Agro-sphere determinants of green branding: eco-consumption, loyalty, and price premium

The paper examines how green branding influences consumer loyalty and price premium formation in the agricultural sector, and whether national income relates to organic product consumption. The context is Ukraine’s growing potential in organic agriculture alongside a lag in organic production and consumption culture. The authors synthesize principles of green branding within green marketing, noting drivers such as chemical-free consumption, CSR, eco-innovation, green advertising, eco-labeling and packaging. They highlight the role of consumer trust and potential negative factors (distrust in control systems and product authenticity) that can hinder loyalty formation. Pricing is emphasized as a key element, suggesting that the green brand price premium may be shaped by competition, industry profitability, consumer income, loyalty, additional organic costs, green advertising, and certification. The study sets three hypotheses: H1—there is a correlation between per capita income and per capita consumption of organic products; H2—green branding positively impacts eco-market consumer loyalty; H3—the green brand price premium is determined by a set of factors (consumer loyalty, organic certification, green advertising costs, additional organic costs, average industry profitability, and average consumer income).

Prior studies on green branding consider elements such as green brand awareness, trust, perceived value, and purchase intention, indicating positive links between ethical brands and loyalty, and the mediating role of trust (e.g., Murphy, 1992; Doszhanov and Ahmad, 2015; Cheung et al., 2015). Factors stimulating green branding include eco-innovation, CSR, green advertising, eco-labels and packaging (Sarkar, 2012; Čerkasov et al., 2017; Chen et al., 2017; Darnall et al., 2018). Consumer distrust in certification/control systems can hinder organic market development (Muposhi et al., 2015; Nuttavuthisit and Thøgersen, 2017). Price is a salient determinant affecting loyalty and green purchase (Azad et al., 2013; Marakanon and Panjakajornsak, 2017), while certification can justify willingness to pay a premium (Asioli et al., 2017; Zhang et al., 2018). The paper notes gaps: limited focus on drivers of organic consumption levels and on determinants of green price premiums; limited treatment of loyalty as an integral satisfaction-importance construct and the nonlinearity between satisfaction and loyalty.

The study tests three hypotheses using quantitative methods. H1 (income–organic consumption correlation): Data collected for 37 OECD member countries (2017–2019) include gross national income per capita (OECD, 2020) and per capita consumption of organic products (FiBL/IFOAM, 2020). Three-step correlation analysis: (1) scatterplot and Pearson correlation; (2) normality tests for both variables; (3) Spearman correlation if normality is violated. H2 (impact of green branding on loyalty): An expert consumer survey of 250 respondents conducted in five Kyiv supermarkets (50 per store). Respondents rated satisfaction and importance (5-point scale) on eight brand attributes: product quality, environmental friendliness, organicity, price, brand image, brand social responsibility, advertising support, and accessibility. Two egg brands were evaluated: a conventional brand and an organic (green) brand. Sample size justification used standard formulas for 95% confidence and 0.05 error, yielding N=250. Agreement among respondents was assessed via Kendall’s coefficient of concordance (W=0.81). An integral indicator of satisfaction I=(Σx/Σy)*100% was computed. The non-linear relationship between satisfaction and loyalty was modeled as a rectangular hyperbola l=a+b/(x−c) with boundary conditions (l=1 at x=5; l=0.3 at x=4; l=0 at x=1), yielding parameters a=1/6, b=−9/6, c=7/6 and function l(x)=1/6−[9/(6(x−7/6))]. Loyalty coefficients were then computed from average responses to compare conventional vs eco-brand loyalty. H3 (determinants of price premium): Prices for nine green agricultural brands in five Kyiv supermarkets were analyzed to estimate price premium range (1%–45%). Price premium intervals were defined to classify brands into three levels: low (1–14%), medium (15–29%), and high (30–45%). Factors considered: consumer loyalty, availability of an organic certificate, costs of green advertising, additional cost of organic products, average industry profitability, and average consumer income. After initial significance screening (Student’s t-tests and p-values), clustering proceeded in two stages: hierarchical clustering to confirm three groups, followed by k-means clustering (k=3). ANOVA was used to assess between/within-cluster variance and significance. Discriminant analysis then produced classification functions for each price-premium level: dk=β0+β1x1+...+βpxp. The variable “average profitability of the industry” was dropped from the final discriminant model due to low tolerance (<0.01). An illustrative example (“BioFood”) demonstrates assigning a new brand to a price-premium class by evaluating the discriminant functions.

• H1: Strong positive correlation between per capita income and per capita organic consumption. Pearson r=0.794 (positive). Due to non-normality of the consumption variable, Spearman’s rho was computed: 0.879, confirming H1. - H2: Green branding positively impacts consumer loyalty. For the conventional egg brand, integrated satisfaction without loyalty adjustment was 78%, but loyalty-adjusted integrated indicator was 41%. For the eco-brand, integrated satisfaction was 83% and loyalty-adjusted was 44%. Consumer loyalty to the eco-brand exceeded that of the conventional brand by 3 percentage points, confirming H2. - H3: The size of a green brand’s price premium is influenced by consumer loyalty, organic certification, green advertising costs, additional organic costs, industry profitability, and consumer income. Clustering identified three price-premium levels: high (30–45%), medium (15–29%), and low (1–14%). ANOVA showed significant between-cluster differences for all analyzed factors (e.g., for loyalty ratio, F=160.50, p=0.000006). Discriminant analysis achieved strong classification performance (Wilks’ lambda=0.001793; F > Ftable=5.96). The “average profitability of the industry” variable was excluded from the final discriminant model due to low tolerance, improving model parsimony. Example classification of a new brand (“BioFood”) yielded discriminant scores d=-554.86 (high), dm=206.356 (medium), dl=-31.423 (low), assigning it to the medium price-premium class (15–29%). - Cluster membership examples: TM “Organic Milk” and TM “EthnoProduct” mapped to the high price-premium cluster; several brands (e.g., TM “Staroporytskoe”, “Ekorod”, “Svit Bio”, “LiQberry”, “Organico”) to medium; TM “Liluck” and “Mol’far” to low.

The findings directly address the research questions: higher national income is associated with greater organic consumption, suggesting that macroeconomic capacity underpins eco-market development. At the micro/brand level, green branding enhances loyalty, albeit modestly (3 percentage points over a conventional brand in the egg category), indicating that emphasizing attributes such as organicity, product quality, and environmental friendliness strengthens repeat-purchase propensity. For pricing, the results provide empirical evidence that a green brand’s price premium depends on a coherent set of demand- and supply-side factors, including loyalty, certification, advertising, added organic costs, and consumer income. The derived clusters and discriminant functions offer brand managers practical tools to set price premiums consistent with brand attributes and market conditions and to classify new brands into appropriate premium tiers. Together, the results underscore the strategic value of green branding in agriculture and support policies/practices (e.g., certification, credible green advertising) that build trust and willingness to pay.

Green branding is an effective lever in the agricultural sector: it is associated with higher consumer loyalty and supports the strategic setting of price premiums. The study confirms a strong positive association between national income and organic consumption, quantifies loyalty advantages for eco-brands, and demonstrates that price premiums can be systematically categorized (low/medium/high) and predicted via discriminant functions based on key determinants (loyalty, certification, advertising costs, additional organic costs, and consumer income). Practically, the framework enables brand managers to align pricing strategies with measured consumer responses and brand investments. As eco-consumption, eco-orientation, and eco-society concepts expand, green branding will become increasingly important for socially responsible producers. Future research could extend to broader product categories, additional markets beyond Kyiv/Ukraine, longitudinal analyses of loyalty-premium dynamics, and deeper examination of trust mechanisms and certification regimes.