Consumer Choice of Private Label or National Brand: The case of organic and non-organic milk

We use a two-stage, sample selection model to investigate organic milk purchases using Neilsen’s Homescan data. In the first stage, households decide on a weekly basis to buy mainly organic milk or non-organic milk. Results from this stage show that higher income, better education, having children at home, and several other demographic and marketing variables have a positive effect on organic choice. In the second stage, consumers then choose to buy mainly private label milk or national brand milk conditional on their first-stage choice. Most demographic and marketing variables are found to affect the organic and non-organic private label decision in the same way. However, our results show that a few factors, such as marriage status and children, affect the private label decision differently for organic and non-organic milk customers.