Does shelf-labeling of organic foods increase sales? Results from a natural experiment

• Can a simple point-of-purchase shelf-label increase sales of organic foods?
• Data from a natural experiment in a hypermarket in Gävle, Sweden, is used to investigate this question.
• The display increases sales of organic coffee and olive oil, but reduces sales of organic flour.
• The organic products became less price-sensitive after the introduction of the labels.

Can a simple point-of-purchase (POP) shelf-label increase sales of organic foods? We use a random-effects׳, random-coefficients׳ model, including a time adjustment variable, to test data from a natural experiment in a hypermarket in Gävle, Sweden. Our model incorporates both product specific heterogeneity in the effects of labeling and consumer adjustment to the labels over time. We find that the introduction of POP displays leads to an increase in sales of organic coffee and olive oil, but a reduction in sales of organic flour. All targeted products became less price-sensitive. The results reveal that product specific differences have to be accounted for, and in some cases consumers adjusted to labeling over time.