Consumer Misuse of Country-of-Origin Label: Insights from the Italian Extra-Virgin Olive Oil Market

Abstract

Providing information to consumers through the label is a means for food companies to inform consumers about product’s attributes, including the country of origin (COO). In the EU, COO labeling has been made mandatory for several categories of food products, to enable consumers to make informed choices at the point of sale. In particular, Regulation (EU) No 29/2012 has introduced a mandatory country-of-origin labeling system for extra virgin olive oil (EVOO). In the present study, conducted in Italy, we test whether there is a price differential associated with the COO information for EVOO. To this end, we employ a hedonic price model and data about the purchase of EVOO products collected from 982 consumers at the supermarket checkout. Having interviewed these consumers, we also assess the share of EVOO consumers that correctly identify the country of origin of the product purchased. Our findings point out that, in Italy, the EVOO with domestic origin, indicated on the label, benefits of a premium price equal to +35% compared to the product labeled as blend of European EVOOs, while a discount of −10.8% is attached to EVOOs from a non-European origin. A significant share of consumers in our sample (19.04%) is, however, unable to correctly identify the origin of the EVOO purchased. This label misuse mostly occurs among consumers who report that they had purchased Italian EVOO, while they had actually purchased a blend of European EVOOs. Female and more highly educated consumers are less likely to misuse label information about the product’s origins.

Keywords

• consumer choice
• food labeling
• extra virgin olive oil
• hedonic price model
• country of origin