Premium Private Labels, Supply Contracts, Market Segmentation, and Spot Prices

Pascale Bazoche · Eric E. Giraud-Heraud · Louis Georges Soler

29 citations0/0 files storedJournal of Agricultural & Food Industrial Organization

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Consumer Market Behavior and Pricing Supply Chain and Inventory Management Economics of Agriculture and Food Markets

Abstract

In recent years, European retailers have modified the market segmentation in the meat and the fresh produce sectors by implementing new private labels which aim to guarantee higher quality and food safety. As a result, retailers impose more demanding production requirements and rely on contractual relationships with upstream producers. Meat and vegetables shelve spaces are now composed of generic products supplied from competitive spot markets, and premium private labels based on long term supply contracts. In this paper we propose a model of vertical relationships between producers and retailers in order to analyze the consequences of such strategies. In particular, we analyze the interest of producers to commit to these new private labels, their effects on spot market prices, and the resulting market segmentation between the spot market and supply contracts.

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References

1978Monopoly and product quality 2000Building Store Loyalty through Store Brands 1993Endogenous Quality Choice: Price vs. Quantity Competition 1995W hy R etailers S ell P rivate L abels 2000Assessing the Competitive Interaction between Private Labels and National Brands 1996Information Asymmetry as a Reason for Food Industry Vertical Integration 1995P roduct R ivalry with multiple S trategic weapons : an A nalysis of price and advertising C ompetition 2004Economics of Private Labels: A Survey of Literature

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2012The Strategic Use of Private Quality Standards in Food Supply Chains 2007Data Aggregation and Information Loss 2014Cross-category effects and private labels 2020Premium Private Label strategies: social networks and traditional perspectives

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