Competitive Effects of Front-of-Package Nutrition Labeling Adoption on Nutritional Quality: Evidence from Facts Up Front Style Labels
Posted: 29 Jul 2020 Last revised: 11 Sep 2020
Date Written: December 12, 2018
Facts Up Front style nutrition labels are a front-of-package (FOP) nutritional labeling system that present key nutrient information on the front of packaged food and beverage products in an easy-to-read format. The authors conduct a large-scale empirical study to examine the effect of adoption of FOP labeling on the nutritional quality of products. The authors assemble a unique dataset on packaged food products (21,096 products, 9,083 brands, and 4,408 firms) in the U.S. across 44 categories over a period of sixteen years. They individually examine each new product introduced during the data time period to record FOP nutrition label information and use product-specific nutrient information to measure nutritional quality of products. By using a difference-in-differences estimator, the authors find that FOP adoption in a product category leads to an improvement in the nutritional quality of products in the category. They further find support for the moderating role of brand and product category characteristics. They argue that adoption of FOP in a product category serves as a source of “nutritional information clearinghouse” and empirically test for the role of salience of nutritional information as the mechanism that drives the improvement in the nutritional profile of the products. They find that subsequent to FOP adoption, food manufacturers improve the nutritional quality by lowering the content of calories and the nutrients to limit such as sugar, sodium, and saturated fat. Supplementary analyses are performed to rule out potential self-selection issues and a battery of robustness checks and falsification tests are conducted. The authors discuss the implications of the findings for public policy makers, consumers, manufacturers and food retailers.
Keywords: front-of-package (FOP) nutrition labeling, competition, nutritional quality, public policy and marketing, difference-in-differences
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