Produce consumers who want organic will generally pay a premium to get it, according to organic industry leaders and participants.
Christine Bushway, executive director of the Brattleboro, Vt.-based Organic Trade Association, pointed to a Dec. 19, 2012, report from PricewaterhouseCoopers, “Experience Radar 2013: Lessons from the U.S. Grocery Industry,” which studied the experiences of 6,000 consumers across a number of industries.
The study’s findings: Retailers should expand their rosters of organic products to attract a rapidly growing population of shoppers who “care about their organic lifestyle and are often willing to pay a premium for organic produce.”
“The report goes on to note that many consumers are willing to pay a premium for the peace of mind that comes from buying organic and local,” Bushway said.
Organic-focused growers and shippers say they see the evidence piling up.
“People are seeking those types of products and are willing to pay a premium on organic berries,” said Amber Kosinsky, marketing director for Wish Farms, a Plant City, Fla.-based strawberry and blueberry grower-shipper.
The results are demonstrating that outside economic forces, at least in the last year, haven’t affected sales of organics, said Jim Roberts, vice president of sales with Naples, Fla.-based berry grower-shipper Naturipe Farms LLC.
“I was concerned because it started going down in 2009, when, as a category, organics showed negative growth,” he said.
“In 2011, we saw some positive trends and in 2012 saw double-digit growth. It’s now back to 2008 growth trends, in double digits,” he said.
The cost differential can have an effect on sales, but there are other considerations that compensate, said Bruce Klein, marketing director with Maurice A. Auerbach Inc. in Secaucus, N.J.
“When you have a packaged item that’s certified organic, there’s a trust level, and consumers start looking for organic product,” he said.
Klein said organic sales are up in “upscale” retail chains and mainstream chains that have upper-income clienteles.
“They do cost more and people with more expendable income can spend the money on organics,” he said.
Future affordability
Even for consumers who aren’t in higher-income brackets, organic products are within fiscal reach these days, said Matt Seeley, vice president of marketing with The Nunes Co., a Salinas, Calif.-based vegetable grower-shipper.
“I can only speak to our items — vegetables — and that price gap has closed significantly over the last four or five years,” Seeley said.
He said the price premium on organic produce, at one time, could be as high as “double or triple” the price for comparable conventional items.
Today, he said, a 25% or less difference, is not uncommon.
“There are several major retailers out there, and once they get to a critical mass standpoint, where they can get organics in that 25%, they’ll just have an organic offering,” Seeley said.”
Price parity between organic and conventional, while not unheard of on occasion, is normally not a realistic expectation, Seeley said.
“The objective is to reduce costs, but to continue to make this as affordable as you possibly can, and we’re going to continue down that path or trying to reduce costs,” he said.
Comments (1) Leave a comment