Evidence from Retail Food Markets That Consumers Are Confused by Natural and Organic Food Labels

In the USA, food producers can label their products as organic only if they are certified by the United States Department of Agriculture (USDA) as having met comprehensive regulatory standards for environmental stewardship. In contrast, the Federal Government has not defined the term natural for most food products. Survey and experimental studies suggest that consumers are confused by the meanings of natural and USDA Organic on food labels, and often believe that these two label claims have similar meanings. In this paper, we examine whether this confusion influences aggregate retail food expenditures. High-frequency Google Trends data on the volume of web searches for “organic food” and for “natural food” are used as indicators of consumer interest in those food attributes. Results from a vector autoregression model show that web searches for both terms are correlated with retail purchases of organic food. Web searches for both help predict retail purchases. If consumers were aware of differences implied by the two label claims, searches for natural food would be uncorrelated with decisions to purchase organic products. These results are therefore evidence that consumers view the two claims as related, or even view the two claims as identical. © 2018, This is a U.S. government work and its text is not subject to copyright protection in the United States; however, its text may be subject to foreign copyright protection.