Willingness to pay for organic products: Differences between virtue and vice foods ☆ Jenny van Doorn ⁎, Peter C. Verhoef The Faculty of Economics and Business, University of Groningen, The Netherlands abstract article info Article history: First received in 12, December 2010 and was under review for 3½ month Available online 22 April 2011 Area Editor: Koen H. Pauwels Keywords: Sustainability Retailing Consumer behavior Pricing Environmentalism Faced with growing environmental problems, food safety issues, and increasing obesity rates, many consumers desire healthier, less processed natural foods that are less harmful to the environment. Yet organic foods only partially benefit from this market environment, and their market share remains quite low despite high growth rates. The usual explanation for this discrepancy is that consumers are not willing to pay the price premium prompted by an organic claim. In this paper, we explore the reasons behind consumers' (un) willingness to pay for organic food and investigate whether it differs between virtue and vice food categories. The results indicate that in vice food categories, organic claims are associated with lower quality, which seems to be only partly compensated by higher prosocial benefits. The lower-quality perceptions translate into a decreased consumer willingness to pay (WTP). We supplement the empirical results with data on organic purchases in the Dutch food market. These data show that market shares of organic food are indeed lower for vice categories of organic food. © 2011 Elsevier B.V. All rights reserved. 1. Introduction With annual growth rates of approximately 10% on a worldwide basis, the market for organic food has made remarkable progress. In 2008, organic food generated revenues of almost $51 billion (Biomonitor, 2009). The market for organic food thrives on increased consumer attention to environmental and animal welfare issues, owing to extensive coverage in the media and growing awareness of the consequences of environmental pollution, global warming, and the use of natural resources. Because organic farming uses fewer pesticides and artificial fertilizers, it is believed to do less harm to the environment (Cornelissen, Pandelaere, Warlop, & Dewitte, 2008; Gore, 2006; The Week, 2009). Another consumer motive for choosing organic products relates to health concerns. Alarmed by dramatically increasing obesity rates and discussions about food safety, many consumers desire healthier, less processed, natural foods (Food MarketWatch, 2008). Some authors cite health preservation and improvement, rather than ethical motives, as the chief reasons consumers purchase organic products (McEachern & McClean, 2002; Schifferstein & Oude Ophuis, 1998). Retailers and manufacturers have also recognized the organic food market's potential (Kiesel & Villas-Boas, 2007; Polman, 2010). Mirroring the growing interest in corporate social responsibility initiatives (Bhattacharya & Sen, 2004; Groening, Swaminathan, & Mittal, 2009), the organic market has become an attractive opportunity because of higher margins earned for organic products; the average unit margin for organic products exceeds that of conventional products by 4.2 cents (Bezawada & Pauwels, 2010). Yet the actual market shares of organic food remain small. In 2008, in the European market, France, and the United Kingdom were characterized by particularly low market shares (approximately 1.5%) for organic products, although Switzerland, Denmark, and Austria had somewhat higher organic market shares ranging between 5% and 6% (Biomonitor, 2009). Thus, the question of interest is: Why are these market shares low? The general explanation for this discrepancy is that organic food is more expensive than regular food. In theory, consumers would prefer organic food, but in practice, they are not willing to pay the price premium such claims prompt (Bhattacharya & Sen, 2004; Verhoef, 2005). Prior literature has only partially explored the reasons behind consumers' (un)willingness to pay (WTP) for organic food. For example, marketing and consumer literature frequently focuses on the impact of consumers' sociodemographics, health consciousness, and environ- mental concerns as motivations to purchase organic food (Grunert & Juhl, 1995; Schifferstein & Oude Ophuis, 1998). Agricultural literature investigates the WTP for organic products (see Appendix A), but these studies usually involve few product categories and none of the me- chanisms by which food claims might affect WTP. Auger, Devinney, Intern. J. of Research in Marketing 28 (2011) 167–180 ☆ The authors thank AIMARK for its support of this project, and Marcel Temminghoff (GfK) and Alfred Dijs for their support in the execution of this research. They also thank Jan-Benedict Steenkamp for his inspiring idea that led to this research. Finally, they thank Dhruv Grewal for comments on a previous version of this paper, the participants in the special session on consumer wellbeing at the EMAC conference in Nantes 2009, and the participants in the Marketing Science Conference 2008. We are indebted to the editor, area editor, and the two anonymous reviewers for their helpful comments and suggestions. ⁎ Corresponding author at: University of Groningen, Faculty of Economics and Business, Department of Marketing, P.O. Box 800, NL-9700 AV Groningen, The Netherlands. Tel.: +31 50 3633657; fax: +31 50 363 3720. E-mail address: j.van.doorn@rug.nl (J. van Doorn). 0167-8116/$ – see front matter © 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.ijresmar.2011.02.005 Contents lists available at ScienceDirect Intern. J. of Research in Marketing journal homepage: www.elsevier.com/locate/ijresmar