhere is a very tough price competition on the food market. Sustainable products being

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available at every discounter at relatively low prices add to this competition. However, the price span between conventional and sustainably produced products is often stated to be a barrier for choosing the sustainable alternative. High prices are for example still the most frequently mentioned reason by consumers for not buying organic products (Lea and

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Worsley, 2005; Marian et al., 2014). In order to account for this issue milk has been chosen as product under investigation not only because it is a relatively cheap product but also as the price span between the conventional and sustainable variant is relatively low for milk than

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for other products (e.g. meat). Milk being used as product under investigation and being an unprocessed, daily consumed and regularly purchased good at a low price level, allows assuming that consumers, who are not willing to choose the sustainable variant (and willing to pay more for sustainability) on such a low level, will most probably behave similarly for other products. This means sustainable consumption is so far hindered by a limited consumers’ willingness to pay. The policy activities proposed by the most recent expert opinion from the

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Scientific Advisory Board on Agricultural Policy published in July 2016 are to increase the value added tax on milk and meat from currently 7 % to 19 % and are regarded as means to offset the current limited willingness to pay. This regulation would help to facilitate sustainable production as long as consumers’ appreciation for sustainable production is not reflected

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in their willingness to pay. To sum up, one could say that even though this study has certain limitations, it provides valuable insights about consumers’ preferences for different sustaina-

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ble aspects as well as their relation to each other.

Conclusion

The present paper sheds light on consumers’ perception of different sustainable attributes labelled on milk and analyses the relationship between different sustainable aspects in terms of a complementary or substitutional relationship. This has to date not extensively been investigated. The empirical results of the study show that three consumer segments with welldistinguished preferences with regard to sustainable product labelling do exist. While for two of the three classes sustainable product labels play either no or only a subordinate role in their purchase decision for the other almost all sustainable aspects are of appreciable relevance in their purchase decision, resulting in an average WTP of € 0.15 for each of the sus20

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tainability attributes (except CO2-reduced). Thus, for the latter class a substitutional relationship of the tested sustainable label can be assumed, the labels are exchangeable, since participants seem to pay only attention to the fact whether the product is carrying a sustainability related label or not, regardless of its distinctive meaning. Class 2, however, clearly differentiates between the respective labels expressing clearly their preferences and refusal for each of the labels. Beside this clear expression of preferences for selected sustainable aspects, a

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look at the interaction effects hint at the fact that for class-two-members some sustainable labels do have a complementary relationship. This finding is especially interesting for marketing departments and marketers, who might make use of a simultaneous labelling of sustainable aspects though being redundant by definition.

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This study has applied a profound method that considers heterogeneity not only with regard to people (consumer heterogeneity, i.e. latent classes) but also to preferences (preference

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heterogeneity, i.e. different sustainable attributes). Since class 1 and class 3 value all presented sustainable aspects (significantly) equally positive and make around 84 % of the market, a positive resonance can be stated for all presented sustainable aspects. However, the study shows that neither the detailed knowledge of consumer heterogeneity nor of preference heterogeneity would help to increase the sales of sustainable product alternatives. This is due to the limited additional WTP consumers do express for sustainable issues labelled. Class 1 is only willing to pay around € 0.01 more for a sustainable product compared to the

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conventional alternative, while class 3’s WTP lies between € 0.14 and € 0.18. Though the WTP of the latter is much higher than the one of class 1, even € 0.14 to € 0.18 will most likely not be sufficient to produce and market sustainable products reasonably. Since 84 % of the market obviously do not seem to differentiate between diverse sustainability labels but gen-

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erally support them, this study allows drawing two conclusions: (1) An universal label symbolizing sustainability will be sufficient to target almost 85 % of the German population, and (2)

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the awareness and appreciation of sustainable products have to be increased in order to gain a higher WTP. The challenge is, for sure, to create a universal sustainability label that meets the different dimensions of sustainable production, that is credible and for which the communication, awarding and audit criteria are transparent. Moreover, due to the globalization and the fact that not everything can be produced everywhere in the world (e.g. bananas can hardly be produced locally in Germany but organic somewhere else; thus, the different aspects of sustainable production have to be balanced by a proper system), an international concept is needed in this regard. This is a Herculean task. Hence, further research should focus on how to set credible standards for a universal label and on how to communicate and monitor them. Finally, this study clearly shows that with regard to different sustainable labels the more the merrier does not always apply. 21

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The corresponding author gratefully thanks the Theodor-Brinkmann-Graduate School for granting her with a doctoral scholarship during the time this study was conducted. Additionally, the authors like to thank Monika Hartmann for valuable comments on earlier versions of

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the questionnaire as well as the anonymous reviewers for helpful comments.

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ACCEPTED MANUSCRIPT Table 1: Overview on the different research steps

1. Organic, 2. Locally Produced, 3. GMO-free, 4. Fair wages for farmers, 5. Climate friendliness 6. Animal welfare 7. Free of Residues 8.Donation to a social project in Africa (school lessons for children) 9. Donation to a local social project (SOS children villages) 10. Employee friendliness * see legend

N = 787, representative for the German online population (in terms of age, gender education and income); discrete choice experiment and questionnaire, online

1. Organic, 2. GMO-free, 3. Locally, produced, 4. Animal welfare, 5. CO2-reduced

Tools used

1. Test, which sustainable aspects are of relevance to consumers in their milk purchase. 2. Test whether consumers are willing to compromise with regard to classical product attributes (e.g. fat content, production type etc.) 3. Testing attitudinal constructs

Descriptive statistics, Principal Component Analysis

1. Testing the “final questionnaire” in terms of comprehensibility, lengths and attitudinal constructs 2. Testing the online version of the questionnaire (especially the choice experiment) 3. Testing the automatic data recording 4. Re-testing the attitudinal constructs

Descriptive statistics, Principal Component Analysis, Latent Class analysis

1. Test how the different environmental and social aspects of the production process covered by various sustainably labels are perceived by consumers

Principal Component Analysis, Latent Class Analysis, Class Membership model, WTPCalculation

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1. Organic, 2. GMO-free, 3. Fair wages for Farmers 4. Locally, produced, 5. Animal welfare, 6. CO2-reduced.

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Main Study (2014)

N = 30 not representative; discrete choice experiment and questionnaire, online + group discussion after filling in the questionnaire with N = 10

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Pre-Study II (2013)

Main purpose/aim

2. Test different label combinations that cover the same or similar sustainable aspect in order to test, whether they complement or substitute each other 3. Calculate willingness to pay estimates for the

Main outcomes

1. Top 6 of important sustainable aspects when buying milk identified (
included into main study)

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N = 180, not representative; paper and pencil questionnaire in supermarkets

Sustainable aspects tested

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Pre-study I (2012)

Sample characteristic s

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Study type (year)

2. Consumers are not willing to compromise with classical product attributes (
classical product attributes are assumed constant for main study)

3. Attitudinal constructs worked out well, minor modifications were done (
attitudinal statements were taken over in the main study) 1. No major modifications needed in terms of comprehensibility, lengths and attitudinal construct 2. It turned out that respondents were not so familiar with the label “fair wages for farmers”. Hence, this label was excluded 3. Attitudinal constructs were robust See next paragraphs

ACCEPTED MANUSCRIPT different sustainable aspects for the different consumer segments

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Source: Own depiction. Remark: Consumers had to rank the attributes according to the relevance in their milk purchase decision. Attributes are listed according to the order of stated importance.

ACCEPTED MANUSCRIPT Table 2: Principal component analysis on attitudinal statements regarding the relevance of sustainable aspects when buying milk Statements

Factor 1

Factor 2

Factor 3

When buying milk, it is important to me that.... .703

...the origin of the milk can be traced back to the respective farm.

.726

...I support farms in my surrounding.

.827

...selected environmental aspects are considered.

.747

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...fair and decent wages are paid over all stages of the value chain.

...animals have been given enough space.

.678

...short transport distances are guaranteed.

.807

...local economy is supported.

.814

...the milk has been produced climate-friendly.

.775 .806

...the milk is free of antibiotics to the greatest possible extent. ...there are no genetically modified organisms in the milk.

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...I know where the milk is coming from.

.768 .747

.668

...the milk is safe and harmless.

.671

...the milk is particularly fresh.

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...there has also not been used any genetically modified organisms in the fodder.

.620

...the milk is rich in vitamins and has a high nutrient density.

.512

...the milk tastes good.

.730

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...the milk is sold at a cheap price. Eigenvalue greater than or equal to 1. Source: Own calculation.

.646

ACCEPTED MANUSCRIPT Table 3: Information criteria for detecting the optimal number of latent classes Number of classes

Loglikelihood

Pct Cert

AIC

CAIC

BIC

ABIC

Chi-Square

Relative ChiSquare

-8184.23716 19.23201

16408.47431

16563.42771

16543.42771

16479.87298

3897.56788

194.87839

2

-6720.82975 33.67398

13523.65950

13841.31396

13800.31396

13670.02678

6824.38269

166.44836

3

-6038.93421 40.40342

12201.86841

12682.22394

12620.22394

12423.20430

8188.17378

132.06732

4

-5858.91316 42.18000

11883.82632

12526.88291

12443.88291

12180.13080

8548.21587

102.99055

5

-5735.22706 43.40062

11678.45412

12484.21178

12380.21178

12049.72722

8795.58807

84.57296

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Source: own calculation.

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1

ACCEPTED MANUSCRIPT Table 4: Class sizes and respective attribute importance Class 1

Class 2

Class 3

36.1%

16.4%

47.5%

Organic

2.9

5.9

15.8

GMO-free

3.5

4.9

18.3

Locally produced

7.7

14.6

19.5

Animal welfare

5.6

CO2-reduced

2.3

Segment sizes Relative attribute Importance [%]

3.6

7.4

60.6

21.8

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17.2

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78.0

Price Source: Own calculation.

10.4

ACCEPTED MANUSCRIPT Table 5: Parameter estimates for the three class model Class 1

Class 2

Attribute(s)

Raw utilities

Rescaled utilities

Raw utilities

Rescaled utilities

Raw utilities

Rescaled utilities

Organic

0.13***

8.73***

-0.20

-17.85

0.43***

47.39***

(0.04) 0.16***

(0.14) 10.44***

0.16

(0.04) Locally produced

0.35***

23.16***

0.26***

0.48***

16.77***

0.35**

(0.04) 30% price increase

-3.37***

-0.12

-221.02***

-141.81***

-0.24*

-15.53*

-0.87*

2.00***

3.76***

1.04***

247.00***

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-0.02

2.09***

-0.00

-1.10

EP

Organic x CO2-reduced

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GMO-free x Locally produced

Interaction effects

GMO-free x animal welfare GMO-free x CO2-reduced

-0.04

0.39***

(0.04) 0.03 (0.04) 0.40***

(0.04)

(0.04) 1.44

-0.05

0.02

-0.06

1.27***

0.03

36.17***

0.02

-0.02

5.08***

-2.64 (0.03)

20.34*

0.03

3.74 (0.03)

-10.24

0.00

0.36 (0.03)

-19.20

0.02

1.76 (0.03)

8.63

0.04*

(0.13) 83.50***

2.19 (0.03)

16.85

0.10

3.18 (0.03)

(0.14) -3.92

-3.71 (0.03)

-3.35

-0.21

(0.04) None

-0.03

(0.15) 1.12

-5.09* (0.03)

35.29***

-0.11

(0.04) Animal Welfare x CO2-reduced

-0.05*

(0.13) -3.46

-6.06** (0.03)

12.74

0.23*

(0.04) Locally produced x CO2-reduced

-0.06**

(0.14)

(0.04) Locally produced x Animal Welfare

-13.35

0.19

50.98*** (0.04)

(0.14) -0.37

0.02

0.46***

(0.13) -1.66

-0.01

188.63***

-0.04

43.91*** (0.04)

(0.13) 2.02

-0.03

0.40***

(0.14) -2.65

7.29 (0.05)

93.95***

0.14

-22.20***

0.07

(0.14) -0.05

-79.98***

(0.05)

-78.09*

-0.15

(0.04)

Organic x animal welfare

-0.20***

(0.28)

(0.04)

Organic x locally produced

-29.52

22.28***

(0.05)

(0.31)

(0.13)

Organic x GMO-free

-0.73***

(0.51)

131.36***

51.51***

(0.03)

(0.43)

(0.12)

10% price decrease

-174.98**

-0.33

(0.14)

0% price increase

0.20***

(0.81)

(0.23)

10% price increase

0.47***

(0.03)

-10.95

-1.94**

58.41***

(0.03)

31.16**

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-2.16***

0.53***

(0.14)

(0.39) 20% price increase

43.66***

(0.15) 6.88***

54.93*** (0.03)

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0.10***

0.50***

(0.14)

(0.04) CO2-reduced

14.58 (0.14)

(0.04) Animal welfare

(0.03)

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GMO-free

Main effects

Class 3

457.86***

4.69* (0.03)

-2.34***

-257.57***

ACCEPTED MANUSCRIPT (0.12)

(0.28)

(0.14)

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Standard errors are given in parentheses. Significant at the 0.10 level: * Significant at the 0.05 level: ** Significant at the 0.01 level: *** Source: Own calculation.

ACCEPTED MANUSCRIPT Table 6: Multinomial logit on class membership Class 1

Class 2

Class 3

S.E.

β3

S.E.

0.11

0.07

-0.05

0.06

Gender: male

-0.41

0.32

-0.18

0.24

Education (6 classes)

-0.11

0.18

-0.03

0.12

0.02

0.08

-0.06

0.05

Number of children <18 living in the household (1 - 7 and more)

-0.02

0.19

0.11

0.14

Dummy_fat content 3.5% and more

-0.42

Dummy_fresh milk

-0.31

Dummy_buys presently organic milk

-0.69

Dummy_buys presently locally produced milk

-0.08

Dummy_buys presently GMO-free milk

-0.33

Age (12 classes)

Income (12 classes)

Dummy_buys presently animal friendly milk Dummy_self-assessment_know meaning of sustainability

Dummy_vegetarian

Dummy_self-assessment-pays attention to sustainability_top2 Dummy_drinks 1-2 liter milk per week Dummy_drinks more than 2 liter milk per week Dummy_living area_urban Dummy_living area provincial Self-assessment of living situation

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Dummy_milk presently bought <70 cents

-0.37

0.25

0.37

0.38

0.27

6.39

1.49***

0.51

0.34

-0.06

0.26

0.47

-0.14

0.32

0.61

-0.04

0.41

-1.20**

0.55

-1.47***

0.54

-0.71

0.43

0.43

0.53

0.32

4.97

0.23

0.69

1.56**

0.58

0.88**

0.45

0.16

0.41

-0.30

0.30

0.06

0.49

0.30

0.37

0.20

0.40

-0.14

0.29

0.15

0.39

0.19

0.30

-0.25

0.18

0.08

0.13

0.36

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Dummy_relation to agriculture

0.35

SC

1.51**

reference category

Dummy_buys presently CO2-reduced milk

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β2

Covariates (coding other than Dummy in brackets)

-0.40

1.12**

0.45

0.74**

-0.78***

0.35

0.31

Dummy_milk presently bought between 70 and 140 cents

-0.14

0.58

0.01

0.29

FAC_1_sustainability

-0.30*

0.17

0.57***

0.15

-0.16

0.16

0.54***

0.16

-0.16

0.17

-0.39***

0.14

0.05

1.24

FAC_2_food safety FAC_3_best value for money Intercept

1.18

0.85

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Significant at the 0.10 level: * Significant at the 0.05 level: ** Significant at the 0.01 level: *** Bootstrapping results with 1000 replications: Number of observations: 625; Wald Chi2 (52) = 142.2; Prob > Chi2 = 0.000; Pseudo R2 = 0.27 Source: Own calculation.

ACCEPTED MANUSCRIPT Table 7: WTP estimates for different sustainable attributes for each class in Euro Class 2

Class 3

Organic

€ 0.01

€ -0.02

€ 0.14

GMO-free

€ 0.01

€ 0.03

€ 0.17

Locally produced

€ 0.02

€ 0.06

€ 0.18

Animal welfare

€ 0.01

€ 0.03

€ 0.16

CO2-reduced

€ 0.01

€ -0.02

€ 0.08

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Class 1

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Source: Own calculation.

ACCEPTED MANUSCRIPT

The bunch of sustainability labels – do consumers differentiate? Highlights Latent Class analysis revealed three segments with well-distinguished preferences.

•

A complementary labeling can be promising even though redundant by definition.

•

For a certain consumer group some sustainable labels substitute each other.

•

85 % of the market could be satisfied with a universal sustainability label.

•

WTP for sustainable labels is still too low to increase sales volume.

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•