Premium Private Labels, Supply Contracts, Market Segmentation, and Spot Prices

Pascale Bazoche; Eric Giraud-Héraud; Louis-Georges Soler

doi:10.2202/1542-0485.1087

Article

Premium Private Labels, Supply Contracts, Market Segmentation, and Spot Prices

Pascale Bazoche , Eric Giraud-Héraud and Louis-Georges Soler

Published/Copyright: February 24, 2005

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From the journal Journal of Agricultural & Food Industrial Organization Volume 3 Issue 1

In recent years, European retailers have modified the market segmentation in the meat and the fresh produce sectors by implementing new private labels which aim to guarantee higher quality and food safety. As a result, retailers impose more demanding production requirements and rely on contractual relationships with upstream producers. Meat and vegetables shelve spaces are now composed of generic products supplied from competitive spot markets, and premium private labels based on long term supply contracts. In this paper we propose a model of vertical relationships between producers and retailers in order to analyze the consequences of such strategies. In particular, we analyze the interest of producers to commit to these new private labels, their effects on spot market prices, and the resulting market segmentation between the spot market and supply contracts.

Keywords: retailing; private labels; supply contracts; captive supplies; spot prices

Published Online: 2005-2-24

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Articles in the same Issue

https://doi.org/10.2202/1542-0485.1087

Keywords for this article

retailing; private labels; supply contracts; captive supplies; spot prices