Do health claims add value? The role of functionality, effectiveness and brand

Abstract

European functional food manufacturers experience high costs of production, marketing and compliance with Regulation EC No. 1924/2006, requiring high premiums to recover these costs. We review the literature on consumers' acceptance of health-enhancing food products and identify three factors potentially affecting health claims' premiums: health claims' type, efficacy and brands. We estimate the contribution of these factors on health claims' implicit prices using a database of Italian yogurt sales and a hedonic price model. We find premiums differing by claim type; that ‘risk diseases reduction’ claims outperforming ‘general function’ claims and that the support of familiar brands affects health claims' premiums.