February 26, 2009
Some Continue Supporting Organics, Others Not
By Bernice Hurst, Managing
Partner, Fine Food Network
For those familiar with
European food shopping, attitudes that differ from those of American consumers
are not altogether surprising. Puzzling maybe but not surprising.
Two articles on just-food.com recently
addressed differing attitudes in France and Italy, however. Traditional
shopping and eating patterns in Europe haven’t varied widely but on the
issue of organics, there does seem to be some divergence.
In Italy, just-food reports, “growth
almost halved last year,” presumably influenced by the economy. Italian
agricultural organization ISMEA and market researchers Nielsen found that “purchases
of packaged organic food increased by 5.4 percent in value during 2008,
down from 2007’s growth rate of 10.2 percent.” In spite of that, a
spokesman explained, “The sector still outpaced the overall grocery
sector … We are encouraged by the resilience demonstrated in organic
purchasing.” Among
the evidence quoted was growth of 20 percent, 16 percent and 14 percent
respectively for organic fruit and vegetables, children’s products and
bread, pasta, rice and eggs.
Meanwhile, a spokesperson
for Agence Bio said French shoppers intended
to continue buying organic. Their survey looked at the attitudes of shoppers
who already buy organic, finding that 74 percent of respondents said they
would maintain or increase organic purchases in the next six months. Growth
has slowed here, too, at least partially because of higher prices but the
spokesperson said that there is still hope for increased sales this year.
Of course there is always
the potential difference between what people say and what they do. Other
differences in attitude may be attributable to differences in definition
(and enforcement) as well as reasons. While there has never been conclusive
evidence that organic food is healthier, to many people this is less important
than their preference to avoid methods of mass production and the pesticides
that are essential for intensive farming. There are also wide differences
between American consumers and others on issues of price vs. (perceived)
quality. Not to mention differences in when, where and how people shop,
cook and eat. All of which contributes to opportunities for manufacturers
and retailers to continue growing their bottom line as well as their product
line to varying degrees according to their markets.
Discussion question:
Can you see any obvious reasons why consumers in some countries will
continue buying organics while others cut back?
[Author’s
commentary] Hopefully we can discuss this in terms of cultural differences
rather than pro- and anti-organics fans sneering at one another. Wouldn’t
it be nice to think the marketplace is big enough to support all preferences
and the businesses that supply them?
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It really comes down to a couple of factors: general economic conditions and organic market costs versus “non-organic” products; and each culture’s belief system around food. Understanding this blend of market and myth is the first step to answering the question, although I for one am a little nervous about classifying behavior by nationality.
Forget the economy. We’re talking about cultural differences here. The fact is that food plays different roles in different cultures. While many Americans would consider a bucket of chicken to be the cornerstone of a great meal, many Europeans would never allow that into their homes (much less their mouths).
The French have always been known for taking their food quite seriously. As such, it should come as no surprise that they are content paying higher prices for organics.
Maybe there’s something to be learned here next time we get excited over a $1.00 off coupon for a Big Mac.
When looking at organics growth rates among countries, the first question should be, what are the current shares and what percentage of the offerings? Organics have a definable market share. Starting from a low base makes large percentage increases easy. Starting from a higher share reduces the growth rate as the denominator is larger.
France has always had a high percentage of local grown produce. The switch to organic was easy. GDP per capital is about 16% higher for France. Therefore it is logical their organic consumptions will grow at a faster rate than Italy’s.
Surveys in France and Italy were done by different folks, with different methods, at different times. So how comparable are they?
And how biased are the survey sponsors? What results did they want? And how reliable are purchase intentions versus behavior?
Maybe a lot of money could be saved: just write any statistic you want, and put it in a press release.
Like all marketing issues, simple answers don’t work. All the respondents’ points are part of the total reason. I would like to suggest another. One key driver of demand is “social consciousness.” (The other of course is “health and wellness”). In the past, organic was seen as the sole flag bearer of products meeting this demand. Lately, other categories have started to compete for a share of the market. They include ‘locally grown’, ‘sustainably grown’ ‘Fairtrade’, etc.
In total, this category has not fallen despite the poor economic times. It is simply growing more slowly and organics’ share of this slowing market is slipping, that’s another reason why we see headlines about organic sales falling!
I agree; it is less the economy, and more the culture. Look at Eastern European countries or Ireland, versus Asian markets. We may a lot of press here or in other countries on health/wellness/nutrition/organics, however the masses are the ones driving the markets, and too many countries still are driven by taste, and not the wholesomeness of ingredients. Education, does have some impact, however. I know plenty of well-educated, unhealthy people. 😉
I agree with Jeff. I have not reviewed the whole study so I do not know if food sales as a whole has declined. In my estimation, with an economic downturn one may choose to trim expenses. The purchases of Organics in both countries is still significant–which would indicate a general acceptance of this type of food. The small fall off may just be due to a cut back on overall expenditure more than a change in purchase behavior away from the segment.
When Whole Foods was on a growth streak, CEO John Mackey said that they based their real estate strategy on education level demographics. He went on to say that they had found that the more educated you were, the more you understood the importance of good food and how it benefits you. Interesting that income demographics did NOT play in their strategy, but that’s why you’ll see Whole Foods near universities, for example.
I agree with Whole Foods strategy in this instance; where you’ll find the most interest in any product is from those that understand what its benefits are.
To me, that’s the simple answer when it comes to food: education level.
I have to question the premise of the question. The articles are talking about reductions in the growth rate of organic food purchases. In both Italy and France, more organic food was sold last year than in 2007. There’s little evidence that people who are already buying organic are going to stop.
Cultural differences may explain why growth rate in France is hold steady vs. other countries. The French (I think) see themselves, deservedly so, as having a special role in the development and defense of our food culture.
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It really comes down to a couple of factors: general economic conditions and organic market costs versus “non-organic” products; and each culture’s belief system around food. Understanding this blend of market and myth is the first step to answering the question, although I for one am a little nervous about classifying behavior by nationality.
Forget the economy. We’re talking about cultural differences here. The fact is that food plays different roles in different cultures. While many Americans would consider a bucket of chicken to be the cornerstone of a great meal, many Europeans would never allow that into their homes (much less their mouths).
The French have always been known for taking their food quite seriously. As such, it should come as no surprise that they are content paying higher prices for organics.
Maybe there’s something to be learned here next time we get excited over a $1.00 off coupon for a Big Mac.
When looking at organics growth rates among countries, the first question should be, what are the current shares and what percentage of the offerings? Organics have a definable market share. Starting from a low base makes large percentage increases easy. Starting from a higher share reduces the growth rate as the denominator is larger.
France has always had a high percentage of local grown produce. The switch to organic was easy. GDP per capital is about 16% higher for France. Therefore it is logical their organic consumptions will grow at a faster rate than Italy’s.
Surveys in France and Italy were done by different folks, with different methods, at different times. So how comparable are they?
And how biased are the survey sponsors? What results did they want? And how reliable are purchase intentions versus behavior?
Maybe a lot of money could be saved: just write any statistic you want, and put it in a press release.
Like all marketing issues, simple answers don’t work. All the respondents’ points are part of the total reason. I would like to suggest another. One key driver of demand is “social consciousness.” (The other of course is “health and wellness”). In the past, organic was seen as the sole flag bearer of products meeting this demand. Lately, other categories have started to compete for a share of the market. They include ‘locally grown’, ‘sustainably grown’ ‘Fairtrade’, etc.
In total, this category has not fallen despite the poor economic times. It is simply growing more slowly and organics’ share of this slowing market is slipping, that’s another reason why we see headlines about organic sales falling!
I agree; it is less the economy, and more the culture. Look at Eastern European countries or Ireland, versus Asian markets. We may a lot of press here or in other countries on health/wellness/nutrition/organics, however the masses are the ones driving the markets, and too many countries still are driven by taste, and not the wholesomeness of ingredients. Education, does have some impact, however. I know plenty of well-educated, unhealthy people. 😉
I agree with Jeff. I have not reviewed the whole study so I do not know if food sales as a whole has declined. In my estimation, with an economic downturn one may choose to trim expenses. The purchases of Organics in both countries is still significant–which would indicate a general acceptance of this type of food. The small fall off may just be due to a cut back on overall expenditure more than a change in purchase behavior away from the segment.
When Whole Foods was on a growth streak, CEO John Mackey said that they based their real estate strategy on education level demographics. He went on to say that they had found that the more educated you were, the more you understood the importance of good food and how it benefits you. Interesting that income demographics did NOT play in their strategy, but that’s why you’ll see Whole Foods near universities, for example.
I agree with Whole Foods strategy in this instance; where you’ll find the most interest in any product is from those that understand what its benefits are.
To me, that’s the simple answer when it comes to food: education level.
I have to question the premise of the question. The articles are talking about reductions in the growth rate of organic food purchases. In both Italy and France, more organic food was sold last year than in 2007. There’s little evidence that people who are already buying organic are going to stop.
Cultural differences may explain why growth rate in France is hold steady vs. other countries. The French (I think) see themselves, deservedly so, as having a special role in the development and defense of our food culture.