Demand effects of unilateral versus industry-wide sugar reduction scenarios.

• Voluntary food reformulation agreements often lack industry compliance. • We analyze how sugar reduction in children's cereals affect demand and brand sales. • We estimate effects of cereal sugar content on consumer choices using mixed logit. • Simultaneous sugar reductions are most effective and least harmful to sales. • Substitution behavior minimally compromises product reformulation efforts. Voluntary food reformulation agreements may often be ineffective due to a lack of industry compliance. This paper examines demand responses and resulting (dis)incentives for companies to reduce the sugar content of children's cereals in Germany. We estimate the effects of sugar content on consumer choices using a random-coefficient logit model. Subsequently, we simulate how simultaneous and unilateral sugar reductions affect sales, sugar quantities purchased, and consumer welfare. The results identify simultaneous sugar reduction as being most effective in reducing sugar uptake and less harmful to firms' sales compared to unilateral reformulation. Product reformulation is not strongly compromised by substitution behaviour. [ABSTRACT FROM AUTHOR]