Abstract
We study the aggregate and heterogeneous effects of a front-of-package labeling policy implemented in Chile. We find that consumers reduced their sugar and caloric intake by 9% and 6%, reductions explained by consumers purchasing healthier products and firms reformulating their offerings. On the demand side, labels prompt consumers to substitute within categories rather than between categories. Within-category responses are more pronounced when labels provide new information. On the supply side, we observe bunching at regulatory thresholds with substantial heterogeneity across categories, consistent with heterogeneous costs of product reformulation. We conclude that considering policy-response heterogeneity is key for effective policy design.