Organic grocers face stiff educational role
as price remains barrier for organic products
Datamonitor via Just-food.com,
Oct. 20, 2003: Nearly 70 percent of Americans surveyed who
do not buy organic food listed price as a “major” factor,
according to a recent survey by the Whole Foods Market supermarket
chain, which features natural and organic products.
WFM surveyed 1,000 US adults in its commissioned research into the
organics sector. It learned that while consumers are purchasing more
organics than in the previous twelve months, price is still a barrier
against new converts to organic foods. Only 19% of Americans are more
inclined to purchase organic foods regardless of the price.
However, the evidence suggests that while producers are striving to
reduce price, they are constrained by the higher costs of organic
production. Many leading European retailers, particularly leading
UK supermarkets, have already hinted that consumers will continue
to pay premium prices because they want to avoid setting unrealistic
consumer expectations over price.
Organic production is generally smaller scale, more labor intensive
and sometimes results in smaller crop yields. It is widely considered
that lowering prices could threaten the livelihood of organic farmers.
Therefore, by maintaining higher prices (and more attractive margins)
retailers are helping farmers to profitably convert to organic production.
Indeed, some retailers claim it is their 'ethical responsibility'
to maintain higher prices.
Given that prices are not currently a flexible marketing tool, the
marketing focus should instead be on education. Currently consumers,
particularly those who avoid organic goods, lack knowledge about what
organic and natural food and drinks actually are. Consequently, marketers
are going to find it increasingly difficult to justify the current
Consumers need to be fully educated about organic produce and its
benefits both to health and to the environment. Only this will impact
perceptions and attitudes towards higher prices. Retailers and producers
need to successfully table (establish) the argument that, when all
of the human, animal and environmental health benefits are factored
in, consumers are getting a good deal with organics.