Estimating the hedonic price for Fair Trade coffee in Sweden

This study aims to investigate the impact of the Fair Trade label on the market for coffee in Sweden, a country with high public awareness regarding environmental and social matters.

A revealed preference approach is adopted, using weekly scanner sales panel data made available by Nielsen and the Swedish Retail Institute (HUI). The pricing of labelled coffee is studied over the 2005‐2008 period. Hedonic estimates are obtained for what consumers pay for different product characteristics.

Results point to a considerable premium of 38 percent to be paid for Fair Trade labelled coffee in Sweden, underlining high public awareness reflected in the retailers' pricing policy. This estimate is clearly higher than numbers obtained in earlier studies focusing on Italy and the UK.

The study provides information on the existing price differences between labelled and conventional coffee. Its main contribution is the analysis of previously unavailable data material. Based on the obtained estimates, it is possible to identify the relative impact on the market price of the different coffee attributes. The calculations provide a tool for further policy‐relevant analysis of the market in Sweden, but are also useful from an EU‐wide point of view. In the current situation with considerable lack of comparable data‐based results, this study thus adds to enriching the ongoing analysis and debate.