Do negative headlines really undermine the credibility of a quality label? A quasi-natural experiment

In 2013, Stiftung Warentest tested hazelnut chocolate for their leading magazine, called Test. Stiftung Warentest is one of the most important consumer organizations in Germany. Ritter Sport is a high-quality producer of chocolate in Germany. Their hazelnut chocolate did not pass the test. It was given the grade of unsatisfactory. Stiftung Warentest accused Ritter Sport of labelling an artificial flavouring as a natural flavouring. Ritter Sport rejected the accusation. They went to court and won the trial. Stiftung Warentest had to withdraw the issue in question of Test magazine. This affair was all over the media in January of 2014. Using the Ritter Sport versus Stiftung Warentest case, we analyse whether negative headlines really undermine the credibility of a quality label by examining Stiftung Warentest and their quality label, also called Test. In addition, we examine what can be done to restore or, more generally, increase the credibility of a quality label. Based on a quasi-natural experiment, we find that the negative headlines on Stiftung Warentest have undermined the credibility of the Test label. We also find that the credibility of the Test label can be increased by providing reference values to the tests, strengthening the independence of Stiftung Warentest, and using laboratory methods in the tests. For the most part, the same holds true for any quality label.