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The impact of price promotions on sales of unhealthy food and drink products in British retail stores

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  • Toby Watt
  • Walter Beckert
  • Richard Smith
  • Laura Cornelsen

Abstract

We study the health impact of food and beverage price promotion strategies—multi‐buy offers and price discounts, typically biased toward unhealthy product categories—in British consumer retail. We are the first to employ econometric models from the marketing literature to analyze the impact of price promotions with a focus on population health. Our dynamic, reduced form demand model incorporates endogenous inventory (stock piling), consumption rates imputed from repeat purchases and allows for unobserved household heterogeneity. We find that removing price discounts is more effective for reducing purchase volume compared to removing multi‐buy offers for 10 out of 12 food and drink groups, particularly those products for which price reduction is more common than multibuy. We find that price promotions induce consumption—and waste –through behavioral effects, associated with increased household inventory (stockpiling).

Suggested Citation

  • Toby Watt & Walter Beckert & Richard Smith & Laura Cornelsen, 2023. "The impact of price promotions on sales of unhealthy food and drink products in British retail stores," Health Economics, John Wiley & Sons, Ltd., vol. 32(1), pages 25-46, January.
    • Handle: RePEc:wly:hlthec:v:32:y:2023:i:1:p:25-46
    DOI: 10.1002/hec.4607
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    References listed on IDEAS

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